Members of the Board
Asian Development Bank

RE: Board Decision on 2 April 2003 regarding Inspection Request on the Chashma Right Bank Irrigation Project-Stage III (CRBIP-III)

We are writing to you regarding the Board decision on the Chashma Inspection Request dated 2 April 2003. We are deeply concerned that this decision to delay the Inspection for 5 to 9 months would effectively preempt the responsibility of the Asian Development Bank (ADB) in the following ways:
i) The Grievance Redress and Settlement Committee (GRSC) is not designed to fulfill the accountability of the ADB. In addition, it appears that the GRSC is failing even in its own mandate; and
ii) The delay will minimize ADB's leverage to take any action based on the findings of the Panel since CRBIP-III loan will close before the inspection is completed.

In order to ensure that the ADB is accountable for the suffering it has caused on affectees due to its own lack of policy compliance, therefore, we ask you to take leadership as a member of the Board to withhold the CRBIP-III loan until the recommendations of the Board Inspection Committee (BIC) based on the Panel's findings are thoroughly implemented, and to finance all costs for the implementation of the recommendations.

The Board decision delayed the investigation in order to prioritize the operation of the GRSC. However, we would like to draw your attention again to the fact that the GRSC, an institution of the Government of Pakistan (GoP) and thus not required to follow the policies of the ADB, is inherently irrelevant to the question of policy compliance. Therefore, we strongly believe that the accountability of the ADB for damages caused by Management's lack of due diligence should be upheld in the Inspection process regardless of the GRSC.

Besides the need for ADB's accountability, the development of the GRSC in the past three months suggests that it will not be able to accomplish even its own mission. Even putting aside its unjustifiable structural flaws, the TOR of the GRSC has not been complied with. In addition to the two-and-half months' delay in its schedule, for example, the representatives of the affectees have been selected by the sole discretion of the local officials without any prior consultations with the district counsels as required in the TOR (para. 7, TOR for the GRSC). Furthermore, the GRSC flagrantly decided at its second meeting on 22 May 2003 that ex post facto consents by the respective district counsels would serve its purpose. As a result, all of the GRSC members are male and powerful, and majority of them are beneficiaries of the project, including the two landlords who are known for their strong alliances with the GoP and chosen in violation with the TOR as the affectee representatives. It is painfully clear that the GRSC will not, as a natural course of events, provide a resolution to the disputes that is satisfactory for the affected communities.

It is critical to note that Management supports the above decision of the GRSC as "legitimate." Furthermore, in response to our concerns regarding the GRSC, Management wrongly stated that the Requesters had recently agreed to cooperate with the GRSC (letter dated 23 June 2003 from Mr. Frederick Roche, Director of Agriculture, Environment and Natural Resources Division, South Asia Department to JACSES). To the contrary, according to the Requesters, the Requesters have met with the GRSC to inform them that they (the Requesters) are formally not part of the GRSC but would like to remain up-dated about its activities. These incidents further illustrate the Management's inability to appropriately supervise the GRSC.

Furthermore, the situation as it stands will not allow the ADB to do anything about the findings on policy violations and subsequent damages. The loan is currently scheduled to close on 31 December 2003, which means that even if the investigation begins as early as August, recommendations based on the Panel's findings will be made to a closed project. Moreover, the remaining loan amount is already small. We are deeply concerned that under such circumstances, the fulfillment of the ADB's accountability may be compromised for the technical reasons. We must remember that the implementation of the Board decision based on the Panel's findings in Samut Prakarn case was far from satisfactory since most of its loan was already disbursed.

We believe that the ADB has obligations to ensure its leverage in solving the project-induced problems, especially because the inadequacy and illegitimacy of the GRSC was already clear at the time of Board consideration, and the ADB failed to address the concerns of the Requesters about the GRSC. The failure of the GRSC was expected, as the problems with the GRSC were clearly described by the Requesters in the Second Supplement to the Chashma Inspection Claim dated 25 February 2003. Moreover, it was also recognized within the ADB when a member of the Roster of Experts, requested by the BIC to evaluate the Management response to the proposed GRSC, found that the GRSC is illegitimate and ineffective, as it was established in a manner that ignored the affected people and gave control to the borrowing agencies and local elites. She states:

Management has failed to secure the participation and agreement of the affected people…Despite the clear objections to the GRSC process outlined in the request of 19 November 2002, Management has pressed ahead with finalization of the MOU and publication of the TOR which have been negotiated with only one party to the process… It is my considered view that the GRSC, as presently constituted, will not address those concerns [of the affected people]. Fundamental to the legitimacy of any process for dispute resolution is that all stakeholders must be involved in negotiations to establish the process and agree on the structure and mechanisms [Emphasis added] (para. 21-22, Advise from the Designated Roster Member).

It should be noted that, as described in the Report on Facts and Concerns regarding CRBIP-III and the GRSC sent to you on 8 May 2003, all of the affectees I met at 7 villages have expressed strong skepticism toward the GRSC and its composition, and demanded greater and direct representation of affectees (p. 8). Furthermore, the Requesters clearly stated in the Second Supplement why they have disengaged in the establishment process of the GRSC, and that their participation in the GRSC will depend on acceptance of their demand to redesign the GRSC into a fair institution. However, this demand was not even mentioned by the BIC, and their demand was ignored. That is why the requesters are not participating in the GRSC to this day.

In this regard, we are deeply concerned that, as in the inspection case of Samut Prakarn, the Inspection Function will be once again be unable to ensure ADB's accountability. Repeating the same mistake would lead to erosion of confidence among the stakeholders in the operations of the ADB, as well as its commitment to the new Accountability Mechanism.

Therefore, we demand the following:
i) Start the Inspection in August;
ii) Finance all cost for the implementation of the BIC's recommendations based on the Panel's findings; and
iii) Suspend the disbursement and extend the CRBIP-III loan closing date to ensure the leverage of the ADB until the BIC's recommendations are appropriately and sufficiently implemented.

We hereby ask members of the Board to take leadership in pursuit of justice and ADB's accountability. Those harmed as a result of Management's lack of due diligence should not be made to suffer anymore. Your timely intervention in this matter will allow Stakeholders to have more confidence in the operations of the ADB.

Thank you very much for your consideration.

Sincerely yours,

TANABE Yuki and SUGITA Rena
Program Staff, Sustainable Development and Aid Program
Japan Center for a Sustainable Environment and Society (JACSES)