Report on Asian Development Bank Reform Progress 

Consistent with Section 2126 of the Full-Year Continuing Appropriations Act, 2011 (P.L. 112-

10), the Department of the Treasury is providing the following report describing the manner in 

which the Asian Development Bank (AsDB) is making substantial progress in the following 

areas. 

(1) Implementing procurement guidelines that maximize international competitive bidding in 

accordance with sound procurement practices, including transparency, competition, and costeffective results for Borrowers. 

As reported previously, the AsDB’s Procurement Guidelines provide for maximizing the use of 

international competitive bidding in the projects that it funds, including through: (1) strong 

international advertising requirements, (2) endorsement and use of open competition in the 

contracting process; and (3) mandatory use of publicly available standard bidding documents for 

international competitive bidding. In 2011, 68.6 percent of Bank-financed procurement budget 

expenditures were subject to international competitive bidding, compared to 65.1 percent in 2010 

and 69.8 percent in 2009. When procurement budget expenditures subject to national 

competitive bidding are added, over 90 percent of 2009-2011 procurement budget expenditures 

were subject to either international or national competitive bidding. However, whether these 

project procurement budget expenditures are subject to international competitive bidding, 

national competitive bidding or a different method, the procurement must be open to all Bank 

member countries, including the United States. 

Separately, the AsDB is implementing a procurement accreditation program to build staff 

procurement expertise, including by strengthening the procurement supervision capacity of 

Resident Missions. 

(2) Providing greater public disclosure of loan documents, with particular attention to persons 

affected by AsDB projects. 

The AsDB recently concluded a review of its Public Communications Policy, and made a 

number of modifications that became effective in April 2012. These modifications improved 

upon a policy that already followed a presumption in favor of disclosing all information about 

Bank-assisted operations (subject to very limited exceptions). The modification included 

significant improvements that have made core information about the Bank’s operations easier to 

find and interpret, and should be particularly helpful for persons affected by Bank-assisted 

projects. Key elements include: 

 The AsDB will now release the majority of Board documents (e.g., loan proposals for 

sovereign projects, regional cooperation strategies and country partnership strategies) to 

the public more quickly, disclose summaries of the Board discussions on Country 

Partnership Strategies, and narrow the scope of some categories of information that are 

exempt from disclosure. 
 Information on specific projects and programs will now be made available to affected 

persons at each stage of the project or program in a manner, form, and language 

understandable to them and in an accessible place. A project/program focal point will be 

designated for regular contact with affected persons and other stakeholders. These 

changes were made to allow affected persons and other stakeholders to provide 

meaningful inputs into project/program design, preparation, processing and 

implementation. 

(3) Implementing best practices in domestic laws and international conventions against 

corruption for whistleblower and witness disclosures, and protections against retaliation for 

internal and lawful public disclosures by AsDB employees and others affected by AsDB 

operations who report illegality or other misconduct that could threaten the AsDB’s mission, 

including best practices for legal burdens of proof; access to independent adjudicative bodies; 

and results that eliminate the effects of proven retaliation. 

As reported previously, the AsDB reformed its whistleblower policy in December 2009, and it is 

consistent with best practices in anti-corruption and witness protection. Under this policy, any 

individual who reports a suspected integrity violation or misconduct can remain anonymous and 

has numerous protections against retaliation. In instances where retaliation is alleged, the Bank’s 

policy provides recourse for the whistleblower to transfer to another office, obtain security 

protection, or seek other reasonable measures. Furthermore, retaliation against those who in 

good faith bring allegations of unsatisfactory conduct or misconduct to the attention of 

Management, or who avail themselves of the Bank’s grievance procedures, is considered 

misconduct that can lead to disciplinary measures. 

Since the last report, we have sought information on the implementation of this policy from 

AsDB staff and management. The Bank notes that, over the last five years (2007-2011), its 

Office of Anticorruption and Integrity (OAI) received, on average, about 200 registered 

complaints each year. During this period, there were five specific requests for “whistleblower 

protection,” and retaliation was not at issue in any of these matters. 

In one matter, the ensuing investigation revealed that the allegations made by the employee were 

unfounded. In another matter, an employee who was unhappy with his superior requested 

whistleblower protection. However, because the employee’s complaint did not allege that 

adverse action was taken against him in response to his reports of misconduct, this employee did 

not qualify for whistle-blower protection. In two other matters, the employees who made the 

request resigned from the AsDB before the requests could be decided upon. In the fifth matter, 

an employee requested whistleblower protection after being terminated for sending allegedly 

malicious messages to Bank Management and Board members. This matter has been appealed to 

the Appeals Committee (consisting of Bank staff serving under one year appointments), and 

referred to the Administrative Tribunal by the former employee. 

Thus far in 2012, OAI has received two further cases where information concerning suspected 

misconduct or integrity violations is or might be covered under the Whistleblower Protection 

Policy. In neither of these two cases has the involved staff member specifically asked for 

whistleblower protection, but all allegations referred to the OAI by staff are registered as 
whistleblower cases. In these ongoing cases, no concerns about retaliation have as yet been 

raised. 

(4) Ensuring that the Investigations Office, Auditor General Office, and Evaluation Office are 

functionally independent, free from interference when determining the scope of investigations 

and audits, performing work and communicating results, and regularly report to the AsDB’s 

board of directors and, as appropriate and in a manner consistent with such functional 

independence of the Investigations Office and the Auditor General Office, to the AsDB 

President. 

Since the last report, additional steps have been taken to strengthen the Office of the Auditor 

General (OAG) and buttress its independence. For example, as required under the new Terms of 

Reference approved by AsDB Management and endorsed by the Audit Committee of the Board 

(ACB) in the fall of 2011, the Auditor General confirmed OAG’s organizational independence in 

its Annual Report to the ACB. In addition, the external quality assessment, which was done at 

the strong urging of the United States, was completed by the peer review team from the Institute 

of Internal Auditors. The assessment report was generally positive, but made a number of useful 

recommendations that the OAG is addressing through its internal strengthening program. These 

recommendations included such things as improving risk assessment and documentation 

processes, expanding fraud-related training, and expanding the use of computer-assisted audit 

techniques. These actions will be reviewed by the ACB as they are implemented. In addition, 

the Office of Anticorruption and Integrity (the “Investigations Office” in the legislation) 

continues to report quarterly to the ACB. 

(5) Requiring that each candidate for adjustment or budget support loans provide an 

assessment of reforms to budgetary and procurement processes to encourage transparency, 

including budget publication and public scrutiny, prior to loan or grant approval. 

As reported previously, prior to seeking Board approval for budget support (i.e., policy-based) 

loans, the AsDB prepares risk assessments and risk management plans for potential borrowers. 

These assessments and plans analyze financial management systems, with particular emphasis on 

the strength of procurement processes and anti-corruption controls. 

In addition, under the recently-revised Public Communications Policy, the full governance risk 

assessments (which cover the above-mentioned risk assessment and risk management plans) that 

are used to prepare country partnership strategies are made public, subject to limited exceptions. 

In those instances where a limited exception is warranted, a summary of the governance risk 

assessment will be disclosed. Moreover, those elements of a budget support recipient’s 

development expenditure program that are supported by AsDB budget support are disclosed in 

the development policy letter that recipients must submit to the Bank detailing policy reforms to 

be facilitated by the budget support. Further, the indicative costs of these elements are presented 

in the Report and Recommendation of the President for the specific budget support loan. 

Under the revised Public Communications Policy, the AsDB now posts the Report and 

Recommendations of the President relating to each budget support loan on its website at the time 

of its circulation to the Board, subject to concurrence of the borrowing country regarding the 
simultaneous disclosure. If the borrowing country does not consent to such early disclosure, the 

Report and Recommendation of the President will be posted on the AsDB website upon its 

approval by the Board. 

(6) Ensuring that the AsDB's Accountability Mechanism provides transparency and protects 

local residents affected by AsDB projects. 

The AsDB’s accountability mechanism acts as a forum through which individuals affected by 

AsDB-assisted projects can appeal if they have concerns regarding the Bank’s compliance with 

its operational policies and procedures. The mechanism provides a formal channel for local 

communities and affected persons to request an independent review of alleged policy violations 

in the formulation, processing or implementation of Bank-assisted projects. Results of 

compliance reviews are provided to the affected persons and are posted on the Bank’s website. 

Since the last report, a major development is the Board of Directors’ approval of a revised 

Accountability Mechanism policy, which took effect in late-May 2012. This revised policy 

incorporates several positive changes, including: (1) a more streamlined process for receiving 

and reviewing complaints that includes direct access for project-affected persons to the 

compliance review function (rather than being required to first complete a mediation process), 

which will result in improved access and ease-of-use for those persons; (2) measures to increase 

awareness of the Mechanism in developing member countries; and (3) increased Board oversight 

and reduced Management influence over compliance review panels. Between the date this 

revised policy went into effect and end-June 2012, no new Compliance Review Panel (CRP) 

complaints were filed; the CRP investigates alleged noncompliance by the AsDB of its 

operational policies and procedures that has caused, or is likely to cause, direct and material 

harm to project-affected people. During this same period, four new complaints were filed with 

the Office of the Special Project Facilitator (OSPF); the OSPF performs a problem-solving 

function by assisting people who believe they have been adversely affected by an AsDB-assisted 

project, regardless of whether AsDB operational policies and procedures have been violated. 

Three of these four new complaints were deemed ineligible, and the fourth was under eligibility 

review at end-June. 

(7) Making publicly available external and internal performance and financial audits of AsDB 

projects on the AsDB’s website. 

As reported previously, the AsDB makes its performance assessments available through its 

annual Development Effectiveness Review, which uses four broad indicators to measure the 

external and internal performance of the AsDB. These indicators include project design quality, 

measures of poverty reduction, and organizational effectiveness. This information is available 

on the AsDB’s website.1

As reported previously, the AsDB does not develop its own stand-alone financial audits of 

projects, but the Bank does require borrowers to submit annual audited project financial 

statements under project loan covenants. 

 

1 http://www.adb.org/documents/series/development-effectiveness-review 
Under the revised Public Communications Policy that took effect in April 2012, the AsDB will 

begin posting on its website the full annual audited project accounts for sovereign projects. As 

this new disclosure requirement applies to projects whose loans became effective after the 

revised Public Communications Policy went into effect in April 2012, and given the time 

required for project processing and for loans to become effective (generally 90 days after they 

are approved by the Board), the AsDB expects that the earliest that these audited project 

accounts would begin being posted is April 2013. This additional disclosure brings Bank 

practice into line with that at the World Bank and the Inter-American Development Bank (IDB).