By Shalmali Guttal
A longer version of this paper was presented at the Conference on Access to Information
Hua Hin, Thailand, March 4-6, 2002
THE discussion of information disclosure should be located in the larger context of rights and governance. The public’s right to know is now considered indisputable by most proponents of democracy. It is articulated in the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights and most of us would agree that meaningful public participation in democratic processes requires informed discussion and debate.
By governance, I refer to a comprehensive and transparent system of rules, processes, and procedures that ensure the protection of peoples’ rights to knowledge and decision-making, and accountability and responsibility for decisions made and actions taken. Policy decisions have economic, social and political consequences, and it is crucial to examine whether those who bear the greatest costs of decisions have been involved in making these decisions.
In this context, both the World Bank and the Asian Development Bank (ADB) fail in their practices on information disclosure and access to information. Both institutions are completely unaccountable to the public, highly non-transparent in their policy formulation and decision-making, and irresponsible in their stated commitment to promote public participation, and equitable and fair access to information.
THE POLITICS OF INFORMATION DISCLOSURE
Access to information is primarily a political issue and embedded in power relations and the exercise of power. It involves not simply the ability to access existing information but also the generation of information that would influence the public’s ability to participate in making decisions that shape the future directions of their societies and countries. The capacity to generate information and to enshrine this information in social and institutional memory as “knowledge” is indeed a powerful one. Both the World Bank and the ADB have these capacities and have used it to their full advantage in the name of information disclosure.
The information disclosure policies of both institutions are comparable in some fundamental shortcomings.
1. IRRELEVANCE TO DECISION-MAKING
The most obvious flaw in the information disclosure policies of the World Bank and the ADB is that they have little to do with influencing key policy decisions made by the institutions. It does not matter how much paper or how many megabytes they make available; the most important decisions in both institutions are made according to the economic and political interests of their more powerful members and not according to broad based public interest.
Equally important here is the issue of how decisions within these institutions are made. Again, public debates or public interest priorities have little meaning here. It is widely acknowledged that a significant reason why developing countries have been disadvantaged by multilateral institutions is that they have been marginalised from the formal decision-making systems of these institutions.
In the World Bank, formal decision-making power is based on the size of capital subscriptions. Here, the United States (US), with a 17.6 percent voting power has the formal clout to veto decisions that it does not favour. The only contender on the horizon to the US’s power in the World Bank is Japan, whose capital share and voting power the US has been able to limit to eight percent. Formal power is further supplemented by informal mechanisms. The World Bank President is always a US citizen and the Bank’s location in Washington DC has helped to ensure that (US approved) US citizens account for a quarter of senior management and higher-level professional staff. According to a US Congressional Research Service analysis, the advantage of the World Bank and multilateral development banks to the US (and other rich lenders) is that they are able to demand performance standards of their borrowers that the US and other lenders may be reluctant to impose on a bilateral basis.
What Japan has lost in the World Bank, it has claimed in the ADB. According a number of ADB insiders, the ADB operates by the rules of “Japanese culture.” Decision- making is “consensus-driven” (in the Japanese way) and takes place through informal discussions in hallways among select members of senior management and the Board. The ADB too has specific key senior positions reserved for the nationals of its more powerful capital subscribers. Sole and final authority on all decisions rests with the President of the ADB who is also the Chairman of the ADB’s Board of Directors-and most important, is Japanese. Although members of the Board are supposed-at least in theory–to consult with the national capitals they represent for major policy decisions, senior management have no such cumbersome requirements. Their primary concern is to ensure that no policy or issue goes to the Board unless they are confident that it will receive majority approval from the Board. And if this approval is not possible through informal “consensus-building,” senior management is likely to delay the process by bringing additional steps into the formal decision-making process.
In sum, decision-making in the ADB and the World Bank is controlled by exclusive, closed circles of top leadership and senior management and guided by multiple levels of self-interest. The present information disclosure policies of the two institutions are not going to change this situation.
2. SELECTIVE DISCLOSURE
Another fundamental flaw in the information disclosure policies of the two institutions is that they only disclose what is convenient to them and advance their institutional interests. What is more important than the information they disclose is what they do not disclose.
The World Bank’s recently revised information disclosure policy continues to focus on providing people with information about decisions already taken, rather than making available the information needed for the public to participate in decision making. In the new policy, key documents such as tranche release memoranda, the Bank President’s reports, drafts of Country Assistance Strategies (CAS) for most countries, and the draft and final documents for most structural adjustment lending will not be made available to the public. The Bank’s Board was apparently divided on the question of transparency in structural adjustment lending and these divisions are reflected in the complicated agreement that was eventually reached. Final versions of some documents for low-income borrowers will be made available, while documents pertaining to middle-income borrowers will be left to the “discretion” of borrowing governments to disclose.
According to the Bank Information Centre (BIC), a US based policy research organisation that has monitored the World Bank’s information disclosure process exhaustively, under the new policy the Bank has essentially abdicated responsibility for its own transparency by pushing such disclosure decisions onto borrowing governments. It has thus clearly chosen to deny the public its right to access key documents regarding structural adjustment lending.
Also under the new policy, the World Bank’s Board of Directors will continue to govern in total secrecy. Again according to BIC, the Board has yet to acknowledge that the public has a right to know how they are being represented within the Bank. Almost no progress has been made regarding disclosing information about project lending. While the World Bank claims that it is interested in including project-affected communities in decision-making, it refuses to make important documents about project design and implementation, and financing agreements available to the public until after decisions have already been made.
The ADB on its part proudly touts its website, and the number of reports it has published and made available on the website as evidence of its commitment to information disclosure. However, according to a source close to the ADB, what is not on paper is the real issue. What is available on the website or in published form is not pertinent to the ADB’s decision-making processes. Too many decisions are made through closed, informal discussions that should be accessible to the public. Much of this information is also not equally shared within the ADB itself and delegates from poorer and thus less powerful countries are as likely to be kept out of the loop as the public.
ADB secrecy is amply demonstrated in case of the Samut Prakarn Wastewater Management Project in Thailand. Despite repeated requests by project-affected communities and members of the Thai Senate, the ADB did not disclose the project profile, procurement documents or even initial environmental and social impact assessments of the project. Project-affected communities and supporting non-governmental organisations presented substantial data to the Bank about the potential negative impacts of the project. They also pointed out how the project violated Thai laws, and many of the ADB’s own operational policies (such as anticorruption, governance, confidentiality and disclosure of information, and environmental assessment requirements). However, the ADB continued to maintain that it saw no evidence of wrongdoing or negative impacts, but at the same time, it did not disclose the information on which its assessment was based.
By October, 2001, the Samut Prakarn project went into the ADB’s inspection process, which itself has been wracked with non-transparency, conflict of interest and disagreements between the Bank’s senior management, inspection committee, inspection team and the Thai Government. An inspection report has been submitted by the inspection team to the Bank without the team even having visited the project site or talked at length with project-affected communities. Even so, sources within the Bank have indicated that the inspection report finds violations of key Bank policies and procedures. The project should have been re-appraised at a much earlier stage, before the second loan for the project was made. But of course, the report is secret, and it is not known when and in what shape it will find its way to the public domain.
In the meantime, project construction continues and affected communities cannot expect any compensation from the ADB for lost livelihoods and a degraded environment. The position and response of the ADB in the Samut Prakarn Wastewater Management project is not simply a violation of its own information disclosure policy; it is a fundamental betrayal of the public’s right to know.
3. DUBIOUS QUALITY
Given the high degree of secrecy that governs the information disclosure policies of the World Bank and the ADB, it is difficult to trust the quality and integrity of the information that it does disclose.
The recent draft water resources sector strategy prepared by World Bank staff was found wanting by members of the World Bank’s Board. Quite a few World Bank financed infrastructure projects have been marked with scandals of corruption and bribery, which occurred even as senior Bank staff reported that all was well. one of the Bank’s own internal reports in 1999 indicated that the Bank has tolerated corruption, legitimised false statistics and was complacent about the state of human rights in many of its borrowing countries. The Bank’s close involvement with the Suharto regime in Indonesia–to which it funneled US $30 billion in 30 years–has been well documented. Bank management was found violating its own rules on environment and resettlement in the China Western Poverty Project. The Meltzer Commission report released in February 2000 found that the failure of Bank projects is 65-70 percent in the poorest countries and 55-60 percent in all countries. In sum, the Commission concluded that the World Bank was irrelevant to the achievement of its stated mission of global poverty alleviation. Not surprisingly, none of this information was made available to the public by the Bank itself.
The information provided by the ADB about its own policies is out of date with developments within the institution. For example, long pending reviews of its Information Disclosure Policy and the Inspection Policy have yet to be conducted. Preliminary problems with both policies thus far have been kept secret, as have debates between senior management and the Board about the quality of ADB programmes and projects. The ADB’s lawyers have advised Board members to not make public statements about the possibility or state of project inspection processes (as in the case of Thailand and Sri Lanka). The Operational Manual for ADB Staff has not been updated for at least five years. Staff policies that should have been reviewed years ago are still unchanged, while other policies approved five years ago have still not been included in the Manual-at least not in the version that is publicly available. There is thus a great deal of confusion among Bank staff as to which policies they should follow-those on paper (but outdated), or those agreed on by the Board (but not yet included in the operations manual).
Given that the information disclosure practices of the World Bank and the ADB do not provide complete, accurate, and reliable information to the public, nor do they facilitate public participation in the Banks’ policy and programme development, what purpose do they serve? I would conjecture that the primary aim of these practices is to keep the public occupied with sometimes interesting and largely irrelevant information while the Banks get on with business as usual. This is not information disclosure in any meaningful sense, but rather, this is deception.
STRUGGLING WITH GOVERNANCE
There is ample evidence to show that neither the World Bank, nor the ADB are in a position to preach to the world about transparency, accountability, good governance and participation.
In order to bolster its image, the World Bank attempted to engage the public in at least two global initiatives, the Structural Adjustment Programme Review Initiative (SAPRI) and the World Commission on Dams (WCD). In both these initiatives, the public-which included many long-time critics of the Bank-entered into what they hoped would be a good faith process of research and dialogue with a variety of opposing interest groups. And despite challenges and compromises, they stayed with the processes. The World Bank, on the other hand, started to back-peddle as soon as it became clear that the two reviews were generating information that contradicted its self-created scorecard of successes in structural adjustment programmes and support for large dams. In the case of SAPRI, the Bank produced its own report, which ignored the findings of the research in which its own staff was involved. And by so doing, it effectively closed off any substantive or meaningful discussion with the public about structural adjustment. In the case of the WCD, the Bank more or less rejected the Commission’s findings and is taking refuge behind opposition to the report by some country governments as an excuse to not implement the WCD recommendations.
In the meantime, the Bank continues to impose structural adjustment through a new programme-the Poverty Reduction Strategy Papers (PRSP), which the Bank claims are nationally owned and participatory. However, investigations into the PRSP process by civil society groups reveal that PRSPs are plagued with the same flaws of policy and conditionality imposition, inaccessibility of information and absence of any serious learning from past Bank imposed reform programmes. In the same vein, the Bank has entered yet another global review process, this time of mining and extractive industry. But here, the Bank does show some institutional learning. The process is far more closed and exclusive than the WCD, and the Bank is attempting to exercise greater control than before over the review structure and process. Sources close to the World Bank have indicated that the Bank may be on a path towards “downward harmonisation” of project and programme standards in an attempt to ensure that it does not lose its infrastructure and borrowing clientele.
The ADB has its own problems of internal governance and non-transparency. The Samut Prakarn Wastewater Management Project inspection process has opened a can of worms within the ADB, highlighting problems of poor leadership, staff confusion, and lack of responsibility and accountability. The inspection process revealed the inconsistencies between the ADB’s stated policies, what is recorded on paper and actual implementation. A particularly alarming internal by-product of the inspection process appears to be a rush within the ADB to update the staff operations manual towards protection from future inspection processes. According to sources close to the ADB, the Bank may try to arbitrarily decide which of their policies and which parts of their policies are subject to inspection, and which are not. In the future, project managers are likely to be in a bind as to whether they should focus their efforts on faithfully meeting project objectives, or on implementing the “inspectable” policies and thereby protecting themselves from the risks of future inspection processes.
Like the World Bank, the ADB may also be moving towards a general lowering of programme and project standards by arbitrarily deciding which of its policies are “inspectable” and which are simply “good practice.” And it is more than likely that these downward spirals will be accompanied by a lot more irrelevant information disclosed through paper and megabytes, even as decision-making and democratic oversight in the two institutions become increasingly remote to the public.
Secrecy in public information disclosure policy is a violation of the social and political compacts between a people and their governments. Governments are-at least in theory-expected to be accountable to their peoples for the decisions they make. Multilateral institutions-which are public institutions–argue that they are directly responsible to the governments that constitute their clientele, and not to the public. However, the policies and practices of these institutions have severe and long-term consequences that are not borne by governments alone, but by the populations in the client countries. And the less directly accountable a public institution is to the public, the more open and transparent it needs to be in order to uphold its stated commitments to democracy, good governance and social responsibility.
Experience to date shows that the World Bank and the ADB have failed in this regard. They are in no position to preach the values of openness, transparency and accountability to anyone until they fundamentally restructure internal and external governance of their own houses.
* Shalmali Guttal is coordinator of Focus on the Global South’s micro-macro linkages programme.
Asian Development Bank: http://www.adb.org
Abugre, Charles: Still Sapping the Poor: A Critique of IMF Poverty Reduction Strategies. ISODEC, June 2000.
Bank Information Center: The ongoing Struggle for World Bank Transparency-The Outcome of the Information Disclosure Policy Review. November 2001.
Bank Information Center: The Asian Development Bank’s Inspection Function. February 2002.
Bank Information Center: Testing ADB Accountability: The Case of the Samut Prakarn Wastewater Management Project in Thailand. February 2002.
Bello, Walden: Prospects for Good Governance: The View from the South. Focus on the Global South, October 2001.
The Bretton Woods Project: http://www.brettonwoodsproject.org
The Halifax Initiative: Halifax Initiative Submission to Consultation on Draft Information Disclosure Policy.
The World Bank:www.worldbank.org