Does ADB's Accountability mechanism work?

Updated: Jan 18, 2019

International organizations enjoy broad immunity from suit and other judicial processes in domestic courts. Simply put it is a “functional necessity” designed to protect the autonomy and independence of international organizations including the Asian Development Bank (ADB) against interference in discharging its entrusted functions effectively. In Liang vs. People in the Philippines, G.R. No. 125865, it is contended that the immunity under the ADB Charter and the Headquarters Agreement is absolute. The jurisprudence further argued that only when there is an implied, express waiver or when a statute expressly limits the said immunity can be considered as an exception.


However, the United Nations Guiding Principles on Business and Human Rights describes how international financial institutions (IFIs) veer away from their human rights due diligence and provide access to remedy. Needless to say, there are increasing number of literatures on recent trends articulating the immunity of international organizations before domestic courts. In the case of the European Court of Human Rights (ECtHR), it has allowed many domestic courts in Europe to refrain from the functional necessity argument, which is heavily in favor of the organization but rather espoused a human rights approach. In quite a few cases against international organizations before domestic courts, the aggrieved party can argue that granting immunity to the organization violates the right to an effective remedy before a court as guaranteed by relevant international or regional human rights provisions.[i]


In a commentary by ADB’s General Counsel[ii], accordingly immunity does not mean that project affected persons adversely affected by the Bank’s projects are left without recourse or that their rights are ignored. ADB’s Accountability Mechanism serves as the only institutional platform through which project – affected households can elevate their grievances on any breach in the Bank’s own policies and procedures. While this is the intent of the Policy, does ADB’s Accountability Mechanism work?


What is the Accountability Mechanism?

The Accountability Mechanism (AM) has two primary functions: the problem – solving function led by the Special Project Facilitator (SPF) and the compliance review function spearheaded by the Compliance Review Panel (CRP).


Project – affected communities can either opt to proceed with the problem – solving or the compliance review function to address their concerns. The problem – solving function is responsible in addressing the problems of local people affected by ADB – assisted projects. Accordingly, it assists people who are directly, materially and adversely affected by problems caused by the ADB – assisted projects.


On the other hand, the compliance review function investigates alleged non – compliance by ADB on its own operational policies and procedures including violations on the safeguard policy. The Board of Directors considers and approves the recommendations of the CRP Final Report and allows the ADB Management to propose remedial actions in order to bring the project back into compliance.


However the Accountability Mechanism significantly poses restraints and limitations on its complex and highly bureaucratic processes that prevent communities from filing a complaint:


1. The legitimacy of the AM is also compromised whenever a potential conflict of interest arises at the ADB Board Compliance Review Committee (BCRC) level. As per the policy, the “CRP will investigate alleged non – compliance by ADB with its operational policies and procedures in any ADB – assisted project”. Furthermore, it will “not investigate the borrowing country, the executing agency or the private sector client” (emphasis supplied). The Accountability Mechanism also outlines nine functions of the BCRC (para. 134) with respect to the investigation on the alleged non – compliance by the Bank.


However, complaints in the past e.g. Samoa: Promoting Economic Use of Customary Land and Samoa Agribusiness Support Project (2016); Mundra Ultra Mega Power Project (2013) and the Integrated Citarum Water Resources Management Investment Program (2012) posted risks of conflict of interest when a BCRC member is also representing the constituency of where the project is located. While in principle the BCRC is sitting in that capacity and the focus of the investigation is on the ADB (and not the borrower), this kind of structure poses undue influence and may affect the outcome of the investigation as well as the corresponding monitoring of the CRP.


2. The role of the Office of the General Counsel (OGC) is another pitfall in the current structure of the AM that can also give rise to potential conflict of interest and question the independence of the mechanism. While the OGC is part of the Management, it can also provide legal advice to CRP and SPF. The provision for separate legal counsels to the Management, ADB Board of Directors and to the AM should be explicitly stipulated either in the policy or in the Operations Manual in order to avoid any potential conflict of interest and to retain the independence of the AM.


3. In addition, the filing of a complaint to the AM will not suspend or otherwise affect the formulation, processing or implementation of the project unless agreed to by the borrower concerned and the Bank.[iii] The functions of what the mechanism can and cannot do should be fully conveyed to the complainants and project affected households.


4. Limited awareness on how the Policy works particularly among the local communities largely contribute for the low turnout of complaints received. While some cases filed are deemed eligible, the long process dampens the principles of accountability and transparency, which the Bank is strongly asserting.


5. The notion that the complainants should exercise “good faith efforts” in attempting to solve the problems and issues beforehand at the Operations Department (OD) including at the Resident Missions is also concerning. First, the burden of proof for the complainants to provide evidence on likely, direct and material harm should not be as rigid on its face – value. Once determined eligible in the case of compliance review, the full investigation would be able to ascertain the extent and evidence of the harm caused or will be caused due to non – compliance on ADB’s policies and procedures. Secondly, the rationale for the complainants to reach out first to solve the problems and issues with the OD can at one point be considered reasonable. However better clarity and guidance should also be provided, as this language on the policy appears to be confusing if not contradictory to some provisions in the AM.


Accordingly, the complainant should indicate “a description of the complaints’ good faith efforts to address the problems first with the OD concerned and the results of these efforts” [para. 151 (vii)]. Having the clause that requires complainants to address the problems first with the OD presupposes a sequential approach when there should be none. This also adds an unnecessary burden for the complainants to prove that they should have done “good faith efforts” to resolve the issues being raised.


6. Lastly, the Compliance Review Panel to propose remedial actions is now with the Management. Taking away this function that the Panel previously had before the current 2012 Accountability Mechanism policy poses limitations on what the panel should be able to act upon after taking into account the outcome of its investigation and findings.


What do the figures show?


From 2004 – 2018, there has only been 19 complaints filed in ADB’s Accountability Mechanism through the Compliance Review Panel whereas 80 were filed through the Office of the Special Project Facilitator (OSPF). Out of the bulk of complaints filed, there were only 23 or 28.75% of eligible complaints filed under the OSPF. On the other hand, the number of eligible complaints filed under the CRP was higher at 15 or 78.95%.


Using the same period, the ADB on average approves roughly 343 projects in a year. The number of complaints filed to the Accountability Mechanism may either mean that ADB is doing a “decent” job in ensuring due diligence in all phases of the project implementation or when project affected communities are adversely affected they are not aware that such a redress mechanism is available.


Arguably, to put it in either of these two interpretations does not reflect the complexities of each project and the realities of the potentially affected persons who will benefit or unfortunately suffer harm from these ADB – funded projects.


Be as it may violations on the safeguard and other operational policies of the ADB have been raised to the Accountability Mechanism. At the center of these complaints tackle issues on inadequate compensation, loss of livelihood, cost of economic and physical displacement; health risks and project affected families left to further state of poverty.


ADB Financed Projects of Destruction

In the last 50 years of ADB’s operations, it had financed projects that caused massive destruction of the environment and loss of livelihood to the affected households. To name a few, these include the loss of indigenous variety of fish and crop biodiversity in the Khulna – Jessore Drainage Rehabilitation Project (KJDRP) in Bangladesh; more than 10,000 people affected by the downstream impact of the Nam Theun 2 Hydropower Project in Laos; Marcopper mining disaster in Marinduque, Philippines as a result of mine tailings that contaminated the river system; displacement of affected households and inadequate compensation in the Cambodia Railway Rehabilitation Project; and loss of livelihood opportunities including access to fishing and agriculture in the Tata Mundra Coal Power Plant Project in India. These cases mirror hundreds if not thousands of ADB projects if left unmonitored that may have potential adverse and irreparable damage particularly to the vulnerable and marginalized sectors at the local level.


Is ADB’s Accountability Mechanism Enough?

“I was evicted in my own home,” Srey Van recounted. He is a public school teacher forcibly displaced in the Cambodia Railway Rehabilitation Project.

Upon visiting the resettlement site in Battambang a few years back, he narrated that it has been eight years since the project has been implemented yet there are still families who have not received additional compensation. There is still shortage in potable water in some of the relocation sites and communities are still experiencing difficulty of going to the city for lack of public transportation.


“There are still families who have not been paid in full,” he added. Some of the families are still reeling off from indebtedness and the difficulty of transferring land titles to the evicted families continues. Despite the complaint filed, the issues faced by the communities are not yet resolved.


In 2009, the ADB supported the Project through a USD 84 million loan. There were 4,000 affected families displaced to relocation sites with no basic services including adequate housing, health facilities and without access to livelihood.


Contrary to ADB’s policy that displacement of communities should be avoided whenever possible and to even improve the standards of living of the displaced poor and other vulnerable groups, the families affected are left to further impoverishment and with no adequate compensation.


“I fear for my children’s health in the future,” according to Maribeth Garcia, a mother of five who raised reservations in the then construction of Visayas Baseload Development Project in the Philippines.


In 2009, the ADB approved USD 100 million loan for the construction of the 200 MW Visayas Baseload Power Development Project with the use of clean coal technology (CCT). Notwithstanding this rhetoric from the Bank, CCT is still tainted with social acceptability, health and environmental concerns.


As early as 2003, CSOs in Cebu, Philippines have put up resistance to the construction of new coal - fired power plants that would add to the existing coal plants in the province. While ADB promotes these so – called clean coal technology, the complaint filed against ADB argues that it is worse than conventional coal plants as it will employ four times more coal combustion wastes or coal ash.


Despite the findings on the gross negligence on ADB’s own policies, the Bank in effect still supports the operation of the plant. In 2013, the CRP held a consultation with the affected people and disclosed that ADB does not have the power to shut down the power plant nor impose sanction on the project implementer.


Continuing to Challenge ADB’s Immunity


There have been attempts of filing cases on domestic courts and form a narrative of challenging immunity of international financial institutions. Environmental and human rights group EarthRights International (ERI) on behalf of the affected fishing communities sued the International Finance Corporation (IFC) in a federal court in D.C. over the IFC – funded Tata Mundra Coal Power Plant. ERI also filed a federal lawsuit on behalf of Honduran farmers on the IFC investment on Corporación Dinant S.A. de C.V.


In a statement by Rayyan Hassan, Executive Director of NGO Forum on ADB, lashed out that the ADB should be stripped off its immunity. The ADB continues to peddle on the illusion that it is an institution committed in the principles of transparency, accountability and responsible development financing. However time and again it has contributed in the perilous situation Asia is facing in the midst of the rising inequality, illegitimate debts, environmental degradation, displacement and increasing vulnerability of the poor.


The ADB has hidden behind the cloak of immunity and the perceived notions that its accountability mechanism is working. This however needs to be challenged and hold the ADB responsible before national and international laws.

Disclaimer: Due to the sensitivities of the complaints and in order to protect the identities of the project - affected persons, their real names were not used in this article.

[i]Ryngaert, C. The Immunity of International Organizations before Domestic Courts: Recent Trends. Katholieke Universiteit Leuven Faculty of Law. Institute for International Law. December 2009.

[ii] Stephens, C. Balancing Immunity with Accountability. 8 July 2017. Retrieved from https://opinion.inquirer.net/105420/balancing-immunity-accountability

[iii]Glass Half Full Report: The State of Accountability in Development Finance. 2016.

Annabel Perreras is the Policy Coordinator on AIIB of NGO Forum on ADB, you may reach her via her email ann.perreras@forum-adb.org.

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