Report on Asian Development Bank Reform Progress 

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

1 0), 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 noted in the previous report, 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 2012, 72 percent of AsDB-financed procurement budget expenditures were subject to 

international competitive bidding. Over the 2009-2012 period, 91 percent of all procurement 

was carried out either by international competitive bidding or national competitive bidding. 

Separately, the AsDB rolled-out a procurement accreditation program in 2012 to build staff 

procurement expertise, including by strengthening the procurement supervision capacity of 

Resident Missions. The program, expected to take six months to a year to complete, is rigorous, 

based on international standards, and includes a third-party validation process at the end. As of 

mid-August 2013, approximately 323 AsDB staffhad completed the e-leaming modules 

covering basic procurement and consulting policies and procedures. About 300 staff attended 

the follow-on workshops, and more than 120 staff members have passed the final examination. 

Fewer have been fully accredited given the time lag involved with the third-party validation. 

The program is relatively new, but it holds significant promise for the AsDB as it moves to 

improve the procurement capacity of its staff. In addition to further improving the procurement 

process, this procurement accreditation program should help attract co-financing to AsDB 

projects by providing assurance to co-financers of the AsDB's ability to implement complex 

procurements involving outside funding. Co-financing is a key objective for the AsDB as it 

deals with issues relating to constrained capital in this low interest rate environment. 

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

affected by AsDB projects. 

As noted in the previous report, the AsDB made a number of modifications to its Public 

Communications Policy, which became effective in April2012. These modifications improved 

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

AsDB-assisted operations (subject to very limited exceptions). Two specific improvements to 

the Policy include: 1) disclosing the majority of Board documents to the public at the time that 
they are circulated to the Board for consideration17

; and 2) providing assistance to member 

country governments and private sector clients in developing project or program 

communications strategies, since these are an integral part of consultation and participation by 

affected people and other interested stakeholders. The AsDB is increasing the capacity ofits staff 

to address project communication issues, both through staff capacity building and the 

development of a staff guide on project communications. The AsDB has also committed to 

translating the project data sheet for preparatory technical assistance, loans, and grants into 

relevant languages to increase understanding and awareness of the project by affected people. 

(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 described in the previous report, the AsDB reformed its whistleblower policy in December 

2009, making it consistent with MDB best practices in anti-corruption and witness protection. 

The AsDB's Office of Anticorruption and Integrity (OAI) received 240 new complaints in 2012. 

Of these, two complainants requested protection under the AsDB's Whistleblower and Witness 

Protection provisions. 

In the first case, the whistleblower alleged impropriety and misconduct by other AsDB staff. 

Direct investigation was not possible without jeopardizing the confidentiality of the 

whistleblower's identity. OAI made alternative arrangements with the assistance of another 

department in the AsDB to conduct the investigation, allowing the case to be resolved without 

harm to the whistleblower. Ultimately, however, the allegations of impropriety were not 

substantiated. 

In the second case, a whistleblower complained about procurement fraud by a non-governmental 

organization (NGO) in Central Asia in an AsDB-financed project. While the whistleblower 

requested anonymity, slhe also contacted the NGO's home government about alleged 

irregularities. These national authorities, in tum, disclosed the allegations, including the identity 

of the whistleblower, to the NGO, pursuant to their own internal procedures and laws governing 

access to public records. The whistleblower expressed concerns about his/her safety and security 

resulting from this disclosure. At the request of the whistleblower, the AsDB closed the 

investigation to protect him/her. The AsDB is considering whether to conduct a forensic audit of 

the project, but will do so only if the AsDB determines that the audit can be undertaken without 

risk to the whistleblower. The AsDB has indicated that it will not extend or further contract with 

this NGO. 

17 All documents disclosed simultaneously are displayed on a dedicated web page at: 

http://www.adb.org/site/disclosure/pcp-implementation/simultaneous-disclosure 
(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. 

As described in the last report, AsDB Management and the Board have taken steps to strengthen 

the independence of the Office of the Auditor General (OAG) based on recommendations made 

by the peer review team from the Institute of Internal Auditors. These recommendations include: 

improving risk assessment and documentation processes, expanding fraud-related training, and 

expanding the use of computer-assisted audit techniques. Further, The Office of Anticorruption 

and Integrity continues to report quarterly to the Audit Committee of the AsDB Board. In 

addition, there have been staffing changes in several key accountability roles. 

(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 described in the previous report, the AsDB prepares a risk assessment and risk management 

plan for each potential borrower prior to seeking Board approval for budget support (i.e., policybased) loans. 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 AsDB's revised Public Communications Policy (PCP), the summary risk 

assessment is disclosed in the country partnership strategy. The full governance risk assessment 

(which covers the above-mentioned risk assessment and risk management plans) is made public 

subject to limited exceptions in the PCP. In addition, when considering a budget support 

operation, the borrowing country must detail its proposed reforms and its development 

expenditure program in a letter to the AsDB. The AsDB includes this letter and indicative costs 

of the expenditure program and reforms in the report delivered to the Board for consideration. 

Under the revised PCP, the AsDB now posts the Report and Recommendations of the President 

for each budget support loan on its website at the time of its circulation to the Board, subject to 

concurrence of the borrowing country. 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. 

As described in the previous report, the AsDB's revised Accountability Mechanism policy took 

effect in May 2012. 
The AsDB's Office of the Special Project Facilitator (OSPF) performs a problem-solving 

function by assisting people who believe that they have been adversely affected by an AsDBassisted project, regardless of whether AsDB operational policies and procedures have been 

violated. OSPF currently has one active case that it is seeking to resolve. 

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

projects on the AsDB's website. 

As described in the previous report, the AsDB makes its performance assessments available 

through its annual Development Effectiveness Review, which is available on the AsDB's 

website. 18 

The AsDB also posts annual audited project financial statements for sovereign projects on its 

website, specifically the audit opinion, the financial statements, and the notes to the financial 

statements. The AsDB expects that these audited project financial statements will begin to be 

disclosed in 2014. This additional disclosure is consistent with the practice at other MOBs. 

18 The Development Effectiveness Review can be accessed at: 

http://www.adb.org/documents/series/development-effectiveness-review