ADB slammed for sidelining watchdog unit - report

By Raju Gopalakrishnan

MANILA (Reuters) - The Asian Development Bank (ADB) has "seriously compromised" the independence of its watchdog department and the bank must act to restore its own credibility, according to a report commissioned by the multilateral lender.

The report reviewed the ADB's Operations Evaluation Department (OED), which monitors the billions of dollars in loans made by the bank to Asian nations each year and assesses their impact.

The ADB said on Thursday the report would form a part of a review of the department, due to be completed in December, and there was no immediate action planned.

Bank President Haruhiko Kuroda "regards it as an important input into the review of the OED which is currently being undertaken by a working group," an ADB spokeswoman said.

The report criticised the ADB management for a "lack of consultation and transparency" in replacing the head of the watchdog department last year despite a board committee recommending an extension of his term, and in the selection process for his replacement.

"As a result, potentially very qualified candidates saw no reason to apply", said the report, posted on the ADB website (www.adb.org) earlier this month.

"The review has concluded that the independence of OED, both real and perceived, has been seriously compromised.

"The review concludes that these concerns are both broad enough, and deep enough, to warrant action to restore the credibility, not just of OED, but also of the ADB itself."