Is the Asian Development Bank (ADB) Accountable?

12 May 2013 by People’s front against IFI’s

Since the emergence of International Financial Institutions (IFIs), the questions about their transparency and accountability have been sternly shielded and severely evaded by their founders. The Asian Development Bank (ADB) was established as a regional public multilateral development financing institution in 1966 in Manila to ‘rescue’ Asia from acute poverty. Since then, the ADB- the torch bearer of ’Poverty Alleviation in Asia-Pacific’ has grown from 31 member countries to 67 with annual lending of $ 22 billion in 350 projects (loans, grants, TAs, equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. investments, risk guarantees Guarantees Acts that provide a creditor with security in complement to the debtor’s commitment. A distinction is made between real guarantees (lien, pledge, mortgage, prior charge) and personal guarantees (surety, aval, letter of intent, independent guarantee). ) including professional knowledge and advice for economic and social development in the Asian countries.

Sticking strictly to the nature of IFIs, the Charter of ADB has been prepared and accepted in such a manner that its financial terms and conditions, modalities, and its projects - no matter if it’s a success or a failure - its property and its staffs (2,900 employees from 59 countries working in the Headquarters at Manila, with 27 resident missions and 3 representative offices in Tokyo, Frankfurt, and Washington, DC) can’t be questioned in any national or international jurisdiction. The impunity provided to this Institution and its derivatives Derivatives A family of financial products that includes mainly options, futures, swaps and their combinations, all related to other assets (shares, bonds, raw materials and commodities, interest rates, indices, etc.) from which they are by nature inseparable—options on shares, futures contracts on an index, etc. Their value depends on and is derived from (thus the name) that of these other assets. There are derivatives involving a firm commitment (currency futures, interest-rate or exchange swaps) and derivatives involving a conditional commitment (options, warrants, etc.). is more than that accorded to diplomats and their missions. Even the Prime Minister of India can be questioned in the Parliament, but not the ADB or its officials! The judicial systems in the countries have very little power over the ADB.

The IFIs in general and ADB in particular are held to account for their actions only by their shareholder governments (mostly the largest shareholders). With worldwide peoples resistance and mass protests against the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

funded projects and policies raised, the IFIs in general and World Bank in particular is compelled to formalise accountability mechanism regarding its operations. However, this mechanism is also hogwash since all the IFIs including the ADB is only accountable to itself!

The Accountability Mechanism (AM) of ADB ’provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged non-compliance of ADB’s operational policies and procedures’. [1] However, this mechanism is controlled by the ADB President and the Broad of Directors who are appointed by the largest shareholders.

Since its new avatar as 2012 (May) Accountability Mechanism Policy, there are 23 complaint letters to the AM till 11 April 2013, nevertheless all are declared ineligible except two which are being considered under the problem solving phase for its eligibility. [2] Within less than a year, if 23 projects are being invoked for complaints, it would be a fair reflection of the negative impacts of the Bank’s projects and policies across Asia. Similarly, under the ADB AM’s previous incarnation, the 2003 AM Policy, there were 42 complaints in the first phase of AM. [3]

Independence of AM

The AM consists of two functions of problem solving and compliance review. The problem solving function, led by the Special Project Facilitator (SPF) appointed by President of Bank, focuses on problem solving and finding satisfactory solutions to problems caused by ADB- assisted projects. The SPF reports to the President.

The compliance review function focuses on ADB’s operation, whether it has or has not acted in accordance with its operational policies and procedures; and has directly, materially, and adversely affected local people. The compliance review function is managed by an independent three member panel appointed by Board of Directors. In its new form, the Compliance Review function can’t ’investigate’ any project but can simply ’review’ it.

Ownership of wrong doings

While the AM provides affected communities to file complaint on ADB operations, the AM can’t stop any projects or can’t revise the stand alone projects with complaints of negative impacts. The AM is silent on indirect impacts of ADB projects to communities or the environment. The AM also out rightly refuses to accept any complaint once the ADB funded project’s closing date is declared. Once the project closing date is declared, the Bank won’t take any responsibility, it says ‘leave it and forget it’, moving on to the next investments.

The glaring example of such wrong doings is the Khulna Jessore Drainage Rehabilitation project (KJDRP) in Bangladesh. The project did not only fail but it submerged many settlements, government buildings and schools, among others. The point is that about responsibility. There is a clear set of evidence of damages to local communities by this project. Even when a case was filled under AM in 2007, the ADB didn’t find it difficult to announce the project complaint as non-eligible since the project completion report was released. The communities are still reeling in swamps created by ADB.

The Tree Crop Smallholder Sector (TCSS) Project in Indonesia was completed in 2002. The Project aimed to improve the income and employment generation of rubber and tea smallholders and landless rubber tappers in the area. The farmers participating in this project from Bengkulu (Sumatra) couldn’t repay their obligations in 1996 and 1997 as production didn’t match the proposed project quality as committed by the Bank officers in the initial project stage. The Indonesian Resident Mission conveyed that the project was closed in 2000 and they were unable to make any intervention in this matter. [4] This is not a stray case but is emblematic of the Bank’s projects in Asia-Pacific. [5]

The client or the borrowing country reimburses the loan in 20 to 35 years which the Bank usually disburses between 4-6 years. There are conditions of the loan agreement between the ADB and the borrowing country which applies until the loan is fully repaid. It implies that the project is still active financially as long as the borrowing country pays back its loan with the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. . This logically concludes that both the ADB and the government should be responsible for the adverse impacts caused by it till the borrowing country has fully reimbursed the loan.

Other Policies

Besides the specific Accountability Mechanism Policy, several pro-reformers of the IFIs including the ADB squarely conclude that the Bank has various internal mechanisms and policies which make it accountable of its activities. Such major policies are Safeguard Policy Statement (SPS, 2009), Anti-corruption and Integrity (1998), Independent Evaluation and Public Communication Policy (PCP, 2012).

The SPS are cleared to avoid, or when total avoidance is impossible, to minimize and mitigate adverse impacts on the environment and the affected population. From the conceptualisation of a project to its completion, the ADB and its departments decide, manage and implement the SPS- environment, displacement and indigenous people’s issues. The ADB officials are only judges about its harmful impacts if there are any (!). While management follow the implementation of SPS, the Board of Directors oversees the activities.

The Anti corruption and Integrity division looks into fraud and corruption in ADB operations involving ADB staffs and executing agencies in borrowing countries. When the lower ADB staffs or consultants are on the firing line, the division is toothless against the President, the Vice Presidents or the ’powerful syndicate’ of ADB.

The Public Communication Policy (PCP) aims to provide information on ADB operations to the public or specifically to affected communities. The PCP carries many conditions which restrict certain information to be publicly unveiled. For example, the Board discussions which have already passed 10 years or more are now open to public. Why the sample principle can’t be applied to every Board decision on each projects and posted in public as soon as it is taken.

Finally, is the ADB Accountable to populations of the region? The answer is loudly and clearly in the negative.

View online :

[1ADB (2012), Accountability Mechanism Policy 2012, [Online: Web] URL:

[4Avilash Roul, “Rationality of Accountability: ADB must look beyond PCR”, [Online: web] URL:

[5NGO Forum on ADB (2011), Is ADB accountable? Evaluating the Accountability Mechanism, [Online: web] URL:



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