AIIB Sham Policies on Information Disclosure and Grievance Mechanism

March 14, 2018
PRESS RELEASE: AIIB Sham Policies on Information Disclosure and Grievance Mechanism

The China-led Asian Infrastructure Investment Bank AIIB is currently reviewing its Policy on Public Information PPI, and its Grievance Mechanism policy coined Project Affected Peoples Mechanism, the policies were released January and February 2018 respectively, with a very limited 8 week public commenting window ending on March 16th and March 26th respectively.
On Feb 5th, NGO Forum on ADB coordinated a South-East Asian consultation with AIIB’s Communication and Development Department and the CEIU (Compliance Effectivity and Integrity Unit) on the proposed PPI and PPM in Richmonde Hotel, Ortigas, in the Philippines. The face-to-face consultation included groups from Thailand, Cambodia, Philippines, Indonesia and with other relevant groups. This was followed by a South Asian consultation in Bengal Inn, Dhaka, Bangladesh on Feb 26 that was participated in by groups from India, Bangladesh, Sri Lanka and other groups.

AIIB Speaks in English Only
The formal online consultation organized by AIIB is only in English. This is not accessible to many local communities in the region which will be affected by AIIB’s investments. Please note that NGO Forum on ADB took up the Bank’s responsibility in coordinating the face-to-face consultations in Manila and Dhaka respectively.
For a 100 Billion USD bank, the consultation costs should have been taken up by AIIB itself with its access to both resources and capacity and considering the need for a robust review of both the PPI and PPM policies.

On the Policy on Public Information, we have identified as most worrying the following elements:
• In our experience with other Multilateral Development Banks such as the World Bank and the Asian Development Bank, all Operational Policies, Directives, Operational Charters, and Guidance Notes are subject to compliance review. But in the case of the current draft PPI, it remains outside the purview of compliance. We urge the AIIB Board to ensure that the PPI, its directives and guidelines are all subject to compliance review.

• The lack of timely disclosure of project related information (especially on environmental and social dimensions) leave local communities powerless in situations where AIIB operations fail to meet PPI requirements and that could lead to direct harm on the ground. The PPI must have detailed language on timely disclosure of documents from pre-project approval phase to the closing of the project.

• The lack of a presumption of limited exception and the lack of an independent appeals mechanism.

Consequently, the fact that PPI remains non-compliant to review would also leave AIIB in being opened to risks, where there are no measures in this policy to ensure check and balance in upholding the PPI or its implementation. Thus, problems on information disclosure may recur time and again as AIIB operations continue to roll out without any repercussions on non-compliance by AIIB management and their respective clients.

At the same time, a closer look at the compliance review function of the proposed PPM reveals that the scope of PPM is limited only to the Environmental Social Policy ESP within the broader Environmental Social Framework (ESF). Thus, in case of AIIB Operations causing harm; the current PPM will only look at it from a project operations social and environmental impacts’ point of view. This limits the Bank from identifying non-compliance in other AIIB operations, such as non-compliance in management decision-making, non-compliance of following directives, and non-compliance to fulfilling other AIIB policy requirements (such as the PPI, Energy Sector Strategy (ESS), ESF etc., inclusive of directives and guidelines). While other MDBs ensure that the compliance review functions such as CAO of IFC, CRP at ADB hold the respective banks in compliance on all policies and directives, AIIB’s current PPM clearly does NOT.

• We strongly urge the AIIB Board of Directors to take note of this gross limitation in PPM’s scope; as it will leave most of the AIIB operations non-compliant to its own policies and directives without any compliance mechanism to hold itself accountable. At present, the limitation of PPM scope grossly undermines AIIB’s clean, lean and green core principles.

• More detailed comments will be made and sent on the PPM but in the meantime, we urge the AIIB to consider the issue of third party client compliance, which in the proposed PPM, is placed as an exception. At this point Financial Intermediaries and Private Sector third party clients are exempt from non-compliance investigations of the AIIB PPM.

• When it comes to meeting social and environmental due diligence, both PPI and PPM point towards the AIIB Environmental Social Framework ESF and Environmental Social Policy ESP when it comes to meeting social and environmental due diligence. The ESF fails to provide clear timelines for information disclosure on ESF related documentation and thus PPI fails on its promise to releasing project related information. The ESF also lacks clarity in terms of issues of non-compliance and fails to provide clear remedy or mitigation measures to address harm, thus proving that the PPM cannot address non-compliance to the ESF.

• NGO Forum on ADB cites that the current AIIB ESF was crafted by external consultants and NOT AIIB Full time Safeguards specialists. The ESF was approved as early as 2016 even before any of the AIIBs other policies have been approved. It is already 2018 and we can see its limitations in the context of AIIBs other policies.

In this case, we urge the AIIB to evaluate the current ESF and call for its full-scale immediate review in order to address the scope and complexity of AIIB Operations on the ground in line with the Bank’s other policies, especially the PPI and PPM, Directives, and Guidelines.

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