DEVELOPMENT: Bank, Critics Disagree Over Inspection Panel

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Jul 9 2002 (IPS) - Non-compliance is the biggest hurdle facing an investigative body aimed at protecting locals from potentially harmful projects funded by one of the world’s largest multilateral banks, government and bank officials here say.

The Asian Development Bank (ADB) says that the main obstacle to reforming its Inspection Panel, which looks into locals’ complaints about bank-financed ventures, is to get borrowing governments to conform to the Bank’s social and environment regulations, and, sometimes, to their own laws.

“The main difficult issue we are faced with is how we should deal with the role of governments in the task of resolving problems,” said Eisuke Suzuki, deputy general counsel with the ADB, who was in Washington for consultations on reforming the inspection panel.

“If governments do not co-operate in resolving either potential problems or actual ones, which in many cases probably come from complaints on the basis that there’s a lack of interest and lack of support from governments, then we end up with a big problem,” Suzuki added.

Consultations are underway to reform the Inspection Policy Review of the Manila-based bank. Representatives from government agencies, non-governmental organisations (NGOs) and the private sector have taken part in the consultations in Tokyo, Manila, Frankfurt, Ottawa and Washington DC.

The 59-member ADB plans to hold further sub-regional consultations in August in Phnom Penh, Kathmandu, Beijing, Sydney and special discussions in Colombo, Karachi, and Bangkok.

But many participants say that their confidence in the mechanism is still shaken.

Civil society groups say that the starkest example of official non-co-operation and the panel’s ineffectiveness occurred in March over local complaints about the Samut Prakarn Wastewater Management Project in Thailand.

In March, a team inspecting the controversial wastewater plant found that the ADB, a multilateral sister of the Washington-based World Bank, breached several environmental and social standards.

The 750-million-dollar project is funded by the Thai government and the ADB.

Despite the inspection results, construction went ahead and loan disbursement was never reconsidered.

This prompted civil society groups to accuse the inspection panel of having no influence on the projects themselves and of lacking a mechanism to stop harmful projects from continuing.

During weeks of consultations on the process in June, the groups insisted that the panel’s work must “be for the affected people”, rather for the benefit of borrowing governments.

They demanded that results of the inspection process be “enforceable and in response to the concerns and complaints raised by the affected communities”.

“Citizens should have the right to expect ADB compliance with the policies and procedures that govern its operations,” said Jane Garrido of the Washington-based Bank Information Centre (BIC), a watchdog group. “It is not unrealistic to demand that the ADB comply with the safeguards it has set for itself.”

BIC says there should be a way to create “a compliance arm” to the Inspection Panel.

“We want to see that the Bank has mechanisms for problem solving as well as to check its accountability,” says BIC in a document. “Civil society groups need to monitor closely how the details and requirements are developed.”

Critics also say that the Bank itself has unfairly rejected almost all inspection requests.

In the first years of its existence, the inspection panel rejected a request by communities affected by the Korangi Wastewater Treatment Plant in Pakistan. The ADB claimed that the NGO filing the request could not prove that it represented the concerned people.

In November 2001 to early 2002, communities claiming to be harmed by the Southern Transport Development Project in Sri Lanka filed 11 requests for inspection. All of them were turned down.

Only one out of seven inspection requests was accepted – the Samut Prakarn, according to the ADB’s own documents.

The Bank established its inspection function in 1996 to provide an independent review of grievances by affected people, and to encourage “transparency, accountability and public participation in ADB operations”.

A U.S. government official, who wished to remain unidentified, told IPS that the ADB process is still a far cry from civil society’s “idealistic” views.

Contrary to popular belief, borrowing countries have great influence on the Bank, which is under pressure from developed nations that want to demonstrate they are assisting poorer countries.

He predicted the Bank is unlikely to come up with a compliance arm.

The Bank gave out some 5.3 billion dollars in loans last year while grants reached 145.6 million dollars.

Governments wield heavy influence over the Bank, admitted Suzuki. “You have to remember that all ADB’s borrowing countries are shareholders as well,” he said.

“Each consultation process, each project, they (borrowing governments) review,” he added. “To deal with the problem, we have always to deal with the government. This is not always easy.”

But civil society groups say the Bank should do more to ensure compliance, such as stipulating on loan agreements that borrowers meet social and environmental standards.

“I think there are steps the ADB can take to ensure that borrowing governments comply with ADB policies,” Garrido said. “This will send a clear message to borrowing governments about the need for accountability and compliance with bank procedural requirements.”