ADB Accountability Mechanism Compliance Review Panel Final Report to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project in Sri Lanka (ADB Loan No. 1711-SRI[SF]) 22 June 2005 Contents Page About the Compliance Review Panel.......................................................................................iii Acknowledgements ...................................................................................................................iv Abbreviations, Glossary and Currency ....................................................................................v Map.............................................................................................................................................vii Executive Summary.................................................................................................................viii I. Introduction..........................................................................................................................1 II. Description of the Project ...................................................................................................3 A. Scope ....................................................................................................................3 B. Agencies and Financing ........................................................................................3 C. Status of Project ....................................................................................................4 III. Request for Compliance Review ....................................................................................4 A. Requesters ............................................................................................................4 B. Request .................................................................................................................5 C. Eligibility of Request..............................................................................................6 IV. Conduct of Compliance Review .....................................................................................7 A. Terms of Reference...............................................................................................7 B. Methodology..........................................................................................................7 V. Project History..................................................................................................................8 A. Project Milestones and Chronology.......................................................................8 B. Activities before ADB's Involvement......................................................................9 C. Project Design and Processing until Board Approval............................................9 D. Project Implementation after Board Approval......................................................12 E. References to ADB under its Previous Inspection Function................................15 F. References to Sri Lankan Judicial Authorities.....................................................15 G. References to ADB's Special Project Facilitator..................................................16 VI. Issues ..............................................................................................................................16 A. General................................................................................................................16 B. Project Processing Activities ...............................................................................16 C. Project Approved by the Board ...........................................................................17 D. ADB Loan Effectiveness......................................................................................18 E. ADB Cofinancing with JBIC and Other Cofinanciers...........................................19 F. Adjustments to the Combined Trace ...................................................................20 G. References to Sri Lankan Judicial Authorities.....................................................21 H. Safeguard Review...............................................................................................21 VII. Findings and Assessments...........................................................................................22 A. Environmental Considerations in ADB Operations..............................................22 B. Involuntary Resettlement.....................................................................................29 C. Governance.........................................................................................................40 D. Economic Analysis..............................................................................................44 E. Benefit Monitoring and Evaluation.......................................................................50 F. Gender and Development in Bank Operations....................................................51 ii G. Processing of Loan Proposals.............................................................................54 H. Cofinancing .........................................................................................................55 I. Change in Project Scope or Implementation Arrangements ...............................57 VIII. Conclusions....................................................................................................................59 IX. Recommendations .........................................................................................................60 Appendixes 1. Request...........................................................................................................................63 2. CRP Terms of Reference................................................................................................97 3. List of Persons Contacted .............................................................................................101 4. Southern Transport Development Project Chronology of Events..................................103 Attachments 1. Response from the Requesters ....................................................................................108 2. Response from ADB Management ...............................................................................144 iii About the Compliance Review Panel The Compliance Review Panel (CRP) is a 3-member independent body, appointed by the ADB Board of Directors (Board) that carries out the compliance review phase of the ADB Accountability Mechanism. People who are directly, materially and adversely affected by an ADB-assisted project in the course of its formulation, processing, or implementation can file a request for compliance review with the CRP after going through the consultation phase of the Mechanism. The CRP investigates whether the harm suffered by project-affected people is caused by ADB’s non-compliance of its operational policies and procedures, and recommends to the Board remedial actions. The CRP reports directly to the Board on all activities, except for specific activities where the CRP reports to the Board Compliance Review Committee (BCRC), to clear its terms of reference for a compliance review and to review its draft monitoring reports. BCRC is a standing Board committee of 6 members. Currently, the CRP consists of Augustinus Rumansara as Chair, and Richard Bissell and Vitus Fernando as members. Augustinus Rumansara is an Indonesian national. Before joining the CRP, he worked with the private sector in Indonesia at BP (formerly British Petroleum) as Vice-President for Integrated Social Strategies. Prior to that, he worked for many years with civil society organizations from grassroots community groups to regional and international NGO advocacy networks. His work included facilitating advocacy activities of Indonesian NGOs with national and foreign governments, and multilateral development banks to promote concerns for human rights, equity and justice, people’s participation, good governance, sustainable development, and environment conservation. Richard Bissell, a United States national, is an international economist currently serving as a senior executive with the National Academy of Sciences, Washington, DC. He has worked extensively in the past on enhancing community participation in development with the World Commission on Dams, the World Bank Inspection Panel, and the United States Agency for International Development. Vitus Fernando, a Sri Lankan national, is currently working on a series of policy and institutional issues related to international development cooperation. He has held senior positions with a variety of multilateral and bilateral agencies, and at the national level, with the Ministries of Planning and Economic Affairs; Fisheries; and Environment and Forests in Sri Lanka. He was the director of the Asia/Pacific Program of the International Union for Conservation of Nature. For more information on the CRP, visit www.compliance.adb.org. iv Acknowledgements The Compliance Review Panel (CRP) wishes to acknowledge and record its thanks to the following, within and outside the Asian Development Bank (ADB), as well as persons who requested that their identities be kept confidential, for cooperating with the CRP, communicating their views, and assisting the CRP in its investigation of the request under the Southern Transport Development Project (STDP): • the Requesters and STDP affectees • Executive Directors representing Sri Lanka and