Asian Development Bank tops rank in Aid Transparency Index rankings

9 July 2018 11:09am

29 June 2018. By Robert Thomason.

The Asian Development Bank has significantly improved the transparency of its funding of international aid projects, according to a newly released index study. It's an improvement the bank attributes to investment in technology that makes disclosure of financing data more timely.

The ATI examines how well development financing agencies plan their funding and how well they keep their financial records, and some of its components look at information that would be useful for investigative research into red flags or actual occurrences of bribery and other forms of corruption.

The Philippines-based ADB, which funds major projects throughout Asia, led the 2018 Aid Transparency Index with 98.6 points out of 100 to top its "very good" category (see here). The ATI is a ranking produced by Publish What You Fund, a UK nongovernmental organization that monitors international development funding.

ADB rose from seventh place in the last index rankings released in 2016, jumping over the UN Development Programme (frequently the top-ranked agency on past index lists), the UK's Department for International Development and the World Bank. In the 2013 rankings, ADB had placed10th with a score of 54 and had been rated "fair."

Agnes Marie Surry, an ADB planning and policy specialist, credited this year's improved showing to more timely data submission.

"Frequency and timeliness of data submission improved to monthly and two-month lag from quarterly and three-month lag. New information was disclosed including capital spending, contracts and tenders," Surry said.

"Risks of delays were mitigated thanks to a greater attention to the transparency agenda in ADB and more resources for the [information technology] department to modernize data management," she said. "Having a champion for the process was important. The fact that one department facilitated close coordination among key offices critical in the production of aid data reports in the [International Aid Transparency Initiative] format was a condition of success."

The initiative, or IATI, produces a set of financial reporting standards against which Publish What You Fund assesses the transparency of a financing agency. IATI and Publish What You Fund are separate organizations.

— Red flags in the data —

The  Aid Transparency Index looks at how well agencies' records are kept, and some component data could be useful in investigating bribery and other forms of corruption.

The ATI scores aid financing agencies on how well they describe what the money is being used for on a project. For instance, a precise description of the amount and types of material used on a school project would score much higher than a vague description such as "educational buildings."

Indictments and other charging documents often point out how such vague descriptions of spending are used in bribery schemes.

Financing agencies are also judged on whether the public information can be matched to other public databases. This allows investigators, be they law enforcement, civil society or concerned citizens, to compare the development aid financing to other sources of information, particularly public tender and contracting information.

When discrepancies in funding levels or services rendered emerge in these types of data comparisons, investigators and the public often raise questions about corruption in the projects.

The Aid Transparency Index also looks at how a financing agency reports the final performance of its funding — that is whether the financed project was completed satisfactorily on time and on budget.

— Bribery in development projects —

Catherine Turner, acting CEO of Publish What You Fund, told MLex at a Washington event panel* where the 2018 ATI was unveiled that more transparency will create a better culture for corporations doing international development work to find and fight corruption.

Companies fulfilling development projects financed by public development agencies often work in countries with high risk of corruption. A look at cases in which companies have been sanctioned for bribery charges and claims shows that the development sector is vulnerable to bribery and that when authorities find and bring cases against bribe payers the legal consequences can be high.

Companies engaged in international development contracts have been sanctioned on bribery charges.  One of the US Foreign Corrupt Practices Act charges that Alstom faced stemmed from bribery related to an Egyptian electric grid project funded by the United States Agency for International Development.

Alstom, a French company with US offices, paid $722 million in sanctions to resolve the FCPA charges, which also involved bribery in other countries (see here).

Louis Berger too has been affected by malfeasance in international aid spending. An examination of false claims that an employee was filing with USAID expanded into investigations of bribery in several countries.

In 2015, Louis Berger entered a three-year deferred prosecution agreement with the US Justice Department to resolve FCPA charges that included on for bribery in a water project in Goa, India. That project was partially funded by Japanese foreign assistance.

The FCPA is not the only legal threat to a company involved in bribery in an international aid-funded project. SNC-Lavalin, a Canadian company, suffered two levels of exposure for charges of corruption on the Padma Bridge project in Bangladesh.

The World Bank, which was the major funder of the project through a $1.2 billion loan to the Bangladesh government, debarred SNC-Lavalin from bidding on World Bank projects for 10 years (see here) and cancelled the loan to Bangladesh. (China stepped into to fund the project, which is now widely reported to be substantially over its original budget and years behind its original schedule.)

The government of Canada then prosecuted SNC-Lavalin executives and another businessman under the country's Corruption of Foreign Officials Act.

The Canadian government attempted to use evidence from wire-taps, but after a judge would not admit it, saying the wire-taps were obtained improperly. The prosecutors declined to present any further evidence, and the judge acquitted the defendants. Though they may have walked free, the defendants were forced to defend themselves for months in the proceedings.

	Eliot Gao