Catalog

	Table of Contents
p. 7 of 13 BACK | NEXT Introduction Rationale The Inspection Function in Other Multilateral Organizations Proposal for an ADB Inspection Function A. Composition of the BIC B. Composition of the Roster of Experts C. Parties Who Can File A Request D. Requests That May Be Entertained E. Processing of A Request for Inspection Recommendations

Establishment of An Inspection Function

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Proposal for an ADB Inspection Function

17. As discussed above, inspection of third-party complaints by a body independent of the Bank's Management would complement existing systems for quality control in the Bank's operations. To be effective, however. this independent mechanism must be tailored to the needs of the institution. The WB Panel and the IDB Mechanism present two possible models. each with certain advantages. The WB Panel has the following attractions:

• it may appear more "independent" than the IDB Mechanism since the WB Panel initially reviews each inspection request, although the decision whether to proceed with an inspection ultimately rests in both cases with the Executive Directors
• the WB Panel relieves the Executive Directors of the task of initially screening inspection requests, although the Executive Directors must eventually consider the Panel's recommendations concerning such requests
• the WB Panel may be a more cost-effective option for processing a large number of inspection requests, since a permanent panel could review several requests (and conduct multiple inspections) simultaneously

• a roster of ten outside experts permits broader representation of nationalities and technical expertise than does a single three-member panel
• a roster from which panels of experts can be drawn as needed should be more cost-effective than a permanent panel if only a limited number of inspection requests are received
• by involving the Executive Directors in the inspection process from the beginning, the IDB Mechanism emphasizes the role of the Executive Directors in ensuring compliance with IDB policies and procedures

18. In the Bank's case, several considerations favor the establishment of an inspection function that more closely resembles the IDB Mechanism:

• the Bank's experience does not suggest that there is a need to establish a permanent outside inspection body
• the establishment of a roster of experts who could be called on to assist the Directors as needed would allow for greater diversity of backgrounds and expertise than a single panel of experts
• participation by the Directors in the entire inspection process, including the initial review of inspection requests, would contribute to the discharge of the Board of Directors' responsibility for directing the general operations of the Bank

19. As a variation on the IDB Mechanism, it is proposed that a new standing committee of the Board of Directors be created, which initially will review inspection requests (in consultation, as needed, with an independent outside expert), select a panel of outside experts from an approved roster to conduct particular inspections authorized by the Board, and supervise such inspections. The creation of such a Board Inspection Committee (BIC) will emphasize the importance placed on the inspection function by the Bank and its Board of Directors. The BIC should also provide for more efficient and effective consideration of inspection requests, since a Board committee will be able to devote more concentrated attention to inspection requests and to the conduct of inspections than the full Board. Such a committee will discharge functions external to the Bank's Management, but will be familiar with Bank policies and procedures, and therefore can also provide useful assistance to any panel of outside experts conducting an inspection.

20. The inspection procedures described below are consistent with the provisions of the Bank's Charter dealing with the respective powers and functions of the Board of Governors, the Board of Directors and the President. Under Article 28.1 of the Charter, "[a]ll the powers of the Bank" are vested in the Board of Governors, but not every act must be performed by the Board of Governors or its delegate (the Board of Directors). Article 31 provides that the Board of Directors is responsible for "the direction of the general operations of the Bank..." [emphasis added]. The responsibility of the Board of Directors under the Charter, therefore, relates to the "general operations" as distinguished from "particular operations" of the Bank, and in respect of the general operations, its responsibility is to "direct" rather than to "administer" or "execute" the same. Under the Charter. the latter functions are allocated to the President. Article 34.5 empowers the President, as "chief of the staff of the Bank", to "conduct, under the direction of the Board of Directors, the current business of the Bank". It is in the context of this differentiation of functions between the Board of Directors and the President that Article 14(iv) provides for the consideration of a loan proposal by the Board of Directors on the basis of a report, based on a staff study, presented to it by the President. The primary responsibility for preparation and processing of loans and other Bank projects, therefore, rests with the President.

21. Under the inspection procedures described below, the President will continue to have primary responsibility for processing and implementing projects, while the Board of Directors, in the discharge of its responsibility for directing the general operations of the Bank, will have an opportunity to assess and ensure compliance with the Bank's policies and procedures. The proposed inspection procedures, therefore, require an affected group to first raise its grievance with Management. Only if the group is not satisfied with Management's response can it make a request to the BIC for inspection of the grievance, in which case Management will have an opportunity to respond to the request filed with the BIC. Based on its consideration of the request and Management's response, the BIC will decide whether or not to recommend an inspection to the Board of Directors. If the Board determines that an inspection is warranted, the Board will then authorize the BIC to convene a panel of outside experts to investigate the grievance.

22. The inspection procedures described below are intended to assist the Board of Directors in ensuring the Bank's compliance with its own operational policies and procedures. Accordingly, the scope of any inspection will not include consideration of policies and procedures of other development finance institutions (except to the extent that the Bank's own policies and procedures expressly refer to those of other institutions). Similarly, an inspection will not include consideration of the laws, policies and regulations of any borrowing member country or executing agency (except to the extent directly relevant to the Bank's compliance with its operational policies and procedures). Because the focus of any inspection will be on the Bank's conduct in connection with a particular project, the conduct of other parties, including the relevant borrowing member country and its agencies, will not be the subject of an inspection, and may be considered only to the extent directly relevant to an assessment of the Bank's compliance with its operational policies and procedures.

23. The procedures described below are intended to ensure that requests for inspection are treated in a fair and transparent manner, and that any inspection authorized by the Board of Directors is complete and impartial. It should be understood, however, that the panels of outside experts convened to inspect particular Bank projects will be advisory, not adjudicative, in nature. Based on a panel's independent review and report and Management's response to such report, the Board of Directors will determine what, if any, changes may need to be made to the project under inspection to ensure compliance with the Bank's operational policies and procedures. The proposal set forth below is not intended to provide judicial-type remedies such as injunctions or money damages.

24. Under the procedures described below, in appropriate circumstances individual Board members as well as communities and other groups will be able to raise concerns about particular projects, initially with the Bank's Management and thereafter with the BIC. However, these inspection procedures are not intended to affect or limit existing rights of Board members individually or collectively to request or initiate reviews of Bank policies and procedures.

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