Asia Times: Thailand project puts ADB in a spot


	March 27, 2002	atimes.com

Southeast Asia

Thailand project puts ADB in a spot
By Emad Mekay

WASHINGTON - A team inspecting a controversial wastewater plant in Thailand has found that project backer the Asian Development Bank (ADB) breached several environmental and social standards.

"The panel has found that there has been non-compliance by the bank with its policies and procedures in processing and implementing the project," the three-member inspection panel said in its final report, obtained by IPS.

In the 40-page report, the inspection panel, set up by the ADB itself as an independent arm of the bank, said that standards violated at the Samut Prakarn Wastewater Treatment Project near the Gulf of Thailand included environmental safeguards, resettlement procedures and good governance mechanisms.

The US$750 million project (overruns now make it worth $948 million) is backed by the Thai government and the Manila-based ADB, a multilateral sister of the Washington-based World Bank. The ADB is providing $230 million, with the Thai government and the Japan Bank for International Cooperation contributing the balance.

Among the shortcomings noted by the panel were that the bank's management:

Violated its policies governing the review of cost overruns by not carrying out a reappraisal of the whole project in preparing financing for supplementary loans.

Failed to comply with policies covering changes made in the project design by not conducting a full reappraisal of technical, economic, social and environmental issues relevant to the project.

Breached the bank's environmental guidelines by not conducting an environmental impact assessment of the project.

Violated the bank's policy on involuntary resettlement by not carrying out a social impact assessment.

Violated bank policy on governance by not allowing opportunities for the affected residents of Klong Dan to participate in designing and implementing the project.

Failed to comply with bank policy on project evaluation and monitoring by not putting in place a system for effectively monitoring the social and environmental impacts of the project.

"the failure to carry out an environmental impact assessment" and "failure to consult local people at the Kong Dan site".

Civil society groups and representatives of some 60,000 indigenous villagers in the project areas of Klong Dan and Song Klong have been demanding changes or a complete halt to the work. They have also requested that funders freeze loan disbursements. They argue that villagers have become victims of the ill planning and corruption allegedly engulfing the expensive scheme to manage industrial, commercial, and residential wastewater that currently flows to the sea through open canals and rivers in the heavily populated area. Many of the villagers are mussel farmers and are dependent on the area's rich marine resources.

The panel, which looked into these complaints and will publicly disclose its findings next week, said that its final report was based on "incomplete information" because it could not talk to some stakeholders or access certain documents. Fearing delays in the project, the Thai government in October refused to allow the inspection team to re-examine the project's environmental, social and economic worth.

The ADB has maintained that the scheme would benefit women and low-income families living close to factories and low-lying flood-prone areas, who are most exposed to polluted waterways. The ADB's project documents say that the loan was approved because the project will "improve the quality of the environment, public health and welfare in Samut Prakarn province", one of five provinces in the Bangkok Metropolitan Region, where about 1.2 million residents and 4,000 factories generate large wastewater flows.

But the inspection report is a major blow to the bank's claims. It makes several "remedial recommendations", including that the bank involve the local community in managing and operating the treatment plant. The recommendations are non-binding.

According to another leaked document, bank management has reacted angrily to the report, denying all violations and vowing to go ahead with the project. It says that the panel commented on issues that have no bearing on whether it complied with standards, and that the three-member team of international economists and experts did not conduct the examination with enough "rigor". The management response also said that the panel's suggestions lacked "familiarity with the project since many of the recommendations are already in place".

"The attitude of the bank if there's a problem has been 'let's cover it up' rather than dealing with and solving it," said Nurina Widagdo, Asia projects manager at the Bank Information Center (BIC) a Washington-based watchdog of international financial institutions.

Other multilateral development banks have set up their own inspection processes in response to outcries from civil society groups, environmentalists and indigenous people who say that the institutions often close their eyes to local social and economic conditions.

In its response, ADB management added that "complementary programs are being implemented to improve environmental monitoring" and to promote cleaner industrial production.

But activists and locals fear that the project will go on with no changes. "In our opinion, the management should not question or denounce the eligibility of the panel or the methods they are using in drafting their recommendations. It is not their business," said Widagdo. "It's like questioning the existence of the police or the court system. They should say 'OK, these are the findings of the panel, what are we going to do about them'?" she said.

Activists say that the case has already served as a public alert to the bank's practices and could signal the ADB to change its policies for future projects.

The Samut Prakarn case is the is the first inspection to be conducted under the board's inspection policy approved in 1995. There now may be other requests for independent inspection panels. Two controversial projects, one in Sri Lanka and one in Pakistan, are said to be in the inspection pipeline as a result of strong pressure from civil society groups.

To contain the impact of such inspections, ADB management is seeking to limit what can be scrutinized in projects in narrow terms.

In Thailand, meanwhile, locals are said to be angry and helpless because the findings of the inspection panel are not binding. "The problem is still going on. Construction is going on and [loan] disbursement is still going on," said Widagdo. "The inspection panel does not have an impact at all on the project itself. There is no mechanism that can stop the project from going on."

(Inter Press Service)