May 12, 2002

The $750 million waste water management project in Samut Prakarn province in Bangkok has been dogged by allegations of corruption and violation of environmental laws since its launch in 1995.

SHANGHAI – Major donor countries Saturday welcomed a move by the Asian Development Bank to revamp its project inspection system after irregularities were uncovered in an ADB-funded wastewater management project in Thailand. ADB President Tadao Chino in his address to the Board of Governors said that the bank’s first inspection process “yielded many useful lessons.”

“I have already created a steering committee and a working group to review ADB’s Inspection function,” he said, without saying when the review will be completed. The $750 million waste water management project in Samut Prakarn province in Bangkok has been dogged by allegations of corruption and violation of environmental laws since its launch in 1995. ADB provided $230 million in financing for the project which is designed to manage industrial, commercial and residential waste water currently flowing to the sea through open canals and rivers in a heavily populated area. Samut Prakarn villagers, supported by non-government organizations including Greenpeace, accused the ADB of violating its own policies on corruption, environmental assessment and good governance by financing the project. “The Samut Prakarn project has been a learning experience for us all,” Adrian Wood, head of the UK delegation, said in his speech during the ADB’s annual meeting in Shanghai.

“We welcome (ADB’s) commitment to consult widely, drawing on the experiences of others, including other international financial institutions, and involving its severest critics from civil society,” he said.

Committee Findings “Regrettable”

Austrian delegate Karl-Heinz Grasser characterized the findings of the review as “regrettable” and “deplorable”. He said ADB management and staff must give “due consideration of the findings of independent, as well as of the Board, inspection committees in a transparent, unbiased, and cooperative manner.”

Non-government organizations, in a separate statement, complained about the “condescending attitude of senior ADB staff when confronted with documented cases of problems resulting from ADB projects.”

“I hope that one of the lessons is the importance of listening to people who are affected by the project,” US Deputy Treasury Secretary Kenneth Dam told reporters. “And not only that, but acknowledging when mistakes were made, and taking the necessary remedial actions.”