Asian Development Bank President Haruhiko Kuroda opened the 41st Annual Meeting of the ADB today under a hail of questions from civil society groups critical of the ADB’s pursuit of private sector development at the expense of poverty-alleviation efforts and community and environmental interests.
“The corporatization of Asia is obviously the main agenda under the ADB’s Long-Term 2020 Strategy,” said Isagani Serrano of the Philippine Rural Reconstruction Movement. “It is clear forty-one years after its founding that there is no future for Asia’s poor under the ADB. Under the ADB, physical, economic and political displacement of communities in Asia will be massive,” Serrano said.
The Madrid meeting is taking place under a pall of doubt, as criticism from civil society stakeholders and the ADB country shareholders converged regarding the legitimacy and direction of the ADB’s role in Asia. Debate within the ADB recently spilled over to the public arena, particularly involving its investments in off-shore private equity funds, and an unprecedented delay in the vote to replenish the Asian Development Fund. Replenishment of the ADF is usually agreed months ahead of the ADB Annual Meeting. The ADF provides grants and low-interest loans to the Asia and Pacific’s poorest countries. The new ADF will cover the period of 2009-2012.
“The ADB can boast all it wants about the replenishment of the ADF but the fact is that the delay is a reflection of dissatisfaction and disagreements amongst the Bank donors,” Stephanie Fried of Environmental Defense Fund said. During the negotiation, the US made a strong connection between the ADB’s Safeguard Policies and replenishment of the ADF.
Last week, the Financial Times reported on material risks associated with over US$600 million in ADB investments close to 40 offshore private equity funds, many of which are domiciled in the Cayman Islands.
“We are deeply concerned at the near-total lack of transparency regarding these funds and their unclear relevance to poverty-alleviation efforts,” said Titi Soentoro of the Indonesian group, NADI.
“The ADB has environmental and social safeguards which must be applied to private equity operations but we see no evidence that this is happening,” said Red Constantino of the Bank watchdog NGO Forum on the ADB. “We have requested that President Kuroda release the names of all companies and projects financed by these funds as well as all of their social and environmental assessments.”
“If the ADB actually applied meaningful environmental and social standards to private equity funds, this would be a true breakthrough in the realm of alternative investments,” said Fried.
Kuroda was left with a number of questions to be answered regarding corruption in ADB projects in Afghanistan, the use of child labor in an ADB projects in Central Asia and development projects gone awry in ADB developing member countries such as West Seti in Nepal.