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p. 5 of 16 BACK | NEXT Executive Summary Current ADB Inspection Function Consultations on the Review of the ADB Inspection Function Proposal for a New ADB Accountability Mechanism: A Two-Step Approach of Consultation and Compliance Review Reasons for a New ADB Accountability Mechanism Introduction to the New ADB Accountability Mechanism Specific Issues Related to the New ADB Accountability Mechanism Policy under the New ADB Accountability Mechanism Consultation Phase Compliance Review Phase Resource Implications Status of Operations Manual Updating in the Context of the Inspection Policy Effective Date of the New ADB Accountability Mechanism Transition Arrangements Review of the ADB Accountability Mechanism Recommendation

ADB Accountability Mechanism : Proposal for a New ADB Accountability Mechanism: A Two-Step Approach of Consultation and Compliance Review

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A. Reasons for a New ADB Accountability Mechanism

29. A majority of external stakeholders has preferred Option D of the second draft working paper or a variation, which involves what is commonly referred to as a "problem-solving" function and an "inspection" function. In the second draft working paper, the "problem-solving" function is referred to as a "consultation process" in order to avoid unrealistic expectations that every problem will be resolved by ADB and to give a more flexible, informal, and multimethod approach to the facilitation of problem-solving efforts between the parties to a problem. Even with the establishment of an independent compliance review panel appointed by the Board upon the recommendation of the President, it is now universally recognized that under the present system-at both ADB and WB-once a request for inspection is authorized, the inspection process will run its own course entirely within the organization. At the end of the long process, the complainants are finally informed of what happened to their requests, but the complaint could remain unresolved on the ground.

30. The choice of Option D or a variation therefore reflects the common recognition that ADB needs to address the complaints of people affected by ADB-assisted projects. It is accepted that, as a development finance institution, ADB is a principal interested party in the success of every project it supports, and, accordingly, cannot walk away from problems on the ground. Nonetheless, it is acknowledged that, because the legal ownership of the project lies with the DMC government concerned, the question of "problem-solving" in general, and during project implementation in particular, is primarily the function of the government. It cannot be denied that the government has all the resources needed to solve the problem, such as technical expertise, institutional backing, local knowledge, financial resources, and so on, at its disposal that could be mobilized at will. The EA/DMC government or the private project sponsor (PPS) is naturally the immediate party that the complainants should first approach to present any complaints about a project.

31. The question faced by ADB as a principal interested party in the success of a project it finances is how it can best facilitate the resolution of problems on the ground as the other party to the loan agreement, recognizing that the complaints are primarily between the project owner, i.e., the EA/DMC government or the PPS, and the project beneficiaries, i.e., the local people affected by the project. Nevertheless, as some issues are embedded in the political decision-making processes of the DMC government, the role of the SPF may be limited depending on the nature of the complaints.

32. The new approach seeks to strike a balance between the need for an objective, detached perspective on a project and the need for sufficient knowledge of and experience with it. Striking the appropriate balance suggests that the consultation phase should be located within the organization directly under Management. Any complaint of affected people will arise in the course of the formulation, processing, or implementation of a project, and all of these stages of the project cycle are directly under Management's responsibility. As long as the SPF reports directly to the President and is detached from, and not directly involved in, any aspect of the formulation, processing, or implementation of a project, he/she will be in a position to take a second look at the problem submitted by complainants in a more objective and detached manner. Needless to say, he/she cannot perform the consultation function without the cooperation of staff in the operations departments (ODs)¹⁴ concerned, who are knowledgeable about the project and equipped in terms of technical competence and experience relating to it.

33. The consultation process is not for the determination of liability or apportionment of blame or fault among the parties concerned; rather, it is designed to have genuine complaints properly addressed by ADB as a principal interested party in the resolution of the complaints of people affected by ADB-assisted projects. It is incumbent upon Management to facilitate the resolution of the problem. Whether the SPF can maintain his/her credibility and effectiveness in the performance of the problem-solving function (and correspondingly, enhance the credibility of Management) hinges upon his/her good faith efforts in trying to facilitate the resolution of the problem on the ground.

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