From Dr Eisuke Suzuki. Director General, Operations Evaluation Department, 2003-04;

Sir, I read with interest the article by Paul Speltz and Linda Tsao Yang on the reform of the Asian Development Bank ("Five ways to reform Asia's regional bank", January 28). Unhappily, however, their proposal is a rehash of old stories that do not take us anywhere. Instead, it reveals a more fundamental problem of the accountability of the board of directors. Ambassadors Speltz and Yang were members of the board who represented, full time, the interests of the US, the largest co-shareholder along with Japan. They were part of the ADB!

In the area of personnel management of the international financial institutions, the main shareholders control key appointments: the US decides who should be World Bank president, Europe the managing director of the International Monetary Fund, Japan the president of the ADB, France the president of the European Bank for Reconstruction and Development, and so on. At the ADB, the president is always a senior official from the Japanese ministry of finance, as if it were the case that the presidency belongs to a small group of senior officials at the ministry. The US retains the position of the ADB's general counsel, while Japan treats the head of the department of human resources and budget as a ministry of finance career position.

The US and Japan each have their own preserves and pay deference to one another. Other members of the board co-operate; they need the support of two largest shareholders when they push their own candidates. The two largest shareholders of the institution are corrupting it from within. The principles of reciprocity and threat of retaliation work fine in the boardroom of any IFI and the ADB is no exception

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Posted by dcjaya at February 6, 2008 8:47 PM