Combating Corruption

ADB is at the forefront of supporting anticorruption activities in Asia and the Pacific. In 1995, ADB was the first international aid agency to adopt a Governance Policy, while its Anticorruption Policy was formalized in 1998.

ADB's anticorruption policy is centered on three objectives:

1. Supporting competitive markets and public administration reforms.

2. Supporting promising anticorruption efforts and anticorruption legislation.

3. Ensuring that ADB-financed projects and ADB staff adhere to the highest ethical standards.

ADB is combating corruption, waste, and inefficiency by promoting good governance and ensuring its projects meet the highest ethical standards. For example, ADB:

• has completed Governance Assessments for Cambodia, Lao PDR, Thailand, and Viet Nam to assess transparency, effective delivery of public services, rule of law and growth of the private sector.

• is helping the People's Republic of China bring transparency and competitiveness to the government system of procuring goods and services.

• is assisting civil society in Thailand to identify, address and prevent misuse of public office for private gain.

• is strengthening national auditing systems in the Central Asian Republics of Kazakhstan, Kyrgyz Republic and Uzbekistan.

• has investigated over 100 allegations of fraud and corruption related to ADB activities and has barred over 40 firms and individuals from doing business with ADB.

ADB has been working to develop new, targeted forms of assistance to curb corruption through capacity building, lending and Technical Assistance programs. The Indonesian Governance Reform Partnership to improve governance and eradicate corruption is one such effort. Since the onset of the economic crisis in 1997, ADB has strengthened its support for Indonesia to facilitate recovery and governance reforms, and anticorruption has been one of the priority areas. In addition, ADB's newly approved Country Operational Strategy for Indonesia also links governance reforms to lending.

ADB also recently assisted a study in Cambodia entitled Enhancing Governance for Sustainable Development that shows how Cambodia is staging a remarkable economic turnaround, largely thanks to government efforts to poverty-reducing economic development. With ADB's assistance, Cambodia has put in place important building blocks towards establishing land and audit laws.

ADB is also helping its developing member countries set up independent anticorruption agencies as well as tighten up oversight of ADB projects. It has established an anticorruption unit to ensure that ADB staff and projects adhere to the highest standards of ethical conduct.

ADB approves around US$6 billion a year worth of loans for development projects and programs. It can cancel loans if it finds that representatives of a borrower or beneficiaries have engaged in corrupt or fraudulent practices. ADB will also reject proposal for a contract award if it uncovers corruption.

"Fighting corruption is an increasing priority across the region, but there is plenty of scope to do more. Corruption wastes resources, damages the economy, destroys the social fabric and invites criminality," says Clay Westcott, a senior public administrator for ADB. From next year, ADB will use governance assessment to rate country performance and these ratings will determine ADB's allocation of concessional loan funds. ADB has completed governance assessments of four countries and is finalizing studies in three others - Bangladesh, Nepal and Pakistan.

In addition, ADB supports institutional reforms, including liberalizing licensing regimes and foreign exchange markets, eliminating administered prices, removing credit subsidies, and backing public service reforms which promote integrity.

Looking Ahead

ADB will intensify its efforts to promote accountability in the Asian region. ADB can take the lead in supporting country efforts to combat corruption, but it is the countries themselves that bear primary responsibility in this all-important exercise. International organizations can only support efforts to enhance the quality of governance.

ADB aims to develop a regional program on governance and anticorruption initiatives, aimed at identifying and implementing effective methodologies, demonstrating the positive impact of good governance, and create momentum for an expanded set of activities.

ADB is also working on establishing a regional partnership network on governance and anticorruption, comprising representatives from governments, civil society, private sector and development agencies. The overall aim is to build a consensus on relevant benchmarks, best practices and codes of conduct, and to review progress on achieving better results in the region.