Accountability Mechanism Policy 2012

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• Publisher: Asian Development Bank
• Year: 2012
• ISBN:
  9789290926153
• Edition: 1
• Topic: Business
• Subtopic: Corporate Governance
• Index: Business

At the 43rd Annual Meeting of the Board of Governors of the Asian Development Bank (ADB) held in Tashkent, Uzbekistan in May 2010, the President announced a joint Board and Management review of the Accountability Mechanism. This paper gives the summary of the review in which the main objective was to examine the scope for improvements in the Accountability Mechanism. The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures. It consists of two separate but complementary functions: consultation phase and compliance review phase.

1	Introduction

1. The Asian Development Bank (ADB) created the Inspection Function in 1995 to provide an open forum for public scrutiny to ensure that ADB complies with its operational policies and procedures.¹ Building on the Inspection Function and benefiting from intensive public consultations, ADB introduced the Accountability Mechanism in 2003.² The Accountability Mechanism encompasses two mutually supportive functions: problem solving and compliance review. An effective Accountability Mechanism to address the grievances of people adversely affected by ADB-financed projects and ensure compliance with ADB operational policies and procedures is fundamental to equitable and sustainable development.

2. ADB intends to ensure that the Accountability Mechanism remains adequate and effective in keeping with international best practices. At the 43rd Annual Meeting of the ADB Board of Governors in Tashkent, Uzbekistan in May 2010, the President announced that the ADB Board of Directors and Management would jointly review the Accountability Mechanism.³ A working group was established in April 2010 comprising four members of the Board and the managing director general. The working group finalized the terms of reference (TOR) for the review in June 2010 in consultation with the Board, and engaged two international external experts to provide independent advice. Appendix 1 presents the TOR of the review.

3. The objectives of the review are to take stock of the ADB experience, draw on the experiences of similar mechanisms at other multilateral financial institutions, and examine the scope for improving the Accountability Mechanism. The review has included wide-ranging public consultations with a broad spectrum of stakeholders through face-to-face meetings, multiple stakeholder workshops, and visits to project sites. To systematically respond to stakeholder comments, ADB has produced a series of review documents: two consultation papers, two working papers, and the final paper. The consultation papers were completed in February and June 2011, and the working papers were considered by the Board in April and October 2011. The working group has sought public comments through a dedicated Accountability Mechanism review website.⁴ Appendix 2 summarizes the consultations undertaken as part of the review.

4. This paper presents key findings of the review and proposes changes to strengthen the accessibility, credibility, efficiency, and effectiveness of the Accountability Mechanism.

2	Establishment and Evolution

The 1995 Inspection Function

5. In December 1995, the ADB Board approved the establishment of an Inspection Function. ADB was the third multilateral development bank (MDB) to establish such a mechanism, following the Inspection Panel at the World Bank in 1993 and the Independent Investigation Mechanism at the Inter-American Development Bank in 1994.

6. The Inspection Function aimed to provide a forum for people affected by ADB-assisted projects to appeal to an independent body for matters relating to ADB’s compliance with its operational policies and procedures. From 1995 to 2003, ADB received eight requests for inspections, of which six were deemed ineligible. Two of the requests—for the Samut Prakarn Wastewater Management Project in Thailand⁵ and for the Chashma Right Bank Irrigation Project (Stage III) in Pakistan⁶—underwent a full inspection.

7. The inspection process for these two projects raised concerns about the effectiveness of the Inspection Function. In 2002 and 2003, ADB reviewed the Inspection Function and carried out extensive external and internal consultations. The consultations reinforced support for (i) an independent accountability mechanism that addresses the complaints of people adversely affected by ADB-assisted projects, and (ii) more problem solving measures within the accountability mechanism processes. The new mechanism was expected to enhance ADB’s development effectiveness and project quality. This review ushered in the new ADB Accountability Mechanism in 2003.

The 2003 Accountability Mechanism

8. The most significant change introduced in the 2003 policy was the establishment of two separate but complementary phases within the Accountability Mechanism: (i) a consultation phase,⁷ consisting of a special project facilitator (SPF) to respond to specific problems of people affected by ADB-assisted projects through a range of informal and flexible methods; and (ii) a compliance review phase,⁸ consisting of a Compliance Review Panel (CRP) to investigate alleged violations of ADB’s operational policies and procedures that have resulted, or are likely to result, in direct and material harm to project-affected people.

9. ADB was the first MDB to establish an accountability mechanism that went beyond an inspection function by introducing the dual dimensions of problem solving and compliance review for private and public sector operations.⁹ The Accountability Mechanism policy stressed that problem solving should precede compliance review to enable immediate resolution of the concerns of project-affected people. At the same time, it provided complainants with the option to exit the consultation phase and request a compliance review.

10. Dedicated institutional support has been provided to both the consultation and compliance review phases to reflect their distinctive features and needs. The SPF handles the consultation phase, assisted by the Office of the Special Project Facilitator (OSPF), and reports directly to the President. The compliance review phase is handled by three CRP members, one of whom is the chair. The CRP is assisted by the Office of the Compliance Review Panel (OCRP). It reports directly to the Board on all activities, except for some specific activities¹⁰ for which the CRP reports to the Board Compliance Review Committee (BCRC). Both the SPF and CRP are empowered to monitor the implementation of remedial actions. The Accountability Mechanism policy covers both public and private sector operations.

11. From the time the Accountability Mechanism became effective in December 2003 until the end of 2011, the OSPF received 39 complaints.¹¹ Of these, 13 were found eligible for problem solving, 24 were ineligible, and eligibility determination for 2 complaints is ongoing. The CRP received 5 requests for compliance review over the same period, of which 4 were eligible and 1 was ineligible. Appendix 3 summarizes the experience since 2003.

3	Assessment of the Accountability Mechanism

12. This section provides an assessment of the current Accountability Mechanism based on feedback from consultations, a review of documents, and project site visits. Both strengths and weaknesses have been identified.

Strengths

Pioneer in Introducing the Problem Solving Function

13. The 2003 Accountability Mechanism introduced a new dimension of accountability: the problem solving function. A majority of stakeholders preferred an Accountability Mechanism consisting of two functions—problem solving and compliance review—during the public consultations leading to the adoption of the 2003 policy. The adoption of the problem solving function was a significant innovation that was expected to be particularly positive and beneficial for project-affected people by addressing their problems. In addition to addressing their concerns, development agencies should empower project-affected people to participate in the problem solving process, rather than just letting them be recipients of the inspection results. Following ADB, most international financial institutions have instituted problem solving in their own accountability mechanisms.

14. At the same time, ADB continues to place high importance on compliance review. The problem solving and compliance review functions complement each other. The consultations in 2010 confirmed that these dual functions are working well and remain sound.

Emphasis on Independence and Effectiveness

15. The dual Accountability Mechanism functions require an appropriate institutional setup to ensure their independence and effectiveness. The 2003 Accountability Mechanism policy stipulates that the CRP should be independent from Management to ensure the credibility of its investigation of alleged ADB noncompliance with its operational policies and procedures. Therefore, under the policy, the CRP reports directly to the Board except on certain activities where it reports to the BCRC (footnote 10). The CRP members have nonrenewable terms of 5 years. This is considered appropriate for drawing on fresh experience and minimizing external influence. Thus, the CRP operates with a high degree of independence from Management.

16. The 2003 Accountability Mechanism policy requires that the SPF be independent from operations. The SPF reports directly to the President and should not be involved in the formulation, processing, or implementation of any project. This arrangement is considered appropriate for striking a balance between (i) the need for an objective and detached perspective on a project, and (ii) the need for sufficient knowledge of and experience with ADB operations.

17. Striking this balance suggests that the consultation phase should be located under Management for two reasons. First, the problem solving process is not for determining liability or apportioning blame. Rather, it is designed to address genuine complaints about ADB-assisted projects through informal, consensus-based methods. People who believe they have been adversely affected by an ADB-assisted project can use the consultation process regardless of whether ADB operational policies and procedures have been complied with.¹² Second, the SPF needs to work closely with staff in operations departments to solve problems. By reporting to the President, the OSPF has an appropriate level of independence and is sufficiently empowered, but is not isolated from operations staff.

18. The Accountability Mechanism demarcates problem solving and compliance review as separate matters. Therefore, different institutional setups have been put in place for the two functions. ADB’s experience since 2003 suggests that the institutional setup is sound and suitable for maintaining the appropriate balance between the independence and effectiveness of the Accountability Mechanism.

Monitoring Mandate Enhancing Credibility

19. The 2003 Accountability Mechanism policy empowers the SPF and CRP to monitor the implementation of remedial actions. The CRP and SPF produce annual monitoring reports that describe the implementation of remedial actions. These reports are disclosed to the public. The SPF’s and CRP’s monitoring roles strengthen the credibility of the Accountability Mechanism.

Good Practice on Accessibility

20. The processes in the 2003 Accountability Mechanism policy conform to international good practices. The procedures for filing a complaint are clearly articulated in the policy, the Operations Manual, the ADB website, brochures, and other OSPF and OCRP publications. Requests for consultation and compliance review can be (i) brief; (ii) written in English or in any official or national language of a developing member country (DMC); and (iii) submitted by mail, fax, e-mail, or hand delivery to ADB headquarters or resident missions. The identity of complainants is kept confidential, if they so request. The requesters are encouraged to cite specific policy violations in describing a request, but that is not mandatory.

21. The OSPF and OCRP have pursued systematic outreach activities and consultations with project beneficiaries and project-affected people, governments, nongovernment organizations (NGOs), the private sector, and the public. They have regularly conducted training courses on the Accountability Mechanism to improve staff capacity in ADB. The internet is instrumental in disseminating information about the Accountability Mechanism. A joint OCRP and OSPF outreach strategy was adopted in 2010. ADB has also approved technical assistance funding of $225,000 for the OCRP to pilot a new outreach program.¹³ From 2009 to 2011, the number of complaints received by OSPF and CRP increased, which may partly reflect an increasing awareness of the Accountability Mechanism through these efforts.

Vertical Complementarity: The Problem Solving–Compliance Continuum

22. The continuum of problem prevention, problem solving, and compliance is a strength of the 2003 Accountability Mechanism. ADB’s philosophy is that problem prevention and compliance should be maximized in ADB operations. Once problems and noncompliance occur, they should be addressed promptly at the operational level.

23. During the design and appraisal stage, all projects undergo due diligence on multiple fronts, such as technical, financial, economic, social, safeguards, and governance. Management review meetings and staff review meetings assess a project’s merit, as well as its conformity with ADB policies and procedures. The Regional and Sustainable Development Department (RSDD), whose head also serves as the chief compliance officer, reviews the safeguard aspects of all proposed projects, in addition to the review of the operations departments; advises Management on the safeguard compliance status for projects with potential significant impacts; provides support to complex projects by participating in project missions and advising operations departments on safeguard-related issues; and delivers ADB-wide capacity development and training programs. The Board reviews each proposed project based on the report and recommendation of the President.

Problem Solving and Compliance Framework

ADB = Asian Development Bank, CRP = Compliance Review Panel, OSPF = Office of the Special Project Facilitator.

Note: The figure does not correspond to the actual proportion of issues dealt with by the different mechanisms.

Source: ADB.

24. During implementation, a bottom–up, multilevel mechanism is in place to solve problems and ensure compliance, consisting of grievance...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• Abbreviations
• Review Group
• Executive Summary
• 1 Introduction
• 2 Establishment and Evolution
• 3 Assessment of the Accountability Mechanism
• 4 Major Proposed Changes
• 5 The Revised Accountability Mechanism Policy
• 6 Resource Implications
• 7 Recommendation
• Appendixes
• Back Cover