Report and Recommendation of the Presidentto the Board of Directors

LankaProject Number: 37017 October 2007

Proposed Program Loan and Technical Assistance GrantPeople’s Republic of Bangladesh: Good Governance Program

CURRENCY EQUIVALENTS(as of 2 October 2007)

Currency Unit – taka (Tk)

Tk1.00 = $0.0145486 $1.00 = Tk68.73500

ABBREVIATIONS

ADB – Asian Development Bank BNP – Bangladesh Nationalist Party C&AG – comptroller and auditor general CIDA – Canadian International Development Agency CPA – Chittagong Port Authority CSP – country strategy and program DANIDA – Danish International Development Assistance DFID – Department for International Development EA – executing agency GDP – gross domestic product JSC – Judicial Service Commission MTBF – medium-term budgetary framework NIAC – National Integrity Advisory Committee NCC – National Coordination Committee on Combating Corruption and

Crime NGO – nongovernment organization NIS – National Integrity Strategy NPRS – National Poverty Reduction Strategy PMU – program management unit PSC – Public Service Commission SDR – special drawing rights TA – technical assistance TIB – Transparency International Bangladesh UNCAC – United Nations Convention Against Corruption VCA – vulnerability to corruption assessment

NOTES

(i) The fiscal year (FY) of the Government ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2007 ends on 30 June 2007.

(ii) In this report, “$” refers to US dollars, unless otherwise stated.

Vice President L. Jin, Operations Group 1 Director General K. Senga, South Asia Department (SARD) Director A. Sharma, South Asia Governance, Finance and Trade Division, SARD

Team leader G. Bhatta, Senior Governance Specialist, SARD Team members R. Ahmad, Governance and Capacity Development Specialist, Regional

and Sustainable Development Department F. Ahmed, Head, Governance Unit, Bangladesh Resident Mission (BRM),

SARDM. Z. Hossain, Senior Economist, BRM, SARD N. Huda, Head, Project Management Unit, BRM, SARD P. Kamayana, Senior Country Programs Specialist, BRM, SARD S. Shrestha, Senior Governance and Capacity Development Officer, Nepal

Resident Mission, SARD C. Vandenabeele, Senior Counsel, Office of the General Counsel

CONTENTS

Page

LOAN AND PROGRAM SUMMARY i

I. THE PROPOSAL 1

II. THE MACROECONOMIC CONTEXT 1

III. THE SECTOR 3A. Sector Description and Performance 3B. Issues and Opportunities 5

IV. THE PROPOSED PROGRAM 11A. Impact and Outcome 12B. Policy Framework and Actions 12C. Important Features 16D. Financing Plan 16E. Implementation Arrangements 17

V. TECHNICAL ASSISTANCE 21

VI. PROGRAM BENEFITS, IMPACTS, AND RISKS 22A. Expected Benefits 22B. Risks and Safeguards 23

VII. ASSURANCES 24A. Specific Assurances 24B. Conditions for Loan Effectiveness 26

VIII. RECOMMENDATION 26

APPENDIXES 1. Program Framework 27 2. Sector/Subsector Analysis 32 3. Development Coordination Matrix 37 4. Development Policy Letter and Policy Matrix 40 5. Program Implementation Arrangements 49 6. Technical Assistance Procurement Plan and Packages 51 7. List of Ineligible Items 55 8. Technical Assistance Cost Estimates and Financing Plan 56 9. Summary Governance and Anticorruption Risk Assessment 57 10. Summary Poverty Reduction and Social Strategy 61

SUPPLEMENTARY APPENDIXES (available on request) A. Problem/Constraints Analysis B. United Nations Convention Against Corruption C. National Integrity Strategy D. Background Note on the Anticorruption Commission E. Background Note on Judicial Reforms and Prosecution Service F. Background Note on Chittagong Port G. Detailed Program Adjustment Costs H. Outline Draft Terms of Reference for Consultants for Technical Assistance I. Detailed Governance and Anticorruption Risk Assessment

LOAN AND PROGRAM SUMMARY

Borrower People’s Republic of Bangladesh

The Proposal Support to the Government of Bangladesh for the proposed Good Governance Program comprising (i) a program loan of $150 million equivalent for policy reforms, and (ii) a technical assistance grant of $2.50 million for capacity building and supporting program implementation.

Classification Targeting classification: General intervention Sector: Law, economic management, and public policy Subsectors: Law and judiciary, national government administration Theme: Governance Subthemes: Anticorruption, public governance

EnvironmentAssessment

Category C The environmental implications were reviewed and no adverse impact was identified.

Social Sector Assessment

Involuntary resettlement – Category C Impact on indigenous people – Category C No involuntary resettlement or adverse impact on indigenous people is expected from program implementation.

Rationale The Government has taken a strong stand on developing major reforms to address the problem of corruption. The Good Governance Program is in line with the Government’s priorities on good governance, and contributes directly to desired outcomes in this sector. Governance reform is multidimensional, but currently in Bangladesh the core of such reforms is anticorruption, an area that this Program directly and substantially addresses. There is no program at the moment in the country targeting the primary symptom of poor governance (i.e., corruption) with a broad and comprehensive approach; this Program fills that void.

Program Loan Objectives

The objectives of the Program are to (i) strengthen the ongoing consensus building on good governance, integrity, and anticorruption reforms; (ii) support judicial reforms with a focus on the performance, transparency, and accountability of the judiciary, particularly on its role in the anticorruption agenda; (iii) strengthen the role and reach of the Anticorruption Commission so that it can better fight corruption; and (iv) bring good governance and anticorruption initiatives into the mainstream within selected sectoral level agencies to enhance their effectiveness.

Loan Amount and Terms

It is proposed that the Asian Development Bank (ADB) support the Government’s policy reform program by providing a program loan of SDR 97,910,000 ($150 million equivalent) from ADB’s Special Funds resources. The Borrower will be the People’s Republic of Bangladesh. The loan will have a fixed term of 24 years, including a grace period of 8 years. The interest charge will be at a rate of 1.0% per annum during the grace period and 1.5% per annum thereafter. The loan proceeds are expected to be utilized over a period of 48 months from the date of effectiveness.

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EstimatedProgramCompletion Date

48 months from the date of loan effectiveness

Program Period and Tranching

The Program will be for 4 years. The program loan will be released in three tranches upon meeting the corresponding tranche release conditions. The first tranche (not exceeding $50 million) is to be disbursed upon loan effectiveness, subject to Government fulfillment of all prior actions required under the Program. The second tranche (not exceeding $55 million) will be disbursed 12 months after program loan effectiveness upon satisfactory fulfillment of the corresponding tranche release conditions (or earlier than 12 months if the conditions have been met). The third tranche ($45 million) will be disbursed 24 months after the second tranche, subject to satisfactory fulfillment of the corresponding tranche release conditions (or earlier than 24 months if the conditions have been met). The program period will be from October 2007 (or loan effectiveness) to September 2011 (or 48 months after loan effectiveness).

Executing and ImplementingAgencies

There are two executing agencies (EAs) for the Program: the Supreme Court will be the EA for the program focus on strengthening the judiciary while the Cabinet Division will be the EA for all other activities. Given the separation of the judiciary from the executive branch of government, and given that several policy reforms are within the judiciary, it is deemed necessary to establish two EAs so that responsibilities for attaining outcomes respective to the two branches of government are kept separate. Implementing agencies include the Anticorruption Commission; Ministry of Law, Justice, and Parliamentary Affairs (MLJPA); Ministry of Shipping; Ministry of Establishment; Ministry of Foreign Affairs; and other sectoral agencies.

Procurement and Disbursement

The proceeds of the program loan will be used to finance the foreign exchange costs of items produced and procured in ADB member countries other than items specified in the list of ineligible items (Appendix 7) and imports financed from other bilateral and multilateral sources. The Government will certify that the volume of eligible imports exceeds the amount of ADB’s projected disbursement under the loan for the given period. ADB reserves the right to audit the use of the loan proceeds and to verify the accuracy of the Government’s certification.

CounterpartFunds

Counterpart funds generated from the proceeds of the program loan will be used to finance the adjustment costs associated with the Program, including: (i) implementation at all levels of the National Integrity Strategy (NIS) and the UN Convention Against Corruption; (ii) operation of ACC at the central, regional, and district levels; (iii) separation of the judiciary from the executive branch of government, including costs for capital expenditures flowing from such separation; (iv) implementation of the approved recommendations of the Judicial Service Pay Commission; (v) establishment and operation of independent prosecution services; (vi) reforms at Chittagong Port Authority; (vii) implementation of grievance handling mechanisms, including citizen report cards and Office of the Ombudsman; (viii) operation of the Judicial Service Commission; (ix) any

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performance incentive schemes and human resource plans developed under the Program; and (x) independent surveys on Program-related interventions.

Benefits and Beneficiaries

The program loan will result in long-lasting policy reforms in good governance, particularly those related to instituting good practices in combating corruption, specifically at the sectoral agency level. The loan will also help the Government to formulate and implement a country-specific anticorruption vision and strategy. Beneficiaries include businesses, public servants in the Bangladesh civil service and the judiciary services, service recipients, and citizens.

Risks and MitigatingMeasures

The assumptions inherent in the Program are that (i) the Government commitment to reforms across the various sectors (including for the Anticorruption Commission) will continue to remain high, (ii) the political system is stable during the program implementation period, (iii) the separation of the judiciary from the executive branch of government will be formally completed in the very near future, and (iv) development partners (singly and jointly) remain engaged in the Program.

The Program’s success depends on the Government’s continuing strong commitment to governance reforms in general and, more specifically, to successfully countering endemic and widespread corruption. There is a risk that current reforms may be reversed by future governments. This risk may be mitigated by continued policy dialogue, not only with the Government but also with other stakeholders (such as the judiciary, civil society, and even development partners). The Program also targets reforms that are in the public interest, and so attempts at reversal by future governments will be more difficult. The Government is keen to fundamentally reform the electoral process – a major source of abuse of authority; if successful, this will mitigate risks of reform reversal and will also mean that the Program outcomes and impact will be easier to achieve.

The Program may also place some demands on the institutional capacities of the Government agencies involved in executing and implementing the Program. Close performance monitoring and targeted technical assistance to the two EAs and all implementing agencies will help reduce the adverse effects of implementation delays due to capacity constraints. Enabling conditions for the Program that are in evidence at the moment may not still exist when an elected government takes over as expected in early 2009. This risk can be mitigated by ensuring that the leadership in the various agencies that are part of the Program is suitably engaged in Program design to ensure continued involvement. The extensive process of consultation within the bureaucracy to get commitment to the NIS is designed to directly address this risk.

TechnicalAssistance

In conjunction with the Good Governance Program, technical assistance is proposed for providing support to the Government to enhance the capability of relevant agencies to implement the policy reforms, and to more effectively manage the Program. The estimated cost of the technical

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assistance (TA) program is $3.00 million, of which ADB will finance $1.5 million as a grant from its TA funding program; the Government of Denmark $1.0 million from its Human Rights and Good Governance Program, Phase II; and the Government of Bangladesh $0.5 million in cash and kind. TA program consultants will be recruited according to ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time).

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on (i) a proposed loan to the People’s Republic of Bangladesh for the Good Governance Program, and (ii) proposed technical assistance (TA) for supporting the Good Governance Program. If the Board approves ADB providing the technical assistance, I, acting under the authority delegated to me by the Board, will approve ADB administering the balance of the technical assistance not exceeding the equivalent of $1 million to be financed on a grant basis by the Danish International Development Assistance (DANIDA). The Program framework is in Appendix 1.

II. THE MACROECONOMIC CONTEXT1

2. Since 1991, the country’s economy has improved when measured against most macroeconomic indicators; growth in gross domestic product (GDP) averaged 4.8% in the 1990s, and by 2004 it had reached 6.3%. The Asian Development Bank’s (ADB’s) own estimate is that GDP will grow by 6.5% in FY2007. While it has the potential to grow faster, even at the current rate Bangladesh is expected to become a middle-income country by 2023. Poverty has been declining at a rate of 1% per annum since 2001, but approximately 42% of the population still live in poverty, and 29% are at the extreme poverty level.2

3. There is currently in place a broadly pro-market policy which is the outcome of a series of wide-ranging economic reforms initiated in the early 1990s. Those reforms concentrated on economic liberalization and deregulation, along with the promotion of private enterprise. While some of the reforms became well established, not all were implemented effectively, particularly in privatization and in the financial sector. This has been largely due to lack of political will from successive governments to oppose powerful political, bureaucratic, and trade union groups.

4. The country faces several macroeconomic challenges that impact upon governance reforms:

(i) Despite prudent fiscal management, revenue collection remains disappointing. The ambitious revenue target growth set by the National Board of Revenue of 19.2% in FY2007 is unlikely to be achieved. Revenue is also expected to decrease by 0.2% of GDP in FY2007.

(ii) Because the first-generation market liberalization reforms were rushed through in the 1990s, implementation of institutional and administrative arrangements (second-generation reforms, such as financial regulation) has been much slower. This has been largely attributed to “political interference and a lack of political will to enforce regulations”.3

(iii) The budgetary formulation process is highly centralized within the bureaucracy, and parliamentary working committees, for example, have no opportunity to comment on the budget until it is presented in full to Parliament. In addition, the centralized nature of the process means that sectoral allocations tend to be strictly incremental.

(iv) There are also capacity and accountability issues in line ministries as far as public expenditure management is concerned. This is demonstrated by the fact

1 This analysis is drawn largely from Bangladesh Rural Advancement Committee. 2006. The State of Governance in

Bangladesh. Dhaka: Centre for Governance Studies. 2 In response to this, in June 2007 the Government announced that 57% of the proposed annual aggregate budget

(non-development and development combined) will be spent on programs directly or indirectly relating to poverty reduction, and about 11% of the total budget will be for social empowerment and safety-net programs.

3 Chowdhury, A. 2002. Politics, Society, and Financial Sector Reforms in Bangladesh. International Journal of Social Economics, 29(12), pp. 963–988.

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that public projects funded under the annual development programs have very low completion rates.4

(v) Public financial management vulnerabilities are also mirrored in the fiduciary risks evident at the organizational level. Internal controls and financial management in key sectoral agencies are high operational risk areas.5

(vi) Political disruptions (at least until late 2006) that affect the economy have led to a decline in medium-term strong economic growth prospects. It is estimated that 3–4% of GDP per year is lost as a result of hartals (strikes); more worrying is the fact that this has adversely affected Bangladesh’s image as a place in which to do business.6

5. To address these and other problems, some far-reaching reforms in the economic and financial sectors have recently been attempted. The Government has now introduced the medium-term budgetary framework (MTBF) in 14 ministries,7 and it has expressed commitment to implementation of budgetary reforms, fiscal reporting, and related monitoring and evaluation mechanisms. The Government in FY2005 issued new annual budget guidelines on a pilot basis, which contained elements of more strategic budgeting practices, better fiscal discipline, and better coordination of recurrent and capital budgets. 8 In May 2007, the Government also announced that any block-allocation in the budget for a government agency, if needed, must be for specific projects to ensure discipline and transparency in public expenditure. In June 2007, in announcing the annual budget, the Government hinted at broad tax reforms, including curtailing discretionary powers of the tax authorities and building a simplified and transparent tax regime.

6. The Government has also implemented a procurement law which details how public procurement should take place with a view to being transparent, efficient, and conscious of the principles of value for money. It is beginning to institutionalize procurement management capacity, including the strengthening of procurement policy units in key ministries. Finally, the Government has recently announced its decision to privatize 17 state-owned enterprises, and Biman Bangladesh Airlines has already been corporatized. Plans are also underway to privatize three nationalized commercial banks (Janata Bank, Sonali Bank, and Agrani Bank).

4 Line ministries are rarely able to spend the funds allocated them (i.e., they have poor absorption capacity); in

addition, the quality of those projects that actually do get implemented tends to be poor and subject to corruption (D. Bhattacharya. 2005. Bangladesh Economy: Macroeconomic Performance, Dhaka: Centre for Policy Dialogue). A 2002 report by the Implementation Monitoring and Evaluation Division of the Ministry of Planning found that the average completion rate over a 4-year period was only 56%; a further 15% of projects made no progress at all.

5 See, for example, World Bank. 2006. Operational Risk Assessment. Washington, DC (conducted for the Roads and Highways Department, Bangladesh).

6 The state of governance and its impact on the investment climate is a critical variable to consider in macroeconomic governance. While private sector investment in Bangladesh has increased steadily over the years (from an average of 11% of GDP in 1991–1995 to 17% in 2001–2004), recent studies have pointed out that the country’s global competitiveness and economic growth rate would benefit greatly from governance improvements in the public sector (see, e.g., D. Roy. 2006. Governance, Competitiveness, and Growth: The Challenges for Bangladesh. Asian Development Bank Institute Discussion Paper 53. Tokyo).

7 Each of these MTBF agencies is also expected to pay significant attention to internal audit and control mechanisms so as to ensure proper and effective resource use.

8 As per the provisions of the MTBF, selected ministries are required to consider an overall 3-year ceiling and set priorities between revenue and development budget spending even though their authority to redeploy resources toward highest social returns remains limited.

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III. THE SECTOR9

A. Sector Description and Performance

1. Political Governance

7. Parliamentary democracy was reinstated in Bangladesh in 1991 following the ouster of the autocratic military government by a mass movement. A parliamentary form of government was established and all powers previously vested in the president were transferred to the prime minister; the president is the head of state, and the prime minister is the head of the Government. Legislative powers are vested in the Parliament.10

8. Three successive parliamentary elections have been held since 1991. These elections ensured the emergence of parliamentary democracy and provided for a process of peaceful transfer of power, as witnessed by the formation of government by the two major political parties (Bangladesh Nationalist Party (BNP) and Bangladesh Awami League) in 1991, 1996, and 2001. For the 2006 national elections, there were problems in matters such as errors in the voters’ list prepared earlier and implementation provisions in Article 58 of the Constitution in toto regarding formation of the caretaker government. This sparked mass protests by the opposition parties. The country came to a standstill, resulting in the imposition of a state of emergency under the Constitution and the establishment of a caretaker government in early 2007.

9. A large part of the problem in political governance in Bangladesh has to do with the low level of internal accountability and transparency. As a result, the government apparatus is often politicized, which leads to inadequate appreciation of different point of views. In absence of adequate checks and balances, decisions are often taken without adequate consensus.

2. Governance in the Judiciary

10. The Constitution of Bangladesh envisions an independent judiciary having the final authority to declare any laws or governmental actions void if they are not found consistent with the Constitution. As per Article 94 of the Constitution, the judiciary in Bangladesh is divided into two categories: (i) the Supreme Court, and (ii) the subordinate courts. The Supreme Court is comprised of the Appellate Division and the High Court Division, and is headed by the chief justice. There is a Supreme Judicial Council to enquire into the capacity or conduct of the judges of the Supreme Court. The Supreme Court has the jurisdiction to hear public-interest litigation and other writ petitions, and issues necessary orders to ensure justice to the victims of civil rights violations. The Supreme Court is empowered to review legislative enactments and Executive actions with a view to ensuring their compatibility with the spirit of the Constitution. While the Supreme Court cannot review the actions of the prime minister or president on its own, based on any writ petition by any aggrieved party, the decision of the prime minister or president can be reviewed and revoked by the Court.

9 The term sector here is taken to mean governance, which encompasses, among other things, public sector

management, anticorruption, separation of powers among the three branches of government, and decentralization. It is less focused on corporate governance or market dynamics (such as competition and regulation), and it also excludes other governance components such as the election system, human rights, police reforms, or political party reforms. Appendix 2 contains a more detailed sector analysis.

10 The Parliament has 48 committees but during the last administration these were not formed in time which interfered with their oversight functions. For example, in the last seven parliaments, the Public Accounts Committee has been formed only five times, resulting in a backlog of audit reports to be reviewed and debated. Further, ministries frequently do not respond to the Public Accounts Committee’s recommendations and directives.

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11. Although the formal structure of the judicial system is in place in Bangladesh, judicial independence and performance is of concern. At any given time, approximately 800,000 cases are pending at different levels of the judicial system, including 400,000 civil cases and 200,000 criminal cases filed with the district and magistrate courts, and around 40,000 cases before specialized courts. Although a separate Judicial Service Commission (JSC) has been established, the Government is yet to fully implement the Supreme Court’s directive for the separation of judiciary and Executive.11 While the Supreme Court continues to be held in high regard, perception about the integrity of the subordinate courts, including the district magistracy, is a cause of concern.

12. The core institutions of formal justice (the formal courts, prosecution, and the police) lack independence and more could be done to enhance the performance of the subordinate courts. Consistent politicization of the justice sector agencies has been one of the key causes for the deterioration of the justice system; political parties in power have deliberately appointed their loyalists in the justice system to ensure political protection and gains. The political parties, once in power, were unwilling to relinquish their influence over the judiciary and initiate the process of judicial reforms, particularly the separation of the judiciary from the Executive. The politicization of the higher judiciary has adversely influenced rule-based governance.

13. Since access to justice through the formal system is costly and largely inaccessible to the poor and marginalized, an informal institution (referred to as shalish) is integrated into the rural social structure. The shalish system renders fast judgment on local disputes but suffers from gender and class biases. In addition, the shalish system has been captured by political interests which reduces the likelihood of fair local dispute resolution.

3. Public Sector Governance

14. The performance of Bangladesh’s public service is constrained by (i) a top-down culture that leaves little space for mid-level officials to exercise independent authority, (ii) inadequate compensation of public officials, (iii) the absence of a fair system of reward and penalty, (iv) the lack of professional development training and other incentives to improve performance and accountability, (v) the lack of systematic and merit-based policies for recruitment, (vi) inadequate safeguards for actions taken in good faith, (vii) frequent reassignments often driven by political and other considerations, (viii) pressures faced by reform-minded officials in creating space for change in government agencies, and (ix) a lack of uniform public demand for reform.

15. The lack of significant progress in administrative governance is exacerbated by the failure of successive governments, and the civil service itself, to pursue the reform agenda. The Public Administration Reform Commission and several other studies have identified areas that undermine the efficiency of the bureaucracy. These include (i) outside interference in administrative decision making, (ii) politicization of the civil service, (iii) nepotism and favoritism, (iv) a lack of delegated authority by mid-level and local-level public officials, (v) a lack of public scrutiny of public administration, and (vi) a paucity of citizen demand for improvements in public administration.

11 In what has turned out to be a rather routine affair, in late July 2007 the Government once again asked for an

extension to fulfill the formal requirements of the separation of the judiciary (see footnote 35). The Supreme Court has given the Government until the end of October to complete official formalities to implement the separation.

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4. Corruption as a Key Governance Problem

16. There is unanimous acceptance that the single-most telling indicator of poor governance in Bangladesh over the years has been the high incidence of pervasive corruption.12 According to surveys conducted by organizations such as Transparency International and Political Risk Services, Bangladesh consistently ranks among the most corrupt nations in the world. Transparency International Bangladesh (TIB) says that corruption has manifested itself in some very stark socioeconomic indicators, including the fact that the country lost $35 million to corruption in 2005.13 TIB and other corruption survey reports also show the following:

(i) More than one third of service recipients are forced to pay a bribe for admission to school, almost 30% have to pay to gain access to health care (outdoor treatment), and nearly 80% pay to gain police clearance.

(ii) Nine out of 10 respondents in a TIB study on three police stations in 2004 paid various sums to lodge initial complaints, almost all of them had to pay a sum to visit detainees, and 98% had to pay a sum to dissuade the police from torturing detainees.

(iii) For low-income households, almost 10% of household income is lost in the payment of bribes (comparative figures are 4.5% for middle-income households and 2.3% for high-income households).

17. The broader economic picture is gloomier: off-the-record payments by firms cumulatively result in 2–3% of gross domestic product (GDP) being foregone annually. A study done by the Bangladesh Enterprise Institute in 2003 found that 60% of big firms surveyed viewed corruption as the top constraint to their work. The 2004 World Development Report14 stated that the volume of illegal payments by firms is almost 3% of their total sales. These are significant numbers which point to the failure of previous governments to tackle the culture of corruption and impunity.

B. Issues and Opportunities

1. Issues

18. The characteristics of the corruption problem in Bangladesh are multifaceted. The detailed country governance assessment conducted by ADB in 2003–2004, and an analysis of the recent political trends in the country,15 has identified that corruption in Bangladesh has been 12 The term corruption has wide meaning. As used in the context of this Program, it encompasses, among other

things, graft, fraud, rent seeking, bribery, money laundering, misuse of political office for personal gain, and maladministration that unnecessarily adds transaction costs to service users (such costs are increasingly employed as proxy indicators of the incidence and level of corruption). This last point has been captured in corruption-survey work by a nongovernment organization (NGO) in Bangladesh which has determined an indicator titled hairaniwhich gauges the extent of harassment that service users are put through by service providers (see Power Participation Research Centre. 2007. Unbundling Governance: Reforms, Processes, Institutions, and Risks.Dhaka. [April]). Such harassment invariably leads to a situation of vulnerability to corruption since service users have adverse incentive to give bribes to receive the services (thus adding to their transaction costs of interacting with the service providers).

13 Zaman, Iftekhar. 2006. Measuring Corruption in Bangladesh: Can Communication Work? Presentation at the Development Assistance Committee (DAC) Heads of Information Conference 2006 on The Aid Agenda: Corruption, Governance, & Aid Effectiveness–Communicating the Big Issues. Canberra, Australia (17–19 May).

14 World Bank. 2004. World Development Report 2004: Making Services Work for Poor People. Washington, DC. 15 ADB. 2004. Bangladesh-Country Governance Assessment. Manila. The National Integrity Systems Country Study

Report, prepared by Transparency International in 2003, identified the following as some of the priority areas for reform: weak public-sector recruitment policies, weak enforcement of conflict-of-interest rules, the absence of regulation of party political finance, and the lack of independence of the lower judiciary. The Public Administration Service Reforms Commission has also recommended improvements in transparency and accountability in service delivery.

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impacted by several variables. Key ones that are relevant to the proposed Program (and are detailed below) include: (i) public financial management problems, (ii) civil service problems, (iii) a lack of judicial independence, and (iv) official secrecy.

19. Public Financial Management. Weak internal and external control measures and poor auditing and accounting standards mean that the scope for corruption is high. There are increasing backlogs of audits for the Public Accounts Committee, and in the absence of a Parliament at present, the current Government may be unable to act on the annual audit and other general audit reports.16 Monitoring and evaluation mechanisms in public-sector agencies are also considered weak, thus exacerbating financial management weaknesses.

20. A related area of concern has been with public procurement processes. Deficiencies in the procurement process that give rise to corruption include:

(i) an underdeveloped legal framework (which has largely since been remedied with passage of the Public Procurement Law 2006);

(ii) complex and often inconsistent procurement rules and procedures among various agencies;

(iii) inadequate human-resource capacity as reflected in poor quality bidding documents and bid evaluation; and

(iv) an absence of mechanisms for ensuring transparency and accountability.

21. Despite the recent enactment of the Public Procurement Law, weaknesses in public procurement processes continue to be evident given that no related rules and regulations have yet been framed. The World Bank recently completed an assessment of procurement practices in Bangladesh and concluded that the implementation of procurement is very uneven across agencies and, barring some exceptions, the process is far from satisfactory.

22. Problems with the Civil Service. The problems within the civil service are manifold. There is general consensus that prevailing weaknesses within the civil service have significantly compounded poor governance in Bangladesh. Recruitment, appointment, and promotion procedures emphasize patronage over merit, thus encouraging rent-seeking behavior.17 Low salaries and a lack of incentives result in poor motivation amongst civil servants, with the attendant risks of increased vulnerability to corruption. Potential entrants into the Bangladesh civil service have no faith in the impartiality of the entry examination system, and a stifling quota system remains in place.18 Media reports and assessments voice popular perception that the

16 Indeed, the office of the Comptroller and Auditor General (C&AG) in late July 2007 asked the caretaker

government to immediately constitute a Public Accounts Committee (PAC) on an ad-hoc basis to scrutinize the accounts of the Government and reports of the C&AG in the absence of parliament. This is in line with a recommendation made to the Government by the World Bank in June 2007 which highlighted that given the schedule of submission of reports by C&AG, there is a danger that the C&AG reports starting from FY2004–2005 will not have been acted upon for at least three years if the country is to wait until early 2009 for a parliament to be in place. In asking for the formation of a PAC on an ad-hoc basis, the C&AG has drawn the Government’s attention to the fact that already in mid-2007, the increase in the number of unresolved audit reports involves millions of dollars and the cases of retired government officials who are not getting their pensions due to unsettled objections remain high. The need for an ad hoc Public Accounts Committee is not new in Bangladesh; it has been formed once before in 1983 (see, “Govt accounts pile up as parliament missing,” The Daily Star [Dhaka], Thursday, 26 July 2007).

17 The Bangladesh Rural Advancement Committee reports that “civil servants tend to view the politicization of the PSC [Public Service Commission] as the root cause of corruption in the recruitment process” (BRAC. 2006. TheState of Governance in Bangladesh. Dhaka).

18 The quota system for both the cadre and noncadre posts in the civil service has merit posts weighted at a mere 45%, while district-based quotas include: freedom fighter’s children (30%), females (10%), tribal (5%), and general (10%).

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Public Service Commission (PSC) itself is politicized and thus unable to make the civil service merit-based.

23. Lack of Judicial Independence. While the Supreme Court is widely regarded as being independent of the executive, it is the lower-tier magistracy (which is responsible for trying criminal cases and is staffed by civil service assistant commissioners) that is not independent and that has been the most susceptible to corruption.19 A recent study asserts that “possibly the most serious of the core governance failures … is the lack of independence of the lower judiciary, the magistracy” (footnote 17). With the exception of the Supreme Court, the judiciary does not have its own budgetary allocation; funding for the courts is channeled through the Ministry of Law, Justice, and Parliamentary Affairs (MLJPA). This lack of judicial independence has, therefore, affected the quality of new entrants into the service over the years.

24. Official Secrecy. Compounding this problem is that of a culture of official secrecy that effectively undermines public accountability. The traditional practice of closed-door policy development, legal drafting, public decision making, and the official practice of classifying all government business as top secret, secret, confidential, or restricted, has not helped engender a culture of openness in government business. As a result of this classification system, official information cannot be disclosed without authorization. Under the Official Secrecy Act, 1923, unauthorized disclosure is a criminal offense.20

2. Opportunities

25. There are several signs that these corruption-related variables are now being addressed, providing opportunities for making a substantial contribution towards combating corruption. The current Government has declared, and exhibited, political willingness to take a very tough line on corruption, and on instituting necessary systemic reforms. Fortunately, the focus on anticorruption is backed by wide public support for systemic reforms in the country.

26. Reforms in the Anticorruption Commission. The Anticorruption Commission was created in 2004 and, even though it has had its teething problems, it is set to play a critical role in fighting corruption. In early 2007, in order to provide the commission with a more vibrant leadership, it was reconstituted at the top with three new commissioners. Further, it has been given additional powers to fulfill its functions. The Anticorruption Commission rules of procedures that were not in place prior to 2007 have also been approved. In late March 2007, the president approved the Anticorruption Commission rules, which also provide for an internal anticorruption committee within the Anticorruption Commission to combat corruption and irregularities within the commission itself.

27. Planned reforms at the Anticorruption Commission by the new leadership focus on, among others things, (i) a stronger decentralized network and structure of Anticorruption Commission operations so as to better manage the initial handling of cases before all matters end up at headquarters and thus creating a stifling backlog of cases, (ii) a planned performance management scheme which will provide incentives to the commission staff based on demonstrated performance, (iii) a separate prosecution unit to minimize reliance on government prosecutors to take up the cases, (iv) consideration of the outsourcing of noncore commission functions (with due regard for security and confidentiality of information) so as to be more 19 Indeed, it is the Ministry of Establishment that determines a judge’s career path and where he or she is to be

posted next, not a court administrator, registrar, or a senior judge. Now that the Judicial Service Commission (JSC) has been established, it is hoped that the Commission will play a stronger role in this.

20 In Bangladesh, along with the 1923 Official Secrecy Act, the Evidence Act (1872), Penal Code, the Code of Criminal Procedure (1960), and the Rules of Business (1996) are the laws that restrict people’s rights of access to information.

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efficient, (v) automation and computerization of cases and records management, and (vi) more aggressively partnering with civil society to address corruption from the community level.

28. Reforms of Political Parties. Due to politicization in practically all walks of life in the country, and the attendant risks of corruption that this has engendered (including abundant opportunities for special interest groups to secure influence over government decision making), reform of political parties is critical. The Election Commission intends to put in place campaign finance and other rules that will begin to address this systemic weakness. Policies that are being considered include (i) the oversight of rules governing party funding, (ii) publicizing the level of donations and sources of party revenue, (iii) public disclosures by political candidates both before and after elections, (iv) imposing a ban on the use of state resources for political purposes, and (v) establishing partial public funding for political parties. Proposals have also been made to disassociate professional and student bodies from political parties as a requirement for registration.

29. Reforms in the Civil Service. The Government is aware that the primary way by which corruption can be tackled in the long term is to target the development of a merit-based, suitably rewarded civil service. It has reconstituted the PSC by appointing a new chairman and other members,21 and has planned to develop a strategic perspective for improving the quality of the civil service, beginning with recruitment and promotion policies and practices. Indeed, the PSC’s latest annual report suggests that the quota system needs a fundamental review, and steps have been initiated to tighten the entry examination system.

30. Judicial Independence. The Government has made clear its intention to implement several Supreme Court rulings demanding that the judiciary (primarily at the local level) be independent of the executive. Commensurate with this, there is also a commitment to increase transparency and accountability of the judiciary itself as well as support the JSC. The necessary procedural work for the separation is being done; accordingly, the Supreme Court will assume administrative functions, including direct supervision and control of the subordinate judiciary, judicial magistrates, and administration of the criminal justice system. A Judicial Service Pay Commission has also been established to review judicial remuneration.

31. Judicial independence—indeed, openness in government business as a whole—is expected to be bolstered by current plans to ensure the right to information. It is still early but there are encouraging signs that the Government is favorably disposed towards legislating a right-to-information act in the not too distant future.

32. Role of Civil Society and the Media. Quite separately from the actions of the Government, and more so in recent months than ever before, civil society and the media have continued to highlight cases of corruption across the country, and already there are in place mechanisms at the local level that should give an impetus to demands to address corruption. The work of the TIB-supported Committee of Concerned Citizens is reflective of this. In recognition of the substantive role that civil society can play in fighting corruption, the Anticorruption Commission has now actively sought to partner with NGOs and others at the local level.

21 The new chairman of the commission was nominated in May 2007, and other senior appointments have also been

made in recent months. In this regard, there are calls for amending Article 138 of the Constitution to enable the chairperson and members of the PSC to be appointed by a select committee rather than by the prime minister in effect. This would serve the purpose of instituting some transparency into the nomination process, with a consequent focus on merit in the selection.

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3. Government Strategy

33. The Government has stated its vision of establishing a modern democratic Bangladesh free from corruption, discrimination, and exploitation. The National Poverty Reduction Strategy places importance on, amongst other things, making governance work for the poor. The priorities under the strategy include promoting good governance, tackling corruption, enhancing access to justice for the poor, and improving sectoral governance. The National Poverty Reduction Strategy (NPRS) also argues that any anticorruption strategy should touch on deterrence, system improvements, and value-creation. 22 Along these lines, the strategy to promote good governance by combating corruption entails the following:

(i) in the short term, a focus on enforcement and sanctions to directly address the culture of impunity and to enhance public trust in government;

(ii) in the medium term, to strengthen the core institutions of governance, including the Anticorruption Commission, judiciary, Election Commission, and PSC, so that fundamental reforms in the system can begin to be embedded and also will not be easily reversed by future governments; and

(iii) in the long term, a focus on: (a) public awareness and education on preventive measures; (b) creating the right conditions for the public sector to enhance public

service delivery; and (c) fundamentally altering the manner in which the laws (such as on

competition and regulation) are applied so that the polity is qualitatively better at managing development.

34. This is consistent with international experience on how to best fight corruption.23

4. ADB Strategy, Operations, and Lessons

35. Strategy. ADB’s strategy on good governance in Bangladesh is based on the understanding that reform of institutions is an urgent priority. It is also based on the assumption that cumulative effects of decades of poor governance cannot be overcome immediately, or on all fronts at once. Recognition that a long timeframe will be required to make an impact, and that there should be greater attention to transforming institutions, is required in light of the range and severity of issues to be addressed. ADB has stated that in Bangladesh it will continue to play a major role in improving sector governance, complemented by catalytic support to address critical constraints to core governance. In close cooperation with other development partners, ADB will support measures aimed at combating corruption, improving access to justice, and building governance management capacity.

36. Operations. ADB’s operations in Bangladesh are based on the assumption that building a well-governed public sector is one of the most important priorities. A long-term commitment to capacity development, encouragement of good governance practices, and an appropriate policy environment are critical, together with ownership and commitment to reforms by political leaders, Government, and civil society. Accordingly, ADB’s operations have focused on support to the

22 Planning Commission. 2004. Unlocking the Potential: National Strategy for Accelerated Poverty Reduction. Dhaka

(December).23 International experience shows that there are no quick fixes in fighting corruption, and that a balanced and

sequenced approach (of prevention, detection, and prosecution and sanctions) is essential, as is an appropriate institutional framework. International experience also shows the need for the following to fight corruption: (i) a strategic vision, with high-level ownership; (ii) good governance in the mainstream in sectoral agencies; and (iii) a focus on broad governance issues, including on improving fiscal management, financial management, public service professionalism, public sector management efficiency, and corporate governance.

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Government in various areas, including helping develop an overarching National Integrity Strategy (NIS) to provide a strategic policy framework for anticorruption, and establishing and strengthening the Anticorruption Commission. Current operations at the sectoral level have focused on governance reforms (as part of a larger program of support on sectoral investments) in the railway, power, and port sectors.24

37. Lessons. A review conducted as part of the preparation of the 2003 Country Governance Assessment Report for Bangladesh showed that the experience of development partners in the governance sector in the country, as indeed elsewhere as well, was that success has been greatest and sustained the longest when the development partner has:

(i) maintained long-term involvement in the sector; (ii) combined programs of incremental reform with capacity development and

investment support; (iii) identified–and substantially engaged with–supporters in government and

elsewhere; and (iv) built effective partnerships with other development partners, the private sector,

and civil society.

38. This Program is in keeping with that trend, and is also based on the lessons learned from the Operations Evaluation Department’s evaluation of the country assistance program for Bangladesh (January 2003) for ADB lending,25 the recommendations of which included the need for a more proactive approach to governance issues, and the support of local reform-minded people.26 An upcoming Operations Evaluation Department sector evaluation study also highlights the benefits of flexibility in policy loan conditions, and the provision of sufficient technical assistance to support capacity development. 27 These recommendations are incorporated in this Program, where particular attention has been placed on ensuring that Program executing and implementing agencies receive targeted capability-building assistance.

5. External Assistance and Development Partner Coordination

39. Due to the magnitude of the corruption problem in Bangladesh, ADB’s work must be viewed as part of a larger multidonor strategy to fight corruption. Development partners are 24 These include: (i) ADB. 2003. Technical Assistance to the People’s Republic of Bangladesh for Supporting Good

Governance. Manila (TA 4140-BAN, approved on 4 July for $1.1 million); (ii) ADB. 2005. Technical Assistance to the People’s Republic of Bangladesh for Supporting Good Governance Initiatives II. Manila (TA 4743-BAN, approved on 19 December, for $750,000); and (iii) ADB. 2003. Technical Assistance to the People’s Republic of Bangladesh for Preparing the Good Governance Project. Manila (TA 4744-BAN, approved on 19 December, for $1 million). While TA 4140-BAN looked specifically at how the Anticorruption Commission could be structured and how an institutional framework for anticorruption work could be developed, the ongoing TA 4744-BAN is a project preparatory technical assistance which largely focuses on developing the NIS, and on looking at the legal aspects of the work of the Anticorruption Commission (other tasks include doing a vulnerabilities to corruption assessment for the energy, port, and railways sectors). TA 4743-BAN focuses specifically on strengthening the technical aspects of Anticorruption Commission work. The latter two TA projects will enable the Anticorruption Commission to better fulfill its mandates, and this will enable the Good Governance Program to yield the desired outcomes. Increasingly, ADB support at the sectoral level has incorporated components that focus on good governance. This has meant that good governance is being brought into the mainstream in the sectors, which is also one of the key goals of this proposed program. Some sector projects and programs where this has been evident include, for example, the Sustainable Power Sector Development Program (Project No. 36107), the Railway Sector Investment Program (Project No. 32234-02), and the Chittagong Port Trade Facilitation Project (Loan 2147-BAN). In the Chittagong Port project, for example, development of an anticorruption strategy is one of the policy conditions of the project.

25 OED. 2003. Country Assistance Program Evaluation for Bangladesh. Manila. 26 Local supporters for the Program include the Anticorruption Commission leadership, TIB, and other NGOs, and

central level policymakers that have personally taken a keen interest in the Program. 27 OED. Summary of Lessons from Evaluations of ADB Programs in Support of Public Sector Reform. Forthcoming.

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active in Bangladesh in the area of good governance and anticorruption (see Appendix 3), and areas of support have included:

(i) public service capability building and reforms; (ii) transparency, accountability, and voice (including procurement reforms and

financial accountability); (iii) justice sector reforms (including police reforms and legal capacity development); (iv) parliamentary strengthening (including Parliament’s role in executive oversight); (v) anticorruption (including the establishment of a financial intelligence unit, and

fostering anticorruption initiatives at the service-delivery level); (vi) human rights; and (vii) local governance (including participatory governance, in particular through

supporting civil society to demand greater accountability).

40. Coordination among development partners in these and other activities is done through several local consultative group committees, including on governance, the judiciary, and anticorruption. ADB is an active member of these committees. The level of coordination existing among the development partners with respect to this Program is evident in their decision to be involved in the Program.

6. Rationale

41. The Government has taken a strong stand on developing major reforms to address the problem of corruption. This is a major program of the Government, which has publicly championed it, and it conforms with the Government’s priorities on good governance and contributes directly to desired outcomes in this sector.

42. Governance reform is multidimensional, but currently in Bangladesh the core of such reforms has to be anticorruption, an area that this Program directly and substantially addresses. While the extent of development partners’ involvement in areas associated with governance is extensive, there is no program in place that directly targets addressing the primary symptom of poor governance (i.e., corruption) within a broad and comprehensive approach to good-governance outcomes. This proposed Program thus focuses less on the area of governance that other development partners are already targeting, but concentrates more on areas where the Government’s bold move to fundamentally alter the governance landscape needs to be supported. Indeed, other development partners have accepted that this proposed Program offers a viable opportunity to tackle poor governance in Bangladesh, and several have expressed an interest in being involved in it.

IV. THE PROPOSED PROGRAM

43. The governance reforms (particularly on anticorruption) initiated by the Government need to be made more extensive and embedded, which is why the Good Governance Program is vital at this juncture. The design of the reform program is based on the recommendations of the ADB country governance assessment (footnote 15) which, based on detailed assessments as well as reflections from lessons learnt, recommended that a three-pronged governance strategy be put in place, consisting of (i) a primary focus on sectoral governance initiatives, (ii) a focus on both enforcement and prevention, and (iii) working with the Government and the public on a dialogue for governance reforms and collaboration with donors.

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A. Impact and Outcome

44. The proposed Good Governance Program is in keeping with international experience and the Government’s own stated outcomes on good governance and anticorruption. It is expected to contribute to economic growth and enhanced public access to effective public services for the citizens of Bangladesh. The key outcome of the Program will be improved governance and a lower incidence of corruption in the public sector. (Appendix 1 provides the program framework). The outcome of the Program will be reflected in:

(i) increased consensus on good governance, integrity, and anticorruption reforms in the country;

(ii) increased performance of, and transparency within, key institutions mandated to fight and prevent corruption, such as the Anticorruption Commission, the judiciary, prosecution, and civil society;

(iii) bringing into the mainstream initiatives on good governance and anticorruption within selected sectoral-level agencies vital to public services; and

(iv) the strengthening of corruption prevention mechanisms such as the office of the ombudsman, the right to information act, and legal and institutional framework for protection of those who report corruption cases.

B. Policy Framework and Actions

1. Outcome

45. The policy actions supported by this program loan will lead to improved governance and a lower incidence of corruption in the public sector (Appendix 4 presents the Development Policy Letter and Policy Matrix of the program loan). The outcome of improved governance and the lower incidence of corruption will be visible in (i) the work of key government entities (e.g., those which are implementing the MTBF) in addressing vulnerabilities to corruption aligned to the NIS which, in turn, will be guided by the principles and commitments under the United Nations Convention Against Corruption (UNCAC); (ii) the Anticorruption Commission having a strengthened and more effective role in various parts of the country; (iii) a transparent and accountable judiciary at all levels playing a critical role in combating corruption in the country; and (iv) good governance and anticorruption initiatives within selected sectoral level agencies enhancing the effectiveness of those agencies.

2. Program Outputs

46. The Program will support the achievement of the following three outputs.28

a. Output 1: Vision, Strategy, and Procedures

47. National Integrity Strategy. 29 As a first step to ensure a strong reform regime in governance, it is necessary to formulate and implement the NIS which sits at the core of the good governance agenda. It is based on the premise that good governance is fostered by encouraging and facilitating a dialogue among key participants, including civil society, academia, government, and politicians; in that sense, the NIS is expected to constitute a broad

28 The outputs and performance targets of the Program are in the program framework in Appendix 1. 29 Supplementary Appendix C discusses the NIS in greater detail. Work on the NIS is currently ongoing and care is

being taken to ensure that there is commitment to the exercise from the top political and bureaucratic leadership even as the work is in the initial stages. Even the design of the NIS is informed by broad stakeholder input from across the country; by September 2008, a final NIS is expected to be in place.

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national consensus on how to deal with corruption and issues of poor governance. The proposed Program will enable the Government to disseminate and implement a nationally owned and well-resourced NIS. In addition, special arrangements for top-level coordination and steering of the NIS will be required to continuously monitor and support the implementation of the strategy at all levels of the government, across different line ministries, and across the country with the active support of civil society. This high-level coordination and ownership of the NIS is proposed to be provided by a National Integrity Advisory Committee (NIAC), consisting of supporters from areas including the highest levels of Government, civil society, and academia, which will meet at least twice a year to give guidance on implementation of the NIS. This is critical if the strategy is to be brought into the everyday work of Government agencies. 30

48. The Program will support a national and broad-based development of the NIS and its implementation across sectors and different levels of government. Work on the NIS is currently underway with leadership from the Cabinet Division, and the strategy is likely to focus on, among other things (see Supplementary Appendix C):

(i) strengthening of the relevant legislative and institutional mechanisms; (ii) making effective use of NGOs to provide external measures of control; (iii) further strengthening of current internal control measures in selected ministries; (iv) developing an ethics- and values-based public service to complement the

existing rules-based measures; (v) mobilizing resources outside the government to encourage the private sector, the

media, and others to scrutinize every aspect of government expenditure; and (vi) determining strategic measures against all forms of corruption at all levels (i.e.,

ensuring that, to the extent practical, all types of corruption are addressed).

49. The United Nations Convention Against Corruption (UNCAC).31 In its national and local interventions, the NIS will articulate the goals, targets, and approach of the UNCAC, which the Government acceded to in early 2007, thus setting the overarching framework for anticorruption efforts at the country level. The Convention contains an extensive treatment of how corruption can—and should—be tackled. It encourages signatories to (i) set up autonomous anticorruption watchdogs, (ii) establish merit-based and impartial public service recruitment, (iii) establish public service codes of conduct, (iv) publish details of government expenditure, and (v) ensure transparency in election campaign funding. Ratification of the Convention allows Bangladesh to enjoy international cooperation to combat corruption and also set up international auditing and accounting standards for the local private sector.

50. The Anticorruption Commission and Anticorruption Work. 32 Tackling corruption requires that the Anticorruption Commission has a clear legal and policy framework, rigorous internal management systems,33 sufficient resources, and working partnerships with civil society. Improvements in its physical and human resources, as well as incentives, are also required to 30 This is also in line with the recommendation made by TIB in its Corruption Database Report in 2006 about the need

for a central corruption monitoring unit in the office of the prime minister, so as to ensure that the individual ministerial and departmental monitoring units function effectively. Detailed terms of reference of the composition and functions of the NIAC will be finalized during the work of the project preparatory technical assistance currently being provided to Government. In particular, the terms of reference will highlight the relationship between the work of NIAC and the Anticorruption Commission.

31 For more details on the UNCAC, see Supplementary Appendix B. 32 See Supplementary Appendix D for a background note on the Anticorruption Commission. 33 This includes instituting transparency within the Anticorruption Commission currently, all staff members are to

submit asset and wealth declarations. In early 2007 the Government approved the Anticorruption Commission rules, which, amongst other things, provides for an internal anticorruption committee within the Anticorruption Commission to combat corruption and irregularities within the organization. As of June 2007, the committee had already taken disciplinary action against three staff members.

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enable it to effectively fulfill its mandate. The Anticorruption Commission Act calls for investigation skills within the Anticorruption Commission and so there is immediate need to strengthen its technical professional expertise.34 In line with the UNCAC, asset recovery and anti-money laundering provisions as well as international cooperation systems need to be developed. The Program seeks to strengthen the Anticorruption Commission not only in terms of its physical resources but also in respect of the performance management scheme, prosecutorial capability, and partnerships with civil society.

b. Output 2: Enforcement and Sanction Mechanisms

51. Independent and Transparent Judiciary. Recent efforts to separate the judiciary from the Executive require that necessary systems are in place to anchor the separation on clear policies and legal frameworks as well as on clear provisions related to staffing and availability of physical resources and budgets.35 Further, to enhance the transparency and accountability within the judiciary, it will be imperative to improve incentives for the judiciary. An independent and well-resourced JSC also needs to be supported to ensure that recruitment exercises are carried out regularly, and that professionalism in recruitment of judges is maintained. Support will also be provided to increase the number of specific special anticorruption courts, particularly in terms of the physical and human-resource requirements of these courts. The Program will support the Government’s resolve to ensure timely adjudication of cases filed by the Anticorruption Commission by dedicated courts. To improve the method of appointments of judges at the Supreme Court, special legislation as mandated by the Constitution is required. Finally, a more thorough implementation of the judges’ code of conduct would increase public trust in the institution. (Supplementary Appendix E has more details on the judiciary.)

52. Improved Prosecution Services. Currently, the public prosecution service is underresourced, and its capacity is weak. Hence it is unable to carry out independent and effective prosecution of criminal cases in general, and of anticorruption cases in particular. The Anticorruption Commission and the judiciary cannot fulfill their roles if the prosecution service is not strengthened and legal or policy changes are not effected to enhance its performance. There is consensus within Government and other national stakeholders that an effective fight against corruption will not be possible without a reliable and professional prosecution service. Based on this imperative, the Program will assist the Government to establish a permanent and independent prosecution service whose members will be recruited through competitive examinations to be conducted by the Public Service Commission. (Supplementary Appendix E has more details on the prosecution service)

34 Prior ADB technical assistance to the Anticorruption Commission (ADB. 2003. Technical Assistance to the People’s

Republic of Bangladesh for Supporting Good Governance. Manila (TA 4140-BAN), approved on 4 July, for $1.1 million) has determined that in order to be able to fulfill its mandates effectively, the commission should have capabilities in investigation, intelligence, surveillance, prevention, prosecution, and corporate affairs.

35 In early May 2007, the full court of the Appellate Division, taking the most crucial step in separating the judiciary from the Executive, issued a three-point directive on the Government for the creation and sanctioning of a particular number of posts of judicial magistrates across the country along with manpower, including supporting staff, allotment of courtrooms and chambers, and necessary budgetary allocations. The court asked the ministries of Establishment, Finance, Public Works, and Law to take immediate steps in this regard. As of the end of July, the Government had created and sanctioned 877 posts of judicial magistrates and 5,030 posts of supporting staff, and had also sanctioned logistical support including allotment of courtrooms and chambers. The Government also maintains that necessary budgetary allocations for the judicial magistracy are being processed. On a matter related to the separation, the court has observed that the Ministry of Law will work as an ‘appropriate authority’ for communications between the country’s president and the Supreme Court on control and supervision of the judicial officials until a separate and independent secretariat of the Supreme Court is established.

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c. Output 3: Prevention Mechanisms

53. Focused Anticorruption Interventions. The emphasis is on improving sector governance and strengthening anticorruption mechanisms to reduce fraud and mismanagement, and improve services for citizens. 36 Sector agencies where vulnerability to corruption assessments (VCAs) have been completed, and where a subsequent anticorruption strategy has been prepared, will be supported to implement the strategy.37 In that regard, in the initial stage, and as part of ongoing reforms under the ADB-financed Trade Facilitation Project for the Chittagong Port Authority (CPA), this Program will help implement the CPA’s anticorruption strategy and ongoing efforts to improve efficiency and increase private sector participation in the operations and maintenance of the port. This will enable CPA to improve port operations and reduce opportunities for graft, fraud, and rent seeking.38 Program funds will enable CPA to put in place systems that will improve the operations and governance of the port, thus directly addressing corruption vulnerabilities.

54. Accountability Mechanisms within Line Ministries. Tackling corruption is not likely to succeed if sectoral agencies are not supported in identifying and fighting corruption.39 Given that the work of the Anticorruption Commission alone is not likely to effectively tackle the problem, there is need to ensure that opportunities to minimize corruption at the service-delivery level are also effectively utilized. In this context, strengthening the existing accountability mechanisms within line ministries can contribute significantly to minimizing corruption opportunities at the sectoral or agency level.40 In addition, the Program will also assist the Government to fully implement the existing rules on declaration of wealth and assets by public servants.

55. Grievance Redress and Access to Information. While the Bangladesh Constitution (Article 77) provides for an office of the ombudsman, and the Government in 1980 passed the 36 One particular area where a direct contribution can be made to reduce the vulnerabilities to corruption for the

average citizen, and which has wide implications for widespread service delivery improvements, is the application of the 2004 Birth and Death Registration Act and its implementing rules. As of the end of 2007, the act makes it mandatory for anyone wishing to access about 14 services (including schooling, getting utility connections, land registration, passports, driving license, and banking) to furnish a birth certificate. However, only 7–10% of the population currently has a birth record. It is expected that as of the end of 2007 when the act is to be fully implemented (although there are indications that the effectiveness date will be extended yet again), there will be a surge in the number of applicants seeking this document. Unless the Government can meet this increased demand in an effective, efficient, and transparent manner, it can be expected that both rent seeking for service delivery, as well as delays and the need for “speed money” in delivering birth certificates, will increase considerably.

37 Recognizing that not all agencies may have the skills and institutional capacity to conduct vulnerability to corruption assessments (VCAs) and prepare anticorruption strategies, the Program will pilot VCAs and anticorruption action plans in key selected agencies and then replicate them elsewhere. Agencies that could be covered by the Program include those in the power and transport sectors (where ADB investments are high, and where the vulnerabilities to corruption are also high; these two sectors also received the highest (Tk 33.8 billion) and fourth-highest (Tk 28.11 billion) revised sectoral allocation of the Annual Development Program FY2005–2006.

38 The purpose of assisting the CPA in enhancing internal governance systems is to complement ongoing ADB assistance in improving operations at the port, and so that its operational efficiency will boost the economy since 85% of all of the country’s international trade takes place out of Chittagong Port. Pursuant to the prior ADB assistance, the CPA has already developed an anticorruption strategy, and a VCA there will corroborate the various components of the newly formed strategy. (See Supplementary Appendix F for a background note on the Chittagong Port.)

39 This focus is nothing new: at the heart of the World Bank’s Development Support Credit III provision lies governance-related reforms at the macro and sector levels. It is also widely accepted in Bangladesh that “without significant improvements in sectoral governance of key sectors, it will be very difficult to bring about a better governance reality.” (Power Participation Research Centre. 2007. Unbundling Governance: Reforms, Processes, Institutions, and Risks. Dhaka. [April]).

40 This is in line with the recommendation made by TIB in its Corruption Database Report in 2006 about how each ministry and department should establish special units to monitor newspaper reports and take appropriate actions. The Government has issued a circular to ministries and departments instructing them to strengthen their citizens’ charters.

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necessary act for its establishment, such an office has not yet been established.41 The Program will provide support to the Government to establish an ombudsman’s office to improve citizens’ access to grievance redress mechanisms, thereby providing an additional check on maladministration and corrupt practices. Also, the right to information is a critical requirement of enhancing transparency of government decisions. Currently, the legal framework for the exercise of this right does not exist. Under this Program, the Government will be assisted to prepare and enact a right to information law as well as a whistleblower protection act. Support will also be provided to review (for purposes of amending and repealing):

(i) the Official Secrecy Act 1923, by appropriately defining secrets to only cover matters of state security and price-sensitive information; and

(ii) Section 9 of the Government Services (Conduct) Rules 1979, which provides effective legal coverage for public officials to deny information to the press.

C. Important Features

56. Some important features of the Program are as follows.

(i) For the first time in Bangladesh it develops a NIS that will enable agencies to critically assess their vulnerability to corruption, and will be owned by an NIAC at the highest level of Government, with membership from Government, NGOs, academia, think tanks, and others.

(ii) The NIS itself will be aligned to the provisions in the UNCAC, which the Government has acceded to.

(iii) It takes a holistic approach to combating corruption (i.e., it encompasses different branches of government, and includes prevention as well as enforcement and sanctions) in line with the Government’s vision articulated in the NPRS.

(iv) It conforms with the outcomes and new initiatives of the Government, which has publicly championed this Program.

D. Financing Plan

57. The estimated adjustment costs of policy reforms under the Good Governance Program are based on medium-term adjustment scenarios and are illustrated in Table 1 (see Supplementary Appendix G for further details on the derivation of the indicative costs).

Table 1: Estimates of Adjustment Costs

Output Purposes Indicative Costs ($ million)

1. Vision, Strategy, and Procedures

(i) Implementation of the NIS at both central and local levels, (ii) support for the work of the NIAC, (iii) publicity of the strategy, (iv) implementation of UNCAC, (v) NIS implementation support to sectoral agencies, (vi) strengthening performance management scheme at the Anticorruption Commission, (vii) contributions to extra-budgetary career development opportunities in anticorruption work, (viii) support for partnerships with civil society on the anticorruption and good governance agenda, (ix) support for a separate prosecution unit at the Anticorruption Commission, and (x) support for set-up and operations of anticorruption work at the district and local level

45.0

41 Bangladesh is the only country in South Asia not to have an ombudsman’s office. There is, however, a tax

ombudsman, established with donor support after legislation in Parliament in 2005.

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Output Purposes Indicative Costs ($ million)

2. Enforcement and Sanction Mechanisms

(i) Strengthening the judiciary, (ii) internal accountability systems (such as on monitoring and inspections, and declaration of wealth statements), (iii) services management, (iv) institutional strengthening of the JSC, (v) preparation of annual reports, (vi) support for development budget of the judiciary, and (vii) strengthening the work of the prosecution service and investigation service.

65.0

3. Prevention Mechanisms

(i) Bringing governance into the mainstream at the sectoral level, including adjustment costs for Chittagong Port improvements (such as incentives, improving internal systems, and anticorruption work); (ii) VCAs and risk mitigation work in sectoral agencies; (iii) adjustment costs for strengthening departmental accountability systems; (iv) policy reforms in establishing an ombudsman’s office; and (v) adjustment costs in reforming the PSC processes.

60.0

Total 170.0 JSC = Judicial Service Commission, NIAC = National Integrity Advisory Committee, NIS = National Integrity Strategy, PSC = Public Service Commission, UNCAC = United Nations Convention Against Corruption, VCA = vulnerability to corruption assessment. Source: Asian Development Bank.

58. It is proposed that ADB support the Government’s policy reform program in the governance sector by providing a program loan of SDR 97,910,000 million ($150 million equivalent) from ADB’s Special Funds resources.42 The borrower will be the People’s Republic of Bangladesh. The program loan will have a fixed term of 24 years, including a grace period of 8 years. The interest charge will be 1.0% per annum during the grace period and 1.5% per annum thereafter. Program loan proceeds are expected to be utilized over a period of 48 months from the date of loan effectiveness.

E. Implementation Arrangements

1. Program Management

59. There are two executing agencies (EAs) for the Program: the Cabinet Division will be the EA for all the activities that relate to the Executive; while the Supreme Court will be the EA for the program focus on strengthening the judiciary. Given the separation of the judiciary from the Executive, and given that several policy reforms are within the judiciary, it is deemed necessary to establish two EAs so that responsibilities for attaining outcomes respective to the two branches of government are kept separate. Implementing agencies include the Anticorruption Commission, MLJPA, Ministry of Shipping, Ministry of Establishment, Ministry of Foreign Affairs, Public Service Commission, JSC, Economic Relations Division of MOF, and other sectoral agencies. (Appendix 5 has details of program implementation arrangements.)

60. Both EAs will act under the guidance of the Program Steering Committee. The Committee will be chaired by the Cabinet Secretary. Its members will comprise representatives, not below the rank of Joint Secretary, from the Prime Minister’s Office, Office of the Registrar, ACC, JSC, MLJPA, Economic Relations Division of MOF, Finance Division of MOF, Ministry of Home Affairs, Ministry of Foreign Affairs, Ministry of Shipping, Ministry of Establishment, Ministry of Information, Implementation Monitoring and Evaluation Division, and Planning Commission. Other members, such as from the Public Service Commission or from line

42 Gap funding for the remaining costs is assumed to come from the support provided by other development partners

on governance and anticorruption reforms and judiciary support, and from the Government.

18

ministries, shall be co-opted as necessary. The Program Coordinator at the Cabinet Division shall be the member-secretary of the Program Steering Committee. The Committee shall meet whenever necessary, but in any case not less than once every quarter, to (i) provide policy support; (ii) oversee Program implementation and progress; and (iii) facilitate cooperation and coordination among all relevant agencies.

61. There will be two program management units (PMUs), one at the Cabinet Division and the other at the office of the registrar (Supreme Court).

(i) At the Cabinet Division, the PMU, which consists of the existing Governance Unit, will be headed by a program coordinator at the level of an additional secretary or joint secretary. There will also be two deputy program coordinators at the level of deputy secretary or senior assistant secretary, and one administrative officer. There will be a full-time national consultant program manager for 48 months (and a deputy program manager for the initial 24 months) to be based at the PMU to assist the program coordinator in the day-to-day implementation of the Program. In the various implementing agencies a focal point will be designated so that close coordination on a regular basis is possible.

(ii) The PMU at the Supreme Court will be headed by a program coordinator who will be the registrar of the Supreme Court. The office of the registrar will appoint one additional program coordinator, who will be at the level of additional or deputy registrar, and one officer to ensure necessary support services to the PMU who will be designated as Assistant Program Coordinator. There will also be a local full-time consultant program manager who will be based at the PMU to assist the program coordinator in the day-to-day implementation of the Program.

62. Both PMUs will be responsible for work planning, monitoring and evaluation, and providing technical support to the relevant agencies, as necessary. They will coordinate the daily activities of the various implementing agencies, and will provide secretariat services for all program outputs, and support activities in their program areas.

2. Period of Implementation

63. The reforms supported under the program loan are to be completed 48 months after loan effectiveness. However, it is expected that the implementation of various policy reforms and associated operational matters (such as on separation of the judiciary, independent prosecution services, PSC functions, ongoing reforms at the CPA, departmental accountability systems, and citizen grievance and redress mechanisms) will function on an ongoing basis even after the completion of the program loan.

3. Procurement and Disbursement

64. The proceeds of the Program loan will be used to finance the costs (excluding local taxes and duties) of items produced in and procured from ADB member countries (other than those specified in the ineligible list in Appendix 7 and imports financed by other bilateral and multilateral sources).

65. In accordance with the provisions of ADB’s Simplification of Disbursement Procedures and Related Requirements for Program Loans,43 the proceeds of the Program loan will be 43 ADB. 1998. Simplification of Disbursement Procedures and Related Requirements for Program Loans. Manila

(R50-98, 23 March).

19

disbursed to the People’s Republic of Bangladesh as the Borrower. No supporting import documentation will be required but loan proceeds will be disbursed on the basis of certification provided by the Borrower for a period of 12 months for eligible expenditures, starting 180 days prior to loan effectiveness. For each tranche, when Program loan proceeds are expected to be disbursed, the value of total imports minus (i) imports from nonmember countries, (ii) ineligible imports, and (iii) imports financed under other official development assistance, will be equal to or greater than the amount expected to be disbursed during such year. The Government will certify that each withdrawal request complies with this formula. Otherwise, import documentation under existing procedures will be required.

4. Counterpart Funds

66. The Government will ensure that the local currency funds generated from the proceeds of the program loan will be made available to meet the indicative costs, on a proportional basis, associated with the implementation of the Program,44 with particular regard to the following actions:

(i) the implementation of the NIS and UNCAC at all levels; (ii) the operations of the Anticorruption Commission at the central, regional, and

district levels; (iii) the separation of the judiciary from the Executive, including costs for capital

expenditures flowing from such separation; (iv) the implementation of the approved recommendations of the Judicial Service Pay

Commission; (v) the establishment and operation of independent prosecution services; (vi) implementation of grievance handling mechanisms, including citizen report cards

and office of the ombudsman; (vii) the operation of the JSC, and the Judicial Service Pay Commission; and (viii) other reforms, including any performance incentive schemes and human-

resource plans developed under the Program, reforms at the CPA, and independent surveys on program-related interventions.

67. Any counterpart funds not required for the Program will be used for good-governance interventions.

5. Monitoring and Tranching

68. ADB will monitor program implementation through periodic progress reports and will field regular missions to (i) confirm fulfillment of policy actions for tranche release; (ii) confirm release of adequate funds from Government for program activities; (iii) monitor continued applicability of the assumptions that might impact Program success, such as on political conditions, as well as on specified risks and their mitigating measures; and (iv) advise on actions to maintain effective implementation within the program period.

69. Financing for the Program will include three tranches (the policy matrix [Appendix 4] lists the conditions for the release of the three tranches).

(i) The first tranche (not exceeding $50 million) is to be disbursed upon loan effectiveness, or soon thereafter, subject to Government fulfillment of all first tranche release conditions.

44 Program adjustment indicative costs and assumptions are highlighted in Supplementary Appendix G.

20

(ii) The second tranche (not exceeding $55 million) will be disbursed 12 months after program loan effectiveness, upon satisfactory fulfillment of the corresponding tranche release conditions (or earlier than 12 months if the conditions have been met).

(iii) The third tranche ($45 million) will be disbursed 24 months after the second tranche, subject to satisfactory fulfillment of the corresponding tranche release conditions (or earlier than 24 months if the conditions have been met).

6. Accounting, Auditing, and Reporting

70. To ensure proper fund management, ADB retains the right to audit the use of loan proceeds and to verify the accuracy of the Government’s certification for each withdrawal application. Immediately after Program effectiveness, the Government will open a Special Account at Bangladesh Bank for the specific purpose of depositing and utilizing the Counterpart Funds. And prior to withdrawal, the Government will open a deposit account at Bangladesh Bank into which the proceeds of the loan will be deposited and from which all withdrawals will be made. The accounts will be managed, operated, and liquidated in accordance with terms satisfactory to ADB. Both PMUs will send quarterly progress reports to ADB on policy and institutional reforms. The progress reports will describe progress made and any changes to the implementation schedule, and identify any problems encountered and remedial actions taken.

7. Program Performance Monitoring and Evaluation

71. Within 3 months of loan effectiveness, each PMU will establish and maintain a system to monitor Program performance that will include a database on the status of policy measures and Program indicators, based on the policy matrix and the program framework. Such a system will have the following features.

(i) Baseline data in the various areas that the Program targets (technical assistance to be provided to the PMUs will assist in the collection of such baseline data).

(ii) Provision to incorporate the results of regular program monitoring activities, so as to track progress on a continuing basis.

(iii) Use of such a system to better inform periodic program review (particularly for the purposes of confirming fulfillment of tranche-related conditions).

(iv) Provision to incorporate relevant information from associated evaluations that will be undertaken under the Program (such as, for example, that on NIS and UNCAC implementation).

8. Program Review

72. ADB, the Government, and development partners that cofinance the Program will jointly conduct a comprehensive review 3 months prior to the scheduled release of both the second and third tranche funds. There will be a final review at the end of the Program period. In the third year of the Program, three specific independent reviews will have been conducted to assess progress made in the reform agenda; these reviews will be for (i) NIS implementation at all levels of government; (ii) an expert survey and national perception survey on the performance of UNCAC and anticorruption work; and (iii) an assessment of community outreach and corruption prevention activities, including partnerships of anticorruption agencies with civil society. All these reviews will be done by an independent source, such as an NGO.

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9. Corruption and Governance Risks

73. Corruption and governance risks in the Program can be categorized as (i) related to legislation and policy framework (such as the absence of a right to information act), (ii) institutional arrangements (such as, for example, weak prosecution services), or (iii) accountability and transparency (such as weak grievance redress mechanisms in line ministries). The severity of the risks vary but Type I risks (i.e., risks requiring urgent attention and that need to be addressed prior to any assistance being rendered) are being managed partly by ongoing ADB assistance in specific agencies such as the Anticorruption Commission and the CPA, and partly by engaging the Government to demonstrate—and follow-through on—its political commitment to institutional and long-term reforms; Government commitment does not appear to be in short supply in the country at the moment. (For further risk analysis, see Appendix 9 and Supplementary Appendix I.)

74. ADB’s Anticorruption Policy (1998, as amended to date) as well as the Second Governance and Corruption Action Plan was explained to, and discussed with, the Government and the EA. Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to investigate, directly or through its agents, any allegedly corrupt, fraudulent, collusive, or coercive practices relating to the Program. To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the Loan Agreement and the bidding documents for the Program. In particular, all contracts financed by ADB in connection with the Program shall include provisions specifying the right of ADB to audit and examine the records and accounts of the EA and all contractors, suppliers, consultants, and other service providers as they relate to the Program.

V. TECHNICAL ASSISTANCE

75. The outcome of the technical assistance (TA) program is to enhance the capacity of the Government to effectively implement the Good Governance Program.45 This includes engaging civil society more actively for advocacy purposes and to raise public awareness on good governance and how anticorruption measures can be supported at the grassroots level. This component of the Program provides assistance to develop the capacity of the EAs to manage the Program and its activities.

76. Support is also to be provided to implementing agencies to enable them to attain the policy reforms and actions that are specified in the Policy Matrix. In particular, technical assistance support will be provided in the following areas: (i) legal, judicial, and institutional development work; (ii) automation; (iii) Program management; (iv) staff capacity enhancement;

45 The technical assistance to be provided by ADB is to be complemented by other development partners in various

areas related to governance and anticorruption. The European Union has agreed to conduct an appraisal for financing for €10 million for application of the 2004 Birth and Death Registration Act and its implementing rules as an associated intervention under the overall Good Governance Program. The United Nations Office of Drugs and Crime is considering providing approximately $1.5 million in support of the implementation of the UNCAC as well as the alignment between the UNCAC and the Anticorruption Commission Act of 2004. The World Bank is considering provision of financing approximately $2.5 million to develop the investigative capability of the Anticorruption Commission in line with the outcomes sought under this Program. Similarly. the Canadian International Development Agency has expressed an interest in financing approximately $175,000 to support the JSC and work on strengthening the judiciary. The Commonwealth Secretariat is considering providing about $50,000 to support the Anticorruption Commission in the area of performance management within the commission; and a consortium of bilateral development partners (notably Canadian International Development Agency, Danish International Development Assistance [DANIDA], and the Government of Australia) is providing short-term technical support (approximately $0.5m) to the Anticorruption Commission to strengthen various aspects of its operations, including strategic planning and operations, information technology, physical resource requirements, and drawing of lessons from different jurisdictions.

22

(v) organizational performance; and (vi) strengthening aid governance management in central Government (a critical area to ensure that the Program is implemented effectively). Support for any advance procurement that needs to be done for both the EAs will be provided by the TA program (see Appendix 6).

77. The TA program will commence in October 2007 and end in September 2011. It will require a total of 11 person-months of international consulting services and 227 person-months of national consulting services. The consultants will be recruited using individual selection method, least cost selection, fixed budget, and quality-based selection according to ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). The outline terms of reference for the consulting services are in Supplementary Appendix H.

78. The total TA program cost is estimated at $3.00 million, of which:

(i) $1.50 million will be financed by ADB on a grant basis through its technical assistance funding program;

(ii) $1 million will be provided by Government of Denmark on a grant basis to build capability within the Anticorruption Commission and to publicize the NIS across Bangladesh;46 and

(iii) $0.5 million will be contributed by the Government of Bangladesh in kind and cash as counterpart staff, office accommodation, and logistical support.

79. The detailed cost estimates and a financing plan for the TA program are in Appendix 8 (further details are provided in Supplementary Appendix H). The Cabinet Division will be the EA for the TA program, which will be implemented over a period 48 months, commencing from the date of Program loan effectiveness; the consulting services will be delivered intermittently over the TA program implementation period.

VI. PROGRAM BENEFITS, IMPACTS, AND RISKS

A. Expected Benefits

80. The Program loan will help improve the capability of the Government of Bangladesh to better fight the corruption problem in the country, and, in the medium term, institute a system of good governance upon which a strong basis for more rapid and inclusive growth can be established. This, in turn, is expected to directly contribute to a situation where foreign direct investments, and other associated benefits, will be evident. Specific benefits of the Program can be outlined as follows:

(i) A broad and long-term vision of good governance and anticorruption that is aligned to the UNCAC, and is values-based.

(ii) Strengthening of the role of an independent judiciary in not only fighting corruption but also serving as an effective check on the excesses of the Executive.

(iii) Substantial strengthening of the Anticorruption Commission in enforcing relevant laws and curbing corruption, and over time beginning to exert its statutory independence on the basis of public trust and credibility that it will be able to generate as a result of effective performance.

46 This assistance by the Government of Denmark will be provided from its Human Rights and Good Governance

Program, Phase II, which is effective until December 2010.

23

(iv) Encouragement of sectoral agencies to be more involved in instituting anticorruption and good-governance initiatives and actions so as to minimize vulnerabilities to corruption in the public sector.

(v) The establishment of a strong legal framework and practical measures to provide greater opportunities of redress for citizens, which, in turn, will serve as a significant source of demand-driven pressures for good governance in the public sector.

81. As the Program seeks to contribute to the overall agenda on good governance in the country, the entire public will benefit from it. This will be evident in areas such as lower levels of service costs and better services. There is also empirical evidence to show that women have to pay more in bribes than men, that women have to wait longer than men to see officials, and that when they do they are three times more likely to be “queue-jumped” than men. This support proposed here will play a role (albeit an indirect one) in minimizing the negative impact of corruption on women and other marginalized populations in Bangladesh. (A summary social and poverty analysis is presented in Appendix 10.)

82. The key socioeconomic issues that are evident deal with the adverse impacts of corruption and mismanagement of public resources on the economy as a whole and on the lives of the citizens (largely through poor service delivery and greater costs of accessing services). While rent seeking cannot be entirely eliminated in any system, the Program attempts to reduce the incidence of corruption by strengthening not only preventive measures but also measures associated with enforcement and sanctions. These will have positive economic as well as social benefits, including more efficient and effective service delivery, and a greater level of public trust in the Government in the medium to long term.

B. Risks and Safeguards

83. Political Commitment. The Program’s success depends on the Government’s continuing strong commitment to governance reforms in general and, more specifically, to successfully countering the corruption problem. There is a risk that current measures and reform efforts may not be sustained by a future government. This risk may be mitigated by continued policy dialogue not only with Government but also with other stakeholders (such as the judiciary, civil society, and even development partners) to maintain pressure on the government of the day. The Program also targets reforms that are in the public interest, hence attempts at reversal by future governments will be more difficult. The Election Commission is keen to fundamentally reform the political party process, a major source of corruption and abuse of authority; if successful, this will mitigate the risk of reform reversal and will also mean that the Program outcomes and impact will be easier to achieve.

84. The assumptions inherent in the Program are that (i) Government commitment to reforms across the various sectors (including for the Anticorruption Commission) will remain high, (ii) the political system is stable during the implementation period, (iii) the separation of the judiciary from the Executive will be formally completed in the very near future, and (iv) development partners—singly and jointly—remain engaged in the Program. All these assumptions have remained valid during Program processing, and are expected to be so at least until early 2009 when an elected government is expected to be in place.

85. Three other risk areas that could arise in the Program include the following:

(i) Institutional capacity. The Program may place some demands on the institutional capacities of Government agencies that are executing and implementing it. While this is not expected to be substantial in many instances

24

(since much of the reform work reflected in the Program is already underway), close performance monitoring and targeted technical assistance to the two EAs and all implementing agencies will help reduce any adverse effects of implementation delays due to capacity constraints.

(ii) Enabling conditions. The enabling conditions for the Program that are in evidence at the moment may not exist after an elected government takes over as expected in early 2009. This risk can be mitigated by ensuring that the leadership in the various agencies that are a part of the Program is suitably engaged in Program design to ensure continued commitment. The extensive process of consultations within the bureaucracy, and at the top political leadership level itself, to get commitment to the NIS is designed to directly address this risk.

(iii) Fiduciary risks. Fiduciary risks in the Program could be reflected in two specific ways, and mitigating measures for them are as follows:

(a) Expenditure of funds not for the purpose intended. While this is a generic risk in any program loan, for the purposes of this Program the following two risk mitigating measures will be in place. (1) The Loan Agreement will specify arrangements to ensure that

funds are spent for the purposes for which they have been set aside.

(2) Quarterly reporting arrangements are built into the assurances that Government will give to ADB as per the Loan Agreement.

(b) Financial sustainability of agencies involved in the Program. Assurances have been sought from Government that counterpart funds will be made available for program delivery, and that they will be spent for program-specific outputs. Further, while some agencies such as the Anticorruption Commission have already been assured of increased funding from the Government, it has also given assurances that the same will be the case for others, such as the judiciary. Regular monitoring of this commitment will be done as part of program implementation.

VII. ASSURANCES

A. Specific Assurances

86. In addition to the standard assurances, the Government has given the following specific assurances, which are incorporated in the legal documents:

(i) Policies adopted and actions taken prior to the date of the Loan Agreement, as described in the Development Policy Letter, will continue in effect for the duration of the Program period and subsequently.

(ii) The proceeds of the loan will be made available to meet the financial requirements associated with the implementation of the Program; throughout Program implementation, adequate allocation of the required counterpart funds47

47 These counterpart funds will be for, but not limited to, (i) the implementation of the NIS and UNCAC at all levels; (ii)

the operations of the Anticorruption Commission at the central, regional, and district levels; (iii) the separation of the judiciary from the Executive, including costs for capital expenditures flowing from such separation; (iv) the implementation of the approved recommendations of the Judicial Service Pay Commission; (v) the establishment and operation of independent prosecution services; (vi) implementation of grievance handling mechanisms, including citizen report cards and office of the ombudsman; (vii) the operation of the JSC, and the Judicial Service Pay Commission; and (viii) other reforms, including any performance incentive schemes and human-resource plans developed under the Program, reforms at the CPA, and independent surveys on program-related interventions. Any counterpart funds not required for the Program will be used for good governance interventions in Bangladesh.

25

are made, approved, and released in a timely manner to ensure proper implementation of the Program.

(iii) The Government will keep ADB informed of policy discussions with other multilateral and bilateral aid agencies that may have implications for the implementation of the Program, and will provide ADB with an opportunity to comment on any resulting policy proposals. The Government will take into account ADB’s views before finalizing and implementing any such proposals.

(iv) The Government will ensure that all implementing agencies are adequately staffed and provided with the necessary financial, technical, and other resources, including equipment, to perform their functions under the Program.

(v) Within two months of the approval of the NIS, the Government will establish a broad-based and independent high level National Integrity Advisory Committee with a mandate to guide NIS implementation.

(vi) Within 6 months of the approval of the NIS, and every 6 months thereafter, the Cabinet Division will submit reports on the progress of NIS implementation at all levels.

(vii) The Government will ensure that in developing any automation networks, all measures will be taken to guarantee full respect of privacy of information.

(viii) The Government will not intervene, directly or indirectly, in the conduct of policies or actions of the courts, particularly regarding their organizational structure, recruitment of personnel, or actions regarding their management, operational, and financial activities. The Government will refrain from taking any action, directly or indirectly, that inhibits, curbs, or otherwise limits the independence of the judiciary.

(ix) The Government will establish a budget tracking system to track the use of the counterpart funds generated by the loan on a quarterly basis.

(x) Funds for performance management schemes will only be allocated if such scheme is part of a wider human resources development plan that includes: (a) key job descriptions with performance targets; and (b) provisions for career development.

(xi) For the recruitment of new staff as a result of the Program, including judges, investigators and prosecutors, all measures will be taken to attract female candidates. Equally qualified women will be given preference.

(xii) The Government will ensure that for any physical infrastructure built as a result of the Program, the relevant Executing and Implementing Agencies will comply with: (a) Bangladesh’s laws and regulations governing land acquisition; (b) Bangladesh laws and regulations regarding environment; (c) ADB’s Policy on Involuntary Resettlement (1995); and (d) ADB’s Environment Policy (2002). Prior to any construction, the relevant permits and licenses will be obtained.

(xiii) The Government will ensure that all action plans to be prepared as part of the Program will be fully implemented before the end of the Program and that all legislation gazetted will have become fully effective.

(xiv) The Government will ensure that all legislation passed as part of the Program as well as all public awareness campaigns and action plans will be widely published in a way that ensures access by all segments of the population.

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B. Conditions for Loan Effectiveness

87. The following conditions will be met before the loan becomes effective: (i) the PMUs will have been established; and (ii) the Program Steering Committee will have been established.

VIII. RECOMMENDATION

88. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Asian Development Bank (ADB) and, acting in the absence of the President, under the provisions of Article 35.1 of the Articles of Agreement of ADB, I recommend that the Board approve

(i) the loan in various currencies equivalent to Special Drawing Rights 97,910,000 to the People’s Republic of Bangladesh for the Good Governance Program from ADB’s Special Funds resources with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; a term of 24 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Loan Agreement presented to the Board; and

(ii) the provision of technical assistance not exceeding the equivalent of $1,500,000 to the Government of Bangladesh for supporting the Good Governance Program.

Liqun Jin Vice President

5 October 2007

Appendix 1 27

PROGRAM FRAMEWORK

Design Summary Performance Targets/Indicators

DataSources/Reporting

Mechanisms aAssumptions and Risks

Impact Measures of satisfaction of public access to services show yearly increase.

Relevant national surveys on public service delivery

Assumptions Political conditions remain stable

Economic growth and enhanced public access to effective public services Contribution to economic

growth by sectors most vulnerable to corruption shows yearly increases.

Government’s periodic economic reports and budgets

Other external factors do not negatively impact the work on anticorruption and good governance

Public perception of good governance in relevant sectors of operations improves in all surveys.

Evaluation reports; Transparency International and other surveys

Causality of improvements in good governance on economic growth remains valid

Improved Transparency International ranking on corruption (from current CPI score of 2.0 to 2.5 by 2011).

Transparency International surveys

Risk Government focus on good

governance and anticorruption diminishes over time

OutcomeImproved governance and lower incidence of corruption in the public sector in Bangladesh

Demonstrated Government commitment to implementation of the NIS and UNCAC provisions through increased budgetary allocations.

Cabinet documents; budget statements

UN reports on UNCAC program implementation status

Assumptions Continued Government

commitment to the Program as reflected in support to NIAC, the Anticorruption Commission, JSC, NIS and UNCAC implementation, and independence of the judiciary

Cabinet Division and office of the registrar (Supreme Court) better able to manage good governance projects throughout the public sector

Reports of the auditor general, program steering committee reports

Capability is suitably increased in these two agencies

The agencies are adequately resourced for the added workload

NIS is adopted by departments resulting in better management of grievance processes and use of resources, as verified by auditor general’s report.

Reports of auditor general

Civil society organizations continue to demand transparency and accountability in Government work, including in the judiciary

Anticorruption Commission Act of 2004 amended to give Anticorruption Commission clearer powers and greater independence.

Official Gazette; Review mission reports

Anticorruption Commission Act amendments are clear and adhere to due process standards

Yearly increase in corruption cases investigated and prosecuted by Anticorruption Commission.

Anticorruption Commissiondocuments

Relevant capacities are built in Anticorruption Commission’s work

All judicial sector appointments and personnel matters unbundled from the PSC.

JSC documents and Review mission reports

JSC capacity to recruit and manage human resource process is successfully enhanced

Yearly reduction in time taken to resolve corruption cases.

Supreme Court annual reports

Anticorruption courts are established in time

Code of conduct adhered to, and monitored, at the Supreme Court and in district courts.

Supreme Court annual reports

The commitment of senior judiciary remains strong

All departments have fully operational accountability mechanisms or units.

Community level reports on incidence of corruption and mismanagement

Commitment to good governance and anticorruption from sectoral agency heads

Appendix 1 28

Design Summary Performance Targets/Indicators

DataSources/Reporting

Mechanisms aAssumptions and Risks

A functional office of ombudsman handles maladministration and handles cases of petty corruption.

Ombudsman report; budget documents

Office of ombudsman receives political support in the short to medium term

Risks UNCAC provisions do not get

suitably translated in local laws and institutions (due to their broad nature)

Misalignment of NIS stipulations and departmental work

Transaction costs of bringing good governance into mainstream considered high by sectoral agencies

Outputs

Approved NIS with detailed action plan (including targets for UNCAC implementation).

Cabinet directives and decisions

Assumptions Continued political will is

demonstrated Gazetted amended Anticorruption Commission Act in line with UNCAC, and gazetted rules of procedures for Anticorruption Commission Act.

UN reports on UNCAC implementation in Bangladesh; official gazette

Ordinances on all legal changes will be accepted by Parliament when it is eventually reconvened

1. Vision, Strategy, and Procedures,including NIS, UNCAC, amended Anticorruption Commission Act, and strengthened Anticorruption Commission

Performance indicators on vulnerabilities to corruption in departmental work are approved.

Gazetted notices NIS and its targets are fully owned by various agencies within the government

NIAC established and holds regular meetings.

Cabinet directives and decisions

Buy-in of NIAC work in all spheres of Government

NIS implementation reports are published regularly.

NIS reports; reports of review missions

NIS is of good quality and has a clear implementation framework and indicators

Anticorruption Commission performance (as measured by, e.g., case disposal time) shows yearly increase.

Anticorruption Commission reports and records

Substantive increase in resources for Anticorruption Commission’s case management and operational capability

Effective decentralized system of operations in anticorruption

Anticorruption Commission reports

Anticorruption Commission is resourced adequately

Levels of complaints disposal by Anticorruption Commission increases each year.

Anticorruption Commission reports and records

Annual reports provide relevant information in a timely manner

Realistic performance management schemes (at ACC, JSC)

Records of ACC, JSC, and Ministry of Finance

Government has adequate resources to sustain the schemes

Risks Case for reforms becomes weaker

if immediate gains in corruption control and good governance enhancement are not evident

Continued Government commitment to strengthen relevant agencies

Appendix 1 29

Design Summary Performance Targets/Indicators

DataSources/Reporting

Mechanisms aAssumptions and Risks

Gazetted amendments to Code of Criminal Procedure to make judiciary independent.

Official gazette Assumptions Government is able to meet the

Supreme Court-set schedule

2. Enforcement and Sanction Mechanisms,including strengthened judiciary, and improved prosecution services

Implementable staffing and human resource development plans for JSC, judiciary, and prosecution service.

Annual performance reviews

All court bodies are resourced adequately by Government

Performance indicators for judiciary are revised and implemented.

Supreme Court reports Performance indicators are rigorously framed

Published annual reports indicating performance (such as disposal of corruption cases).

Supreme Court documents

Annual reports provide relevant information in a timely manner

Practical and realistic monitoring and reporting protocols at the Supreme Court

Program Steering Committee records, and Supreme Court records

Supreme Court able to convince district courts of benefits from use of such protocols

Submitted declarations of asset statements by those in the judiciary.

Supreme Court and National Board of Revenue records

Supreme Court actively follows up on submission of statements by those in the judiciary

Improvements in judicial facilities, and sufficient resources for operations.

Supreme Court records; budget statements

Government continues to stay committed to strengthening the judiciary

JSC fills judicial vacancies in a timely manner.

JSC records

A separate prosecution service is established with adequate budget.

Law ministry records; budget statements

Risks The judiciary’s independence is

not accompanied by adequate transparency

Agencies (such as JSC) may be insulated from good governance policies internally

Strategic plan for CPA reforms. Ministry of Shipping and CPA records

Assumptions Strategic plan is realistic and

practical VCAs in selected agencies. Agency reports VCAs are done rigorously Corruption risk mitigation strategies in place in at least half the Government agencies.

Agency reports Agency commitment to produce, and adhere to, the strategies is strong

3. Prevention Mechanisms,including focused anticorruption interventions,accountability mechanisms in line ministries, and grievance redress mechanisms

Gazetted right to information, and whistleblower protection legislation.

Official gazette The law is comprehensive in scope and has a clear implementation framework

Political commitment is intact Sector plans to deal with vulnerabilities to corruption are put in place and budgeted for.

Relevant legislative hearings on sector agency work; sectoral budget allocations

Commitment to good governance and anticorruption from sectoral agency heads; and effective legislative oversight in work of sectoral agencies

Complaints handling mechanisms established at all levels of government.

Community level reports on cases or incidence of corruption and mismanagement; agency reports; submissions at www.ekhoni-shomoy.net

Complaints mechanisms are used widely by service users and citizens

Appendix 1 30

Design Summary Performance Targets/Indicators

DataSources/Reporting

Mechanisms aAssumptions and Risks

Transparent and merit-based examination and quota system in the Bangladesh Civil Service

Program Steering Committee reports, records from the Ministry of Establishment

Government is able to get buy-in from different stakeholders on the revised quota system

Office of ombudsman adequately resourced

Budget statement Political commitment to strengthen office of the ombudsman is intact

Risk Weak institutional capacities of

sector agencies impede bringing good governance and anticorruption into mainstream

Activities with Milestones 1.1 Conduct stakeholder consultations and approval of NIS (October 2007–July

2008) 1.2 Establish NIAC on NIS (by mid–2008) 1.3 Prepare action plans associated with NIS and UNCAC at departmental level

(by 3rd quarter 2008) 1.4 Monitor work of departments in line with NIS and UNCAC action plan

(continuous from 3rd quarter 2008) 1.5 Put into action partnership plan on anticorruption work with civil society (from

October 2008) 1.6 Develop decentralized set-up for Anticorruption Commission work (by

October 2008) 1.7 Gazette amended Anticorruption Commission Act aligned to UNCAC (by

October 2008) 1.8 Conduct independent review of NIS and UNCAC implementation (Oct 2010) 1.9 Conduct independent survey on anticorruption work (by October 2010) 1.10 Conduct assessments of community outreach activities (by October 2010) 1.11 Put in place a performance management scheme at Anticorruption

Commission (by October 2010)

2.1 Gradually move recruitment function from PSC to JSC for judges (Oct 2007–Sept 2008)

2.2 Follow up on the directive to all district judges to submit declarations of asset and wealth (from October 2007, and periodically after that)

2.3 Engage in active monitoring of district courts and make broad results publicly available (from October 2007 onwards)

2.4 Conduct a detailed needs analysis of the prosecution service (Oct 2007–March 2008)

2.5 Develop capability development plans in the judiciary (by May 2008, and implemented after that)

2.6 Finalize performance indicators for judiciary (October 2007-September 2008) 2.7 Gazette legislation for an independent prosecution service (by October 2008) 2.8 Gazette legislation prescribing specific qualifications for the recruitment of

High Court judges (by October 2008) 2.9 Publish annual State of the Judiciary report (first report for 2007 to be

published in February 2008; and then annually after that)

3.1 Conduct VCAs in selected agencies and help develop anticorruption strategies as needed (from October 2007 onwards)

3.2 Support CPA and other agencies in implementing their anticorruption strategy (from October 2007 onwards)

3.3 Strengthen and institute inspectorates in key sectoral agencies (Oct 2007–Sept 2008)

3.4 Issue, and follow up on, directive to all civil servants to submit declarations of assets and wealth according to Section 13 of the Government Servants Conduct Rules 1979 (from Oct 2007, and updated every 2 years)

Inputs Program Loan: ADB: $150m Technical Assistance Program:

$2.85m

ADB Grant: $1.50 million, of which: Consultants:

International (8 person-months), $160,000

National (184 person-months), $768,400

International $ local travel: $55,000 Reports & communications: $10,000 Equipment: $100,000 Workshops, training: $260,000 Miscellaneous administration and

support costs: $10,000 Contingencies: $136,600

Government of Denmark: $1.0 million cofinancing, of which: Consultants:

International (3 person-months): $60,000

National (43 person-months): $263,600

International $ local travel: $25,000 Reports & communications: $30,000 Equipment: $180,000 Workshops, training: $270,000 Miscellaneous administration and

support costs: $15,000 Contingencies: $156,400

Government: $0.5 million in-kind and cash, of which: Office accommodation and

transport: $60,000 Remuneration and per diem of

counterpart staff: $220,000 Administrative support: $150,000 Others (including communications,

etc.): $30,000

Appendix 1 31

Activities with Milestones

3.5 Gazette legislation for a Right to Information Act (by October 2008) 3.6 Develop proposals for revised entry and promotion procedures in Bangladesh

civil service (by October 2008) 3.7 Review Official Secrecy Act 1923 and Government Services (Conduct) Rules

1979 (October 2007–Sept 2009) 3.8 Gazette amendments to the 1976 Port Ordinance (by October 2010) 3.9 Use and publicize citizen report cards in selected sectors to address

grievances at the local level (by October 2010) 3.10 Review the existing civil service quota system (by October 2010) 3.11 Publish departmental information on grievances and public complaints (from

October 2010 onwards) 3.12 Develop integrity and anticorruption modules and incorporate them in public

sector training institutes (by October 2010) 3.13 Gazette legislation for a Whistleblower Protection Act (by October 2010) 3.14 Establish well-resourced office of the ombudsman (by October 2010)

Program Supervision and Management 3.15 Establish Program Steering Committee (by October 2007) 3.16 Engage first consultants for program activities (by October 2007) 3.17 Conduct reviews:

Program Steering Committee review (quarterly) Review missions (annually) Tranche condition reviews (before release of tranche 2 and 3 funds)

3.18 Prepare and submit: Program inception report (4th quarter 2007) First program interim report (second quarter 2008) Semi-annual program interim reports (from fourth quarter 2008) Draft program final report (mid-2011)

Program tripartite and final report (third quarter 2011)ADB = Asian Development Bank, CPA = Chittagong Port Authority, CPI = corruption perceptions index, DANIDA = Danish International Development Agency, JSC = Judicial Service Commission, MTBF = Medium-Term Budgetary Framework, NBR = National Board of Revenue, NIAC = National Integrity Advisory Committee, NIS = National Integrity Strategy, PSC = Public Service Commission, TIB = Transparency International Bangladesh, UN = United Nations, UNCAC = United Nations Convention Against Corruption, VCA = vulnerability to corruption assessment. a Data sources listed here will indicate performance of more than one target. Existing reporting mechanisms will guide the

program performance review missions.

Appendix 2 32

SECTOR/SUBSECTOR ANALYSIS

A. Sector Overview

1. Good governance has several benefits: (i) economically it directly contributes to an enhancement of the country’s gross domestic product; (ii) politically it allows service providers to be made more accountable for their actions, and these actions are much more transparent; and (iii) morally it fulfills a bargain between services users and service providers in that the relationship is one based on trust and openness, and a virtuous value system is possible in the relationship between the users and the providers of services.

2. In Bangladesh, this notion of good governance has tended to be absent; economic growth and poverty reduction continue to be frustrated by a lack of accountability, transparency, and predictability in the way government operates (i.e., by poor governance). Indeed, in the public sector, personal greed has always tended to be placed above public interests, which has led the country to the edge of failed statehood.1

B. Nature of the Governance Problem

1. Problem of Corruption

3. Corruption has been the most telling indicator of poor governance in Bangladesh for a long time (see tables 1 and 2 below). According to Transparency International, corruption in Bangladesh was perceived to be the highest in the world for five successive years from 2001; its ranking for freedom from corruption in relation to other such freedoms is also extremely low. Its performance in terms of selected governance indicators has also shown no significant improvement over time.2

Table A2.1: Economic Freedoms in Bangladesh

Note: The trend in ‘freedom from corruption index’ has been a paltry score of 4 in 2003 to 15 in 2006, which is still very low. Source: The Heritage Foundation, Index of Economic Freedom, 2007 (Available: http://www.heritage.org/research/features/index/country.cfm?id=Bangladesh) Fdm fm: Freedom from.

1 Bangladesh has been rated as one of the top 20 states in the world most at risk of failure. See Foreign Policy.

2006. The Failed States Index. May/June. 2 For example, in 2002–2005, values for control of corruption diminished from 13.7 to 7.9, and for rule of law from

25.5 to 19.8. (Source: D Kaufmann, A Kraay, and M Mastruzzi. 2006. Governance Matters V: Governance Indicators for 1996–2005. Washington, DC.)

Year CPI Index Rank/Countries 2001 0.4 Last/91 2002 1.2 Last/102 2003 1.3 Last/133 2004 1.5 Last/145 2005 1.7 Last/158 2006 2.0 156th/163

Source: Transparency International (Available: http://www.transparency.org/policy_research/surveys_indices/global/cpi)

Table A2.2: Ranking for Bangladesh in Transparency International’s Corruption Perception Index

Appendix 2 33

2. Judicial Autonomy and Transparency

4. There is consensus that much more work on good governance can be done in the police force and the judiciary, two critical institutions in Bangladesh.3 The problem stems largely due to political interference in recruitment and management of these institutions. An upcoming study4

on the justice sector in Bangladesh states that the core institutions of formal justice lack independence, and that formal legal mechanisms for holding government and other participants to account have also been severely undermined, particularly by recent processes of politicization across the spectrum. Above all, it emerges that the single greatest source of the justice sector’s problems is the lack of independence of the judiciary from the Executive, and the level of politicization has so hampered the effective delivery of judicial services that poor people have effectively been priced out of the market in getting justice.

3. Voice Mechanisms for Citizens

5. There is less attention paid to this particular problem of the good-governance agenda. The media and nongovernment organizations (NGOs) have indeed provided the opportunity for citizens to voice their concerns regarding mismanagement and poor service delivery, but what is missing is an institutional and formalized mechanism to convey bottom-up concerns of corruption to policy makers. This is evident at two levels: (i) for the common citizen who has been deprived of the right to receive services in an equitable, efficient, and effective manner; and (ii) for the departmental employee who is not empowered to either blow the whistle or channel relevant feedback to the upper hierarchy.

4. Public Service Reforms

6. Despite public sector reform efforts, the civil service remains relatively ineffective and unaccountable, and lacks proper motivation due to a weak incentive system. The highly centralized political and administrative system weakens the government’s capacity to deliver and monitor services effectively. The Public Service Commission (PSC)—the body responsible for recruitment into the Bangladesh civil service—itself is politicized and has been accused of corruption and a lack of transparency.5

C. Government’s Response to Enhance Good Governance

7. Efforts are currently underway to improve core governance systems in areas such as public procurement, financial management, fiscal reporting, and watchdog institutions. Several 3 According to the Transparency International Bangladesh (TIB) corruption database for 2004 and 2005, the police

topped the most corrupt list. The police also routinely come in last in all opinion polls and attitudinal surveys on perceptions of corruption. This is corroborated by a 2006 survey in which 67.3% of respondents said they have no trust in the police and feel that the police sector is the most corrupt (Power Participation Research Centre. 2007. Unbundling Governance: Reforms, Processes, Institutions, and Risks. Dhaka [April]). In the judiciary, the problem is primarily evident at the district court level where “widespread … malpractices delay and deny access to justice for many” (European Commission Justice Identification Mission. 2005. Activating the Justice System in Bangladesh: Final Report. Dhaka [November]). There is also a view that poor terms and conditions of service at the subordinate court level directly contribute to the problem. The European Commission report notes that a large part of this is because income to the Treasury generated by the courts amounts to 2.5 times the annual budget provided to the operational running of the justice system.

4 Bangladesh Rural Advancement Committee. 2007. The Prospects for Justice Sector Reforms in Bangladesh. Forthcoming. January.

5 See, for example, The Daily News. 2007. Probe corruption in PSC, bring culprits to book: Speakers tell TIB roundtable. Dhaka. Friday, 23 March. There are also charges against the Public Service Commission (PSC) of tampering with recruitment processes for entry into the civil service.

Appendix 2 34

reforms to improve sectoral governance are also underway. One in particular that will prove critical for economic activity and international trade for Bangladesh is the governance reform currently underway at the Chittagong Port Authority (CPA). This port handles 85% of all the country’s trade but infrastructural weaknesses, bureaucracy, and administrative red tape has resulted in it being considered “the most expensive port in the region”.6 The CPA has recently introduced measures that will not only speed up port operations through a single point operating system but will also protect importers from the harassment and financial losses they suffer in the stevedoring system.

8. In the area of public administration, reforms have included improvement of a promotion policy for Class I officers (with an emphasis on merit), an improved training policy for Government employees, and the creation of a career planning and training wing in the Ministry of Establishment. To improve public financial management, the Government in FY2005 issued new annual budget guidelines on a pilot basis. These contained elements of more strategic budgeting practices, better fiscal discipline, and better coordination of recurrent and capital budgets. In order to be able to monitor progress against established benchmarks over time, the Government has undertaken expenditure tracking surveys in the health and education sectors to ascertain the effectiveness of service delivery. Furthermore, the Government has recently released a comprehensive Public Financial Management Action Plan.

9. The Government has now also formulated the Money Laundering Prevention Ordinance 2007, which will facilitate the work of the Anti-Money Laundering Department within the Bangladesh Bank. The US is helping establish a financial intelligence unit to combat financial crimes and retrieve assets kept overseas by graft suspects. Though set up in 2003 in line with the anti-money laundering law enacted in 2002, the Anti-Money Laundering Department was not able to do its work effectively. With this ordinance, the Bangladesh Bank can work with other countries on financial crime investigation, and exchange information and expertise with financial intelligence units of other countries.7

10. The Supreme Court has now accepted the four rules on independent judicial service and the amended Code of Criminal Procedure (Amendment) Ordinance, legislated by the Government to separate judicial service, including the judicial magistracy, from government control in compliance with its 12-point directive for eventual separation of the judiciary. The interim government, taking the final legislative step towards separation of the judiciary, amended the Judicial Service Pay Commission Rules 2007 in late April 2007. The new rules stipulate that existing magistrates who have opted for the judiciary will be absorbed into the judicial service for 3 years so that a sufficient number of officers can be appointed to the judicial

6 It is also considered the most inefficient: the number of days waiting for operations in Chittagong Port is 10 as

opposed to less than a day for all other comparable country ports; similarly, Chittagong Port handles only 5.2 containers per hour whereas other comparable ports handle 40–76. (Fixing our ports and beyond. The Daily Star.2007. Dhaka. Monday, 23 April.)

7 This is an important aspect of anticorruption work and has the potential to substantially bolster the Government’s fiscal position. For the first time in its history, in April 2007 the Government was able to retrieve Tk 2.7 billion of illegal money from seven businessmen, and is expecting to recover around Tk3.0 billion more soon, much of which was illegally transferred abroad. The Bangladesh Bank reiterates this point by saying that the anti-money laundering and anticorruption drives by the Government and the move by the National Board of Revenue to expand the tax net are expected to yield positive results in terms of revenue gains for the Government. On the other hand, anticorruption drives have also had an indirect negative effect: e.g., car sales dropped 50% in the first 3 months of 2007 for fear of problems (The Daily Star, Saturday, 24 March 2007); similarly, credit and deposit growth of commercial banks fell “drastically” in the first quarter of 2007 (by up to six to eight times of that in previous periods) as the joint forces and the National Board of Revenue have been checking bank accounts as part of the anticorruption crackdown (The Daily Star. 2007. Dhaka, Tuesday, 15 May).

Appendix 2 35

service in this interim period. According to the report submitted by the Government in April, only 31 existing magistrates have opted for being absorbed into the judicial service. As of the end of February 2007, 484,832 cases are pending with the courts of magistrates across the country and at least 890 magistrates are required to deal with them. None of the metropolitan magistrates, however, have so far opted for absorption into the judicial service. As of the end of February 2007, 112,772 cases are pending with the courts of the metropolitan magistrates and at least 52 magistrates are needed to deal with them.

11. The Government wishes to implement the separation of the judiciary at the earliest opportunity, including (i) the streamlining of recruitment of judges,8 (ii) independent judicial administration and management through the Supreme Court, (iii) special pay package for the judges, (iv) court reforms (particularly caseload management and modernization of systems), and (v) permanent and neutral prosecution services. The ordinance, which proposes 100 amendments to the Code of Criminal Procedure 1898, strips the executive magistrates (including deputy commissioners) of judicial powers and functions.

12. Other steps the Government is taking or considering to institute good governance include (i) a consumer protection law, which should have an indirect impact on curbing corruption since consumers would have greater rights to demand, and receive, better services; (ii) corporatization of several state-owned enterprises and nationalized commercial banks, which will ensure that government patronage in these organizations will diminish and market pressures will assist them to provide better services; (iii) a website to receive corruption complaints; 9 (iv) in April 2007 the Government revisiting the Members of Parliament (Remuneration and Allowances) Act 1973 and rescinding the privilege of members of Parliament to import of cars free of duty, a privilege that had been hugely abused in the past;10

and (v) effective implementation of the Public Procurement Act 2006.11

13. Finally, the Government has embarked on the following courses to tackle the corruption problem.

(i) Stronger enforcement for short-circuiting the culture of impunity. The Government has agreed to substantially revamp the Anticorruption Commission (supported by the National Coordination Committee on Combating Corruption and Crime [NCC]) 12 so that it can carry out its work more effectively. This, coupled with several arrests of known and suspected corrupt officials, has meant that for the first time there is an opportunity for the culture of impunity to be substantially targeted.

8 This is a critical issue; the chief justice himself has publicly stated that the irregularities in appointment of judges in

the past will “need at least 20 years to remove” (The Daily Star. 2007. Dhaka. 30 April). 9 This is available at: www.ekhoni-shomoy.net. 10 For example, it has been reported that during the period October 2001 to October 2006, a total of 303 expensive

and luxury cars or jeeps were imported free of duty, costing the Government revenues amounting to Tk2.11 billion (The News Today. 2007. Dhaka. Tuesday, 17 April).

11 While the act is a very useful tool, contract awards provide opportunities for procurement, and political influence and pressure from trade unions in the procurement process compound the problem. The World Bank recently completed an assessment of procurement practices in Bangladesh and concluded that the implementation of procurement is very uneven across agencies, and barring some exceptions, the process is far from satisfactory.

12 Having said this, the fact that there are at present 40 task forces led by the NCC and the Anticorruption Commission mean that anticorruption work has a substantial coordination problem (The Daily Star. 2007. Dhaka. Friday, 20 April).

Appendix 2 36

(ii) Taking a broad and long-term vision of anticorruption. Both the Government and civil society have forcefully highlighted the corruption issue, and there is a rising expectation among the public that the Government will not only begin to enforce and sanction corrupt officials but also put in place mechanisms that will deter the type of massive corruption that has been the hallmark of public life in Bangladesh. The Government has talked about the need for an institutional framework (led by the Anticorruption Commission but including other agencies, such as the National Board of Revenue) that will begin to address the problem in a concerted manner and with a long-term vision, strategy, and achievement of anticorruption outcomes across sectors, institutions, and levels of government. The substantive basis of this vision is emerging in the Government’s decision in March 2007 to ratify the United Nations Convention Against Corruption (UNCAC). Supplementary Appendix B has more information on the UNCAC.

(iii) Strengthening the Anticorruption Commission. Already three new commissioners have been appointed, all with the requisite experience and technical competencies. The change at the top has given the commission greater visibility and raised public confidence that past practices will no longer apply. As for staffing, the Government has finalized the amendments to the existing organization structure (or organogram) of the Anticorruption Commission raising the number of its staff from 650 to 1,257, and the commission has been given greater powers to pursue, investigate, and prosecute the corrupt.

(iv) Strengthening the role of the judiciary in anticorruption. As noted earlier, the Government has already accepted the Supreme Court’s 2000 decision to separate the judiciary from the Executive at the district level. Ensuring the independence of the judiciary implies that at the very least there is no government interference in the appointment of judges, and that the judges have security of tenure (thus minimizing the opportunities for interference), security of salary and remuneration, and there is institutional independence of the subordinate judiciary especially from Parliament and the Government.

(v) Bringing good governance into the mainstream at sector level. Striking gaps in Bangladesh at the moment are (a) the absence of focus on, and application of, anticorruption measures at the sectoral level; and (b) the absence of any measures to reduce citizens’ vulnerability to corruption. This is evident in (a) internal processes in sectoral agencies that need to be upgraded or rigorously enforced; and (b) the identification of key interventions that will provide an enabling environment for citizen access and participation in preventing corruption. For instance, the right to information is a critical requirement to enhance transparency of government decisions but the legal framework for the exercise of this right does not yet exist. Such enabling features are essential to strengthen the anticorruption drive in Bangladesh.

14. In summary, the Government commitment to make much-needed reforms in the governance sector is most evident in (i) its strong support for the work of the Anticorruption Commission, (ii) separating the judiciary from the Executive, (iii) beginning to address systemic weaknesses in the management of the civil service, and (iv) seeking to improve sectoral governance. These are also the focus areas of the Good Governance Program.

Appendix 3 37

DEVELOPMENT COORDINATION MATRIX (Major Donors and Relevant Governance Areas)

Area of Program/Project Areas of Coverage/Objectives

Financial and Other Information

Danish International Development Assistance (DANIDA)Part of Legal and Judicial Capacity Building Project

Capacity building of the Judicial Administration Training Institute.

Danish kroner (DKr)13 million over 5 years (2002–2007); extended until 2008

Preparatory phase of the ombudsman institution

Activities in preparation for setting up an ombudsman. DKr1.09 million over 3 years (from 1999; extended until 2004)

Local Governance Support Project

Performance based block grants, capacity development, research and studies under the learning and innovation component.

Basket funding with UNCDF, UNDP, EU from 2007–2010; DKr12 million

Strengthening of Parliament

Electronic governance (E-governance) support, training. Cofunding with UNDP DKr3.52 million

Judiciary support Separation of judiciary including support to the Supreme Court.

Discussion ongoing with stakeholders and donors

Department for International Development (DFID), UKTIB Making Waves Project

Increased demand by men and women for transparency in public, nonprofit, and private-sector transactions. Supporting committees of concerned citizens (community watchdog groups) to make them more aware of, and vocal about, corruption in the public sector and poor public-service delivery; supporting TIB to publicize corruption.

In association with NORAD, SIDA and DANIDA with funding of £4.3 million

Human Rights and Governance Fund (Manusher Jonno Project)

Enhance the capacity of, and opportunities for, poor men, women, and children to demand improved governance and recognition of their rights.

In 2002; funding of £13.5 million; initially administered by CARE International

Financial Management Reform Project

Strengthen public financial management system in the Ministry of Finance and selected line ministries, to provide relevant, accurate, and timely information to Government policy makers and other stakeholders.

Cofunded by the Netherlands; total allocation from DFID €18.8 million

Public service capacity building program (Managing at the top [MATT])

Supporting high-level management training of civil servants to create a critical mass of reform-minded civil servants (particular support is given for performance improvement and human resource management)

MATT 2 started in 2006 with funding of £15.2 million; MATT 1 was from 1999 to 2002

Police Reform Program

To improve crime prevention, investigation, human resource management, and strategy of Bangladesh Police. The police have set up 11 model police stations and victim support facilities, undertaken the first public opinion surveys of policing, and started initiatives to combat human trafficking and get children out of adult prisons.

In association with UNDP and Ministry of Home Affairs, £5.5 million; duration: 2004–2007

European Union (EU) Bangladesh Investment Climate Fund

Private sector development to address challenges linked to improving governance and investment climate through regulatory reform and better management of economic zones; strengthening civil service capacity for this.

Total project cost: €43.876 million; EU contribution: €15.8 million; cofinancing with DFID and IFC

Strengthening Communities' Rights and Empowerment

Increase community participation in decision making and ensure that poor people’s voices inform and influence government policy and practice at local and national levels

Total project cost: €0.467 million EU contribution: €0.351 million; cofinancing with CIDA

Public Finance Management (planned intervention)

The goal of the Financial Management Reform Program is to improve the efficiency and effectiveness of the allocation of resources and to achieve more equitable and improved public service delivery.

Approximate EU contribution €15–20 million; cofinanced by DFID, CIDA, World Bank, Netherlands

Support to the Justice System – Activating the Village

Empower and enable poor, women, and vulnerable groups to access a fair and effective justice system at the local level by activating village courts so that disputes may be resolved in

Total project cost: €11 million; EU contribution: €10 million;

38 Appendix 3

Area of Program/Project Areas of Coverage/Objectives

Financial and Other Information

Counts an expeditious, transparent, and affordable manner. starting September 2007 Local Governance Support Project – Learning and Innovation Component

Contribute to good governance and poverty reduction by improving delivery of pro-poor services. The specific project purpose is to enhance the capacity of union parishads to deliver pro-poor services in an effective and accountable manner.

Total project cost: €12.936 million; EU contribution: €9.6 million; started April 2007

Japan Police Reforms, and strengthening Bangladesh Public Administration TrainingCentre (BPATC)

Procurement of vehicles, establishment of forensic laboratory, construction of 25 model police stations, computerization of police stations (2005–2007); human resource development for BPATC and other stakeholders, and training programs at BPATC (2007–2010).

Approximately $18 million under the policy of debt cancellation

Local Governance: Participatory Rural Development Project Phase 2; and Local Development Coordination Program

To improve access to governmental services for village communities and to improve the responsiveness of union parishads and line agencies to the needs of the community; to promote local good governance in selected regions by strengthening mechanism of empowerment of local community and strengthening the link among community, union parishads and line agencies.

2005–2010; funding of $5.7 million

The Netherlands Budget and control procedures

Cofunds with DFID the Financial Management Reform Program (FMRP) of the Ministry of Finance (the next phase could be a public financial management swap or an extension of FMRP).

Will end 2008; total amount: €10 million

Master’s degree course in Governance and Development at the Center for Governance Studies, BRAC University)

Support for two interlinked governance activities: (a) delivering a master’s degree program on governance and development tailored to the needs of civil servants; and (b) strengthening of the Centre for Governance Studies as well as work on institutions of accountability, such as the judiciary. Objective is to create a critical mass of people who are able to implement reforms quickly.

Ongoing project; $1.5 million

United Nations Development Programme (UNDP) Police Reform Program

Legal reform (including the Police Act); crime prevention and community policing, investigation, police operations and prosecutions, human resource management and training, construction of new police stations, and oversight and capacity building (police complaints commission and national police commission).

$16.17 million; 2004–2009; with support from DFID and EU

Strengthening Parliamentary Democracy

To strengthen Parliament’s legislative and oversight functions; institutional reforms; revision rules to business, reform committee system; orientation for members of Parliament, staff training, staff support for members of Parliament and parliamentary committees.

$7.4 million (DFID cost-sharing); 1997–2007

Promoting Access to Justice and Human Rights in Bangladesh

Assist government to legislate national human rights commission law, strengthen the Supreme Court, expedite separation of judiciary from the Executive, awareness-building on human rights, strengthen government capacity to provide legal aid services.

$3 million (yet to be launched)

Anticorruption (Anticorruption Advocacy Campaign 2006–2008)

The campaign is promoting and implementing (a) open discussion on corruption and integrity; (b) dissemination of information on what individuals, groups, and organizations can do to curb corruption; and (c) direct strategic interventions to strengthen anticorruption efforts.

$0.42 million; will be completed in 2008

Civil service capacity Capacity development of BPATC, institutional assessment of BPATC and PSC, field administration.

$0.713 million; 2005–2007

Local Governance Make financial resources available to union parishads in equitable and appropriate ways, improve public expenditure systems for union parishads, enhance mechanisms for local accountability.

$18.12 million; up to the end of 2011; cost sharing from UNCDF, EU, and DANIDA

Appendix 3 39

Area of Program/Project Areas of Coverage/Objectives

Financial and Other Information

Government of the United States Local Governance Initiative

Improvements in service delivery and decentralization policy reform.

$5.6 million over 6 years; project ends September 2008

Anticorruption and Parliamentary committees

Support budget analysis capacity of government, strengthen media reporting and analysis on anticorruption issues, strengthen capacity of community organizations to prevent corruption and promote reform, support parliamentary committees’ role in executive oversight.

$20 million from 2007–2011 (yet to be determined)

Anti-money laundering, including law enforcement and prosecution

Support to creating a financial investigation unit and prosecution unit; as well as training law enforcement officers in conducting criminal investigations (supported by US Department of Justice)

Approximately $0.1 million until October 2007; funding levels not certain for coming years

World Bank Public finance and budget management

Public Expenditure and Institutional Review (involves three agencies: ministries of Finance and Planning, and C&AG)

Approximately $0.3 million

Procurement (Public Procurement Reform Project II [PPRP II])

The objectives of PPRP II are to improve performance of the public procurement system progressively in Bangladesh, focusing largely on the key sectoral ministries and targeting their implementing agencies.

$24.9 million ($1.3 million from Government); 5-year program from 2007

Legal and Judiciary Capability Building Project

Infrastructure, efficiency of commercial justice system, case management and court administration reforms, court-based mediation, legal aid and legal awareness; judicial training (DANIDA implemented); enhancing law reform and legal drafting capacity (CIDA implemented)

$30.6 million; 5 years duration; the project may be extended until the end of 2008, and incorporate support for a land titling project

Voice and anticorruption

Initiated several corruption-related studies contributing to the development of an anticorruption strategy, freedom of information policy note and dialogue, WBI Media and Information Environment, undertaking political economy analyses of various sectors (e.g., roads) in order to assess risks and understand the politics of institutional reform, and some survey work with think tanks on corruption in the roads and power sectors. Currently considering support for strengthening the Anticorruption Commission (in the area of investigation) from Economic Management Technical Assistance Program.

No specific amount can be ascertained; the WBI media project is for $2.5 million (Canadian); $2.5 million for Anticorruption Commission planned

Bangladesh Local Governance Support Project

Aims to support union parishads in providing services that meet community priorities. The project will focus on capacity building, particularly regarding financial management and procurement. Following this, union parishads will receive additional fiscal transfers through the Government’s block grant system.

$208 million (World Bank $111.5 million; UNCDF, UNDP, EU, and DANIDA $18 million; remainder government); 2006–2011

Strengthening core governance institutions

(a) Stand-alone project: Strengthening PAC; (b) Support C&AG in drafting Audit Act; (c) WBI Parliamentary Program; (d) Workshop series on Institutions of Accountability: Support for enhancing accountability and transparency in governance institutions including C&AG, PAC, Bangladesh Bank, PSC, and Supreme Court.

(i) $0.8 million (ii) nonlending TA support; (iii) C$2.5 million over 3 years; (iv) approximately $0.25 million

BPATC = Bangladesh Public Administration Training Centre, BRAC = Bangladesh Rural Advancement Committee, C&AG = Comptroller and Auditor General, CARE = Christian Action Research and Education, CIDA = Canadian International Development Agency, DANIDA = Danish International Development Assistance, DFID = Department for International Development, DKr = Danish kroners, EU = European Union, IFC = International Finance Corporation, MATT = Managing at the Top, NORAD = Norwegian Agency for Development Cooperation, PAC = Public Accounts Committee, PPRP = public procurement reform project, PSC = Public Service Commission, Sida = Swedish International Development Agency, TIB = Transparency International Bangladesh, UNCDF = United Nations Capital Development Fund, UNDP = United Nations Development Programme, WBI = World Bank Institute. Sources: Asian Development Bank, with inputs from various development partners.

40 Appendix 4

DEVELOPMENT POLICY LETTER AND POLICY MATRIX

Appendix 4 41

42 Appendix 4

Appendix 4 43

44 Appendix 4

Appendix 4 45

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in 2

4 m

onth

s of

sec

ond

tran

che)

(1)

V

isio

n, S

trat

egy,

an

d P

roce

du

res

(i) N

atio

nal I

nteg

rity

Str

ateg

y C

abin

et D

ivis

ion

to a

ppro

ve a

det

aile

d co

nsul

tatio

n pl

an to

see

k fe

edba

ck o

n th

e de

sign

of t

he N

IS fr

om a

ll st

akeh

olde

rs a

cros

s th

e co

untr

y (A

pp

rove

d c

on

sult

atio

n p

lan

on

N

IS–C

abin

et D

ivis

ion

)

Cab

inet

to a

ppro

ve a

nd p

ublis

h th

e N

IS, i

nclu

ding

a

deta

iled

time-

boun

d ac

tion

plan

, with

res

ourc

e al

loca

tion,

for

both

cen

tral

and

loca

l lev

el

Gov

ernm

ent,

to im

plem

ent t

he N

IS (

Ap

pro

ved

NIS

an

d a

ctio

n p

lan

–Cab

inet

)

Cab

inet

Div

isio

n to

pub

lish

outc

omes

of

an in

depe

nden

t rev

iew

of N

IS

impl

emen

tatio

n at

all

leve

ls o

f G

over

nmen

t(E

valu

atio

n r

epo

rt b

y in

dep

end

ent

sou

rce–

Cab

inet

Div

isio

n)

(ii)

UN

Con

vent

ion

Aga

inst

Cor

rupt

ion,

A

CC

Act

and

rul

es

of p

roce

dure

s;

stre

ngth

ened

AC

C

Min

istr

y of

For

eign

Affa

irs to

con

stitu

te in

ter-

min

iste

rial c

omm

ittee

with

TO

R to

pre

pare

ac

tion

plan

for

the

impl

emen

tatio

n of

UN

CA

C

(Mem

ora

nd

um

an

d T

OR

of

Co

mm

itte

e–M

inis

try

of

Fo

reig

n A

ffai

rs)

Gov

ernm

ent t

o re

cons

titut

e th

e A

CC

(G

azet

ted

no

tifi

cati

on

–Cab

inet

Div

isio

n)

Cab

inet

Div

isio

n to

app

rove

the

AC

C

prop

osed

dec

entr

aliz

ed s

et-u

p as

ref

lect

ed in

th

e re

vise

d or

gano

gram

(C

op

y o

f ap

pro

ved

re

vise

d o

rgan

og

ram

–Cab

inet

Div

isio

n)

Min

istr

y of

Law

to g

azet

te a

men

dmen

ts to

A

CC

Act

200

4, A

ntic

orru

ptio

n A

ct a

nd R

ules

19

57, a

nd th

e am

endm

ents

to th

e C

rimin

al

Law

Am

endm

ent A

ct 1

958

(Gaz

ette

no

tifi

cati

on

–Min

istr

y o

f L

aw)

Min

istr

y of

Law

or

Par

liam

ent S

ecre

taria

t1 to

gaze

tte a

men

ded

AC

C A

ct, a

ligne

d to

the

UN

C

onve

ntio

n A

gain

st C

orru

ptio

n (G

azet

ten

oti

fica

tio

n–M

inis

try

of

Law

)

Min

istr

y of

Law

to fi

naliz

e ga

ps a

naly

sis

of

Ban

glad

esh

lega

l fra

mew

ork

vis-

à-vi

s U

NC

AC

(R

epo

rt o

n g

aps

anal

ysis

–Min

istr

y o

f L

aw)

Cab

inet

Div

isio

n, th

roug

h M

inis

try

of L

aw to

ga

zette

all

revi

sed

AC

C r

ules

of p

roce

dure

in

corp

orat

ing

the

amen

dmen

ts to

the

2004

AC

C

Act

(Gaz

ette

no

tifi

cati

on

–Min

istr

y o

f L

aw)

Min

istr

y of

Fin

ance

to in

crea

se a

lloca

tion

for

deve

lopm

ent b

udge

t of A

CC

with

suf

ficie

nt fu

nds

to

allo

w it

to im

plem

ent i

ts d

ecen

tral

ized

set

-up

and

its c

omm

unity

out

reac

h pr

ogra

m (

Bu

dg

et

stat

emen

t–F

inan

ce D

ivis

ion

)

Cab

inet

Div

isio

n to

pub

lish

resu

lts o

f in

depe

nden

t exp

ert s

urve

y an

d na

tiona

l pe

rcep

tion

surv

ey o

n pr

ogre

ss in

(i)

antic

orru

ptio

n w

ork,

and

(ii)

UN

CA

C

impl

emen

tatio

n (E

valu

atio

n r

epo

rt–

Cab

inet

Div

isio

n)

Cab

inet

Div

isio

n to

pub

lish

resu

lts o

f as

sess

men

t of c

omm

unity

out

reac

h an

d co

rrup

tion

prev

entio

n ac

tiviti

es, i

nclu

ding

pa

rtne

rshi

p m

odal

ities

of a

ntic

orru

ptio

n ag

enci

es w

ith c

ivil

soci

ety

(Eva

luat

ion

re

po

rt–C

abin

et D

ivis

ion

)

Min

istr

y of

Fin

ance

to a

lloca

te s

uffic

ient

fu

nds

to a

llow

AC

C to

impl

emen

t its

ap

prov

ed p

erfo

rman

ce m

anag

emen

t sc

hem

e (B

ud

get

sta

tem

ent

– F

inan

ce

Div

isio

n)

(2)

E

nfo

rcem

ent

and

San

ctio

n M

ech

anis

ms

(i) S

tren

gthe

ned

Judi

ciar

y M

inis

try

of L

aw to

gaz

ette

Apr

il 20

07

amen

dmen

ts to

the

rule

s of

the

Cod

e of

C

rimin

al P

roce

dure

189

8 w

hich

are

rel

ated

to

the

sepa

ratio

n of

the

judi

ciar

y (G

azet

te

no

tifi

cati

on

–Min

istr

y o

f L

aw)

Sup

rem

e C

ourt

to is

sue

dire

ctiv

e to

all

judg

es

Judi

cial

Ser

vice

Com

mis

sion

to c

ompl

ete

entr

y ex

amin

atio

ns fo

r 10

0 as

sist

ant j

udge

s (P

rog

ress

re

po

rt–J

SC

)

All

judg

es o

f sub

ordi

nate

cou

rts

to s

ubm

it a

decl

arat

ion

of a

sset

s an

d w

ealth

sta

tem

ent t

o th

e O

ffice

of t

he R

egis

trar

(R

epo

rt o

n s

ub

mis

sio

n–

Min

istr

y of

Fin

ance

to a

lloca

te s

uffic

ient

bu

dget

to m

eet t

he a

ppro

ved

capi

tal a

nd

oper

atio

nal e

xpen

ditu

res

for

the

full

oper

atio

n of

the

Judi

cial

Ser

vice

C

omm

issi

on(B

ud

get

sta

tem

ent–

Min

istr

y o

f F

inan

ce)

1 T

he M

inis

try

of L

aw c

an is

sue

a ga

zette

not

ifica

tion

whe

n P

arlia

men

t is

not i

n pl

ace;

oth

erw

ise,

it is

the

Par

liam

ent S

ecre

taria

t tha

t doe

s so

.

46 Appendix 4

Ou

tpu

t F

irst

Tra

nch

e (u

pon

loan

effe

ctiv

enes

s)

Sec

on

d T

ran

che

(with

in 1

2 m

onth

s of

firs

t tra

nche

) T

hir

d T

ran

che

(with

in 2

4 m

onth

s of

sec

ond

tran

che)

of s

ubor

dina

te c

ourt

s on

the

stric

t im

plem

enta

tion

of th

e ru

les

on s

ubm

issi

on o

f de

clar

atio

n of

ass

ets

and

wea

lth s

tate

men

ts to

th

e O

ffice

of t

he R

egis

trar

(D

irec

tive

–S

up

rem

e C

ou

rt)

Min

istr

y of

Law

to n

otify

the

appr

oved

or

gano

gram

of t

he ju

dici

al s

ervi

ce

(No

tifi

cati

on

–Min

istr

y o

f L

aw)

Judi

cial

Ser

vice

Com

mis

sion

(JS

C)

to

com

plet

e fir

st d

epar

tmen

tal e

xam

inat

ion

to

conf

irm th

ose

assi

stan

t jud

ges

on p

roba

tion

(Pu

blis

hed

exa

min

atio

n r

esu

lts–

JSC

)

Off

ice

of

the

Reg

istr

ar)

Min

istr

y of

Law

or

Par

liam

ent S

ecre

taria

t to

gaze

tte le

gisl

atio

n pr

escr

ibin

g sp

ecifi

c qu

alifi

catio

ns fo

r th

e re

crui

tmen

t of S

upre

me

Cou

rt

judg

es (

Gaz

ette

no

tifi

cati

on

–Min

istr

y o

f L

aw)

Min

istr

y of

Fin

ance

to a

lloca

te s

uffic

ient

bud

get t

o m

eet t

he in

crea

ses

in s

peci

al a

llow

ance

s th

at m

ay

be r

ecom

men

ded

by th

e Ju

dici

al S

ervi

ce P

ay

Com

mis

sion

and

app

rove

d by

Gov

ernm

ent

(Bu

dg

et s

tate

men

t–M

inis

try

of

Fin

ance

)

Min

istr

y of

Fin

ance

to a

lloca

te s

uffic

ient

bud

get t

o m

eet t

he a

ppro

ved

deve

lopm

ent e

xpen

ditu

res

for

dist

rict c

ourt

s to

impl

emen

t the

pol

icy

of

sepa

ratio

n of

the

judi

ciar

y fr

om th

e ex

ecut

ive

(Bu

dg

et s

tate

men

t–M

inis

try

of

Fin

ance

)

Sup

rem

e C

ourt

to p

ublis

h 20

07 S

tate

of t

he

Judi

ciar

y re

port

, inc

ludi

ng r

esul

ts o

f ann

ual

rand

om in

spec

tion

and

mon

itorin

g ac

tiviti

es o

f di

stric

t cou

rts

(Sta

te o

f th

e Ju

dic

iary

rep

ort

–S

up

rem

e C

ou

rt)

Judi

cial

Ser

vice

Com

mis

sion

to c

ompl

ete

entr

y ex

amin

atio

ns fo

r al

l app

rove

d po

sitio

ns fo

r as

sist

ant j

udge

s (P

rog

ress

re

po

rt–J

SC

)

(ii)

Impr

oved

pr

osec

utio

n se

rvic

e

Min

istr

y of

Law

or

Par

liam

ent S

ecre

taria

t to

gaze

tte le

gisl

atio

n fo

r th

e cr

eatio

n of

an

inde

pend

ent a

nd c

ompe

tent

pro

secu

tion

(or

atto

rney

) se

rvic

e (G

azet

te n

oti

fica

tio

n–M

inis

try

of

Law

)

(3)

Pre

ven

tio

n M

ech

anis

ms

(i) F

ocus

ed

Ant

icor

rupt

ion

Inte

rven

tions

Chi

ttago

ng P

ort A

utho

rity

(CP

A)

to c

ompl

ete

a V

ulne

rabi

lity

to C

orru

ptio

n A

sses

smen

t (V

CA

) fo

r th

e C

hitta

gong

Por

t (V

CA

–Ch

itta

go

ng

P

ort

Au

tho

rity

(C

PA

))

CP

A to

est

ablis

h a

com

mitt

ee w

ith T

OR

to

deve

lop

a st

rate

gic

plan

for

refo

rms

at C

PA

(M

emo

ran

du

m a

nd

TO

R o

f C

om

mit

tee–

CP

A)

Shi

ppin

g M

inis

try

to a

ppro

ve a

str

ateg

ic p

lan

for

actio

n on

ref

orm

s at

the

CP

A (

Act

ion

pla

n –

M

inis

try

of

Sh

ipp

ing

)

Pow

er D

ivis

ion,

Min

istr

y of

C

omm

unic

atio

ns, M

inis

try

of E

duca

tion,

M

inis

try

of H

ealth

, and

Min

istr

y of

S

hipp

ing

to a

ppro

ve c

orru

ptio

n ris

k m

itiga

tion

stra

tegi

es in

line

with

the

NIS

(C

orr

up

tio

n r

isk

mit

igat

ion

str

ateg

ies–

Rel

evan

t M

inis

trie

s)

Min

istr

y of

Shi

ppin

g, th

roug

h M

LJP

A, t

o

Appendix 4 47

Ou

tpu

t F

irst

Tra

nch

e (u

pon

loan

effe

ctiv

enes

s)

Sec

on

d T

ran

che

(with

in 1

2 m

onth

s of

firs

t tra

nche

) T

hir

d T

ran

che

(with

in 2

4 m

onth

s of

sec

ond

tran

che)

gaze

tte, a

s re

quire

d, (

1) a

ny a

men

dmen

ts

to e

xist

ing

rule

s an

d re

gula

tions

, or

(2)

new

rul

es a

nd r

egul

atio

ns, t

o re

flect

the

ap

prov

ed c

hang

es in

man

agem

ent

resu

lting

from

a c

ompu

teriz

ed te

rmin

al

man

agem

ent s

yste

m a

t Chi

ttago

ng P

ort

(Gaz

ette

no

tifi

cati

on

–Min

istr

y o

f S

hip

pin

g)

(ii)

Acc

ount

abili

ty

Mec

hani

sms

in L

ine

Min

istr

ies

Gov

ernm

ent t

o re

cons

titut

e th

e P

ublic

Ser

vice

C

omm

issi

on(G

azet

te n

oti

fica

tio

n -

Min

istr

y o

f E

stab

lish

men

t)

Min

istr

y of

Est

ablis

hmen

t to

issu

e a

circ

ular

to

all p

ublic

ser

vant

s on

the

stric

t im

plem

enta

tion

of th

e ru

les

on th

e su

bmis

sion

of

dec

lara

tion

of a

sset

s an

d w

ealth

st

atem

ents

to th

eir

resp

ectiv

e lin

e ag

enci

es

(Cir

cula

r–C

abin

et D

ivis

ion

)

Min

istr

y of

Fin

ance

to is

sue

guid

elin

es o

n,

and

prov

ide

reso

urce

s fo

r, s

tren

gthe

ning

in

tern

al a

udit

in M

TB

F m

inis

trie

s (G

uid

elin

es

and

bu

dg

et a

lloca

tio

n–M

inis

try

of

Fin

ance

)

At l

east

50%

of l

ine

min

istr

ies

to e

stab

lish

easi

ly

acce

ssib

le g

rieva

nce

hand

ling

mec

hani

sms

(Dep

artm

enta

l rep

ort

s–lin

e M

inis

trie

s)

Pub

lic S

ervi

ce C

omm

issi

on to

app

rove

rev

ised

ex

ams

for

civi

l ser

vant

s to

mak

e th

eir

entr

y an

d pr

omot

ion

mor

e tr

ansp

aren

t and

mer

it-ba

sed

(Ap

pro

ved

rev

ised

exa

m–P

SC

)

All

publ

ic s

ecto

r tr

aini

ng in

stitu

tes

to

inco

rpor

ate,

and

use

, int

egrit

y an

d an

ticor

rupt

ion

trai

ning

mod

ules

in th

eir

curr

icul

a(R

evis

ed c

urr

icu

la–

Min

istr

y o

f E

stab

lish

men

t)

Cab

inet

Div

isio

n to

col

late

and

pub

lish

depa

rtm

enta

l inf

orm

atio

n on

grie

vanc

es

and

publ

ic c

ompl

aint

s (P

ub

lish

ed

info

rmat

ion

–Cab

inet

Div

isio

n)

Min

istr

y of

Est

ablis

hmen

t to

revi

ew th

e ex

istin

g qu

ota

syst

em fo

r en

try

into

the

civi

l ser

vice

(R

evie

w o

f q

uo

ta s

yste

m–

Min

istr

y o

f E

stab

lish

men

t)

All

line

min

istr

ies

to e

stab

lish

easi

ly

acce

ssib

le g

rieva

nce

hand

ling

mec

hani

sms

(Dep

artm

enta

l rep

ort

s–lin

e M

inis

trie

s)

Line

min

istr

ies

that

pro

vide

util

ities

and

ba

sic

serv

ices

to in

stitu

te a

nd p

ublic

ize

citiz

en r

epor

t car

ds a

s a

way

of

addr

essi

ng g

rieva

nces

at t

he lo

cal l

evel

(P

ub

licly

an

no

un

ced

Min

istr

y d

irec

tive

–Rel

evan

t m

inis

trie

s)

(iii)

Grie

vanc

e R

edre

ss

Mec

hani

sms

Cab

inet

Div

isio

n to

issu

e di

rect

ive

to a

ll lin

e m

inis

trie

s to

des

igna

te a

n of

ficer

as

foca

l poi

nt

for

initi

atin

g gr

ieva

nce

hand

ling

mec

hani

sm in

al

l gov

ernm

ent o

ffice

s, fo

r bo

th in

tern

al a

nd

exte

rnal

pur

pose

s (D

irec

tive

–Cab

inet

Gov

ernm

ent t

o pu

blic

ly a

nnou

nce

its d

ecis

ion

to

esta

blis

h a

natio

nal O

ffice

of t

he O

mbu

dsm

an

(Pu

blic

an

no

un

cem

ent–

Min

istr

y o

f L

aw)

Min

istr

y of

Law

or

Par

liam

ent S

ecre

taria

t to

Min

istr

y of

Law

or

Par

liam

ent S

ecre

taria

t to

gaz

ette

the

Whi

stle

blow

er P

rote

ctio

n A

ct(G

azet

ted

no

tifi

cati

on

–Min

istr

y o

f L

aw)

48 Appendix 4

Ou

tpu

t F

irst

Tra

nch

e (u

pon

loan

effe

ctiv

enes

s)

Sec

on

d T

ran

che

(with

in 1

2 m

onth

s of

firs

t tra

nche

) T

hir

d T

ran

che

(with

in 2

4 m

onth

s of

sec

ond

tran

che)

Div

isio

n)

gaze

tte th

e R

ight

to In

form

atio

n A

ct (

Gaz

ette

no

tifi

cati

on

–Min

istr

y o

f L

aw)

Gov

ernm

ent t

o es

tabl

ish

a w

ell-r

esou

rced

O

ffice

of t

he O

mbu

dsm

an in

line

with

Art

. 77

of t

he B

angl

ades

h C

onst

itutio

n an

d w

ith p

rovi

sion

s fo

r re

gion

al o

utre

ach

and

acce

ss(C

abin

et d

ecis

ion

–Cab

inet

) S

ourc

es: G

over

nmen

t of B

angl

ades

h an

d A

sian

Dev

elop

men

t Ban

k.

Tab

le A

4: P

olic

y A

ctio

ns

no

t R

elat

ed t

o T

ran

che

Rel

ease

Tra

nch

e P

olic

y A

ctio

n

Pro

du

ct/R

esp

on

sib

le A

gen

cy

Sec

ond

Pow

er D

ivis

ion,

Min

istr

y of

Com

mun

icat

ions

, Min

istr

y of

Edu

catio

n, a

nd M

inis

try

of

Hea

lth to

com

plet

e V

CA

s in

thei

r re

spec

tive

sect

ors

VC

As–

rele

van

t m

inis

trie

s

Thi

rdG

over

nmen

t to

com

plet

e a

stud

y on

res

truc

turin

g of

CP

A o

pera

tions

Stu

dy

rep

ort

–Min

istr

y o

f S

hip

pin

gA

CC

= A

ntic

orru

ptio

n C

omm

issi

on,

CP

A =

Chi

ttago

ng P

ort

Aut

horit

y, C

TM

S =

com

pute

rized

ter

min

al m

anag

emen

t sy

stem

s, J

SC

= J

udic

ial

Ser

vice

Com

mis

sion

, M

TB

F =

med

ium

-ter

m b

udge

tary

fra

mew

ork,

NIS

= N

atio

nal

Inte

grity

Str

ateg

y, T

OR

= t

erm

s of

ref

eren

ce,

UN

CA

C =

Uni

ted

Nat

ions

Con

vent

ion

Aga

inst

Cor

rupt

ion,

VC

A =

vul

nera

bilit

y to

cor

rupt

ion

asse

ssm

ent.

Sou

rces

: Gov

ernm

ent o

f Ban

glad

esh

and

Asi

an D

evel

opm

ent B

ank.

Appendix 5 49

PROGRAM IMPLEMENTATION ARRANGEMENTS

Figure A5 : Implementation Structure

CPA = Chittagong Port Authority, MLJPA = Ministry of Law, Justice, and Parliamentary Affairs, PMU = program management unit.a There will be a focal point in each Implementing Agency to ensure adequate level of coordination with the relevant PMU.

Program Steering Committee

Cabinet Division Supreme Court

Governance Unit–forall outcomes except

on judiciary

Anticorruption Commissiona

Public Service Commissiona

Ministry of Shippinga

(for CPA)

Ministry of Establishmenta

MLJPAa

Office of Registrar-for outcomes related

to the judiciary

Judicial Service Commissiona

Ministry of Foreign Affairs

Executing Agencies

PMUs

Implementing Agencies

50 Appendix 5

Table A5: Implementation Schedule

Appendix 6 51

TECHNICAL ASSISTANCE PROCUREMENT PLAN AND PACKAGES

A. Introduction

1. In view of the complexity of the Program, a piggybacked technical assistance (TA) has been provisioned so that relevant Executing and Implementing Agencies (EAs and IAs) can be facilitated in their work related to Program objectives. The outcome of the TA is to enhance the capacity of the Government to effectively implement the Program. Its impact can be measured only in association with the attainment of the objectives of the Program itself (see Appendix 1).

2. The TA contributes to the attainment of the outcome and outputs of the Program; these can be specified as follows:

(i) Outcome: Improved governance in the public sector, through training programs on various Program-related interventions, strengthened Program Management Units and Program Steering Committee, and action plans designed to assist selected agencies (such as the two Executing Agencies) to meet Program objectives.

(ii) Output 1: Vision, strategy, and procedures, through a strengthened ACC Act aligned to the UNCAC provisions, and a well-prepared and well-publicized National Integrity Strategy.

(iii) Output 2: Enforcement and sanctions mechanisms, through monitoring and reporting protocols at the Supreme Court, an effective decentralized system of operations in anticorruption, and performance management schemes in agencies such as the ACC.

(iv) Output 3: Prevention mechanisms, through legislative instruments such as the Right to Information Act and Whistleblower Protection Act, improved examination and revised quota system in the Bangladesh Civil Service, and corruption risk mitigation plans and grievance handling mechanisms in Government agencies.

3. For proper management of the TA, a procurement plan is prepared in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time) and the Guidelines on the Use of Consultants (2007, as amended from time to time). This plan is comprised of the following:

(i) the particular contracts for the goods (equipment, technology), consulting services, and training services required to carry out the Program during the Program period;

(ii) the proposed methods for procurement of such contracts that are permitted under the Loan Agreement;

(iii) for consulting services packages, this plan covers the proposed methods for selection and type of proposal, and an indicative recruitment schedule and budget; and

(iv) related ADB review procedures (see below).

B. Procurement Plan Reviews

4. ADB will review the procurement arrangements in the procurement plan for its conformity with the Loan Agreement and the relevant guidelines mentioned in para. 3. While this procurement plan initially covers the entire 4 years of the Program period, the procurement plan

52 Appendix 6

will be updated on an annual basis or as needed, always covering the next 18-month period of Program implementation.

C. Procurement Plan

Table A6.1: Program Information Country Bangladesh

Name of Borrower Government of Bangladesh

Program Name Good Governance Program

Loan or TA Reference Program Loan

Date of Effectiveness October 2007

Amount ($) 2.35 million

Of which Committed ($)

Executing Agency Cabinet Division

Approval Date of Original Procurement Plan June 2007

Approval of most recent Procurement Plan See above

Publication for Local Advertisements August 2007

Period Covered by this Plan October 2007–September 2011 TA = technical assistance. Source: Asian Development Bank.

D. Procurement Thresholds for Goods and Related Services

Table A6.2: Procurement Thresholds for Good and Related Servicesa

Procurement Method Value

ICB Works (none) Over $1,000,000

ICB Goods Over $500,000

NCB Goods (12e) Over $100,000

Shopping Goods (1e, 2e, 6e, 9e, 11e, 14e, 15e) Over $5,000

Direct Purchase (none) Up to $5,000

Exceptional Methods None e = equipment packages in Supplementary Appendix H, ICB = international competitive bidding, NCB = national competitive bidding. Source: Asian Development Bank.

E. Procurement Thresholds for Consulting Services

Table A6.3: Procurement Thresholds for Consulting Servicesa

Procurement Method Value

Quality Cost Based Selection Over $200,000

Consultants Qualifications Selection (None) Over $100,000

Least Cost Selection (None)

Individual Selection: 1c, 2c, 4c, 5c, 6c, 7c, 8c, 9c, 11c, 13, 14c

Alternative Methods Quality Based Selection:b 12c Fixed budget:c 3c, 10c

Appendix 6 53

c = consulting packages in Supplementary Appendix H. Source: Asian Development Bank.

a Note that all training packages (see indicative procurement packages below) will be provided in conjunction with relevant associated consulting packages.

b Quality-based selection will be employed to procure a consultant package where the assignment is complex, highly specialized with overriding importance on the impact of the quality of the services.

c The Fixed Budget method is used for a lump sum fixed contract for conducting publicity of National Integrity Strategy (NIS) across the country, and for evaluation of NIS and implementation of United Nations Convention Against Corruption (UNCAC) by an independent source.

54 Appendix 6

Table A6.4: Indicative Procurement Packages for the Technical Assistance

ItemMode of

Procurement

1c. Strengthening Governance Unit, Cabinet Division 72 $304,000 Individual2c. Strengthening Office of the Registrar, Supreme Court 48 $220,000 Individual3c. NIS Publicity 9 $50,000 Least cost4c. Support for Strengthening Legislative Framework 7 $44,000 Individual5c. ACC Decentralized System 4 $15,200 Individual6c. Strengthening Judicial Service Commission 10 $38,000 Individual7c. Supreme Court Monitoring and Reporting 6 $22,800 Individual8c. Support for VCAs and Grievance Handling Mechanisms 15 $57,000 Individual9c. Support to Public Service Commission 10 $70,400 Individual10c. Evaluation of NIS, UNCAC, and Partnership Implementation 10 $120,000 Fixed budget

11c. ACC - Performance Management Scheme 8 $30,400 Individual

12c. ACC - Prosecution Unit Strengthening 15 $108,000 QBS

13c. Support to Ministry of Shipping for Port Operations 15 $105,600 Individual

14c. Support to Ministry of Establishment 12 $78,000 Individual

Subtotal (A) 241 $1,263,400

1e. Strengthening Governance Unit, Cabinet Division $15,000 Shopping

2e. Strengthening Office of the Registrar, Supreme Court $15,000 Shopping

6e. Strengthening Judicial Service Commission $15,000 Shopping

9e. Support to Public Service Commission $25,000 Shopping

11e. ACC - Performance Management Scheme $10,000 Shopping

12e. ACC - Prosecution Unit Strengthening $150,000 NCB

14e. Support to Ministry of Establishment $25,000 Shopping

15e. Supporting ERD on Aid Governance $25,000 Shopping

Subtotal (B) $280,000

1t. Strengthening Governance Unit, Cabinet Division (ref. 1c) $20,000

2t. Strengthening Office of the Registrar, Supreme Court (ref. 2c) $20,000

4t. Support for Strengthening Legislative Framework (ref. 4c) $15,000 Individual

5t. ACC Decentralized System (ref. 5c) $20,000 Individual

6t. Strengthening Judicial Service Commission (ref. 6c) $10,000 Individual

7t. Supreme Court Monitoring and Reporting (ref. 7c) $25,000 Individual

8t. Support for VCAs and Grievance Handling Mechanisms (ref. 8c) $40,000 Individual (part)

9t. Support to Public Service Commission (ref. 9c) $30,000 Individual (part)

11t. ACC - Performance Management Scheme (ref. 11c) $5,000 Individual

12t. ACC - Prosecution Unit Strengthening (ref. 12c) $200,000 QBS

13t. Support to Ministry of Shipping for Port Operations (ref. 13c) $25,000 Individual

14t. Support to Ministry of Establishment $50,000 Individual (part)

15t. Supporting ERD on Aid Governance $70,000

Subtotal (C) $530,000

Total for Procurement Packages $2,073,400

Other (non-procurement items)a $145,000

Contingencies $281,600

Total $2,500,000

Excludes $0.5 million for counterpart in-kind costs.

Source: Asian Development Bank estimates.

a Including $80,000 for international and local travel, $40,000 for reports and communications, $25,000 for administrative and support costs.

A. Consulting Services (c) Packages

B. Equipment, Technology, and Materials (e) Packages

C. Training (t) Packages

NCB = national competitive bidding, QBS = quality-based selection.

Person-Months

Quantity Cost

Appendix 7 55

LIST OF INELIGIBLE ITEMS

1. The proceeds of the loans will be utilized to finance the foreign currency expenditures for the reasonable costs of imported goods required during implementation of the Program.

2. Notwithstanding the provision of para. 1 above, no withdrawals shall be made in respect of the following items.

(i) Expenditures for goods included in the following groups or subgroups of the United Nations Standard International Trade Classification, Revision 3 or any successor groups or subgroups under future revisions to the classification, as designated by the Asian Development Bank (ADB) by notice to the Borrower.

Table A7: Ineligible Items Chapter Heading Description of Items

112 Alcoholic beverages 121 Tobacco, unmanufactured; tobacco refuse 122 Tobacco, manufactured (whether or not containing tobacco

substitute)525 Radioactive and associated materials 667 Pearls, precious and semiprecious stones, unworked or worked 718 718.7 Nuclear reactors and parts thereof, fuel elements (cartridges),

nonirradiated for nuclear reactors 728 728.43 Tobacco processing machinery 897 897.3 Jewelry of gold, silver or platinum group metals (except watches

and watch cases); goldsmiths’ or silversmiths’ wares (including set gems)

971 Gold, nonmonetary (excluding gold ore and concentrates) Source: Asian Development Bank.

(ii) Expenditures in the currency of the Borrower or of goods supplied from the territory of the Borrower.

(iii) Expenditures for goods supplied under a contract that any national or international financing institution or agency will have financed or has agreed to finance, including any contract financed under any loan or grant from ADB.

(iv) Expenditures for goods intended for military or paramilitary purposes or for luxury consumption.

(v) Expenditures for narcotics. (vi) Expenditures for environmentally hazardous goods, the manufacture, use, or

import of which is prohibited under the laws of the Borrower or international agreements to which the Borrower is a party

(vii) Expenditures on account of any payment prohibited by the Borrower in compliance with a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations.

56 Appendix 8

TECHNICAL ASSISTANCE COST ESTIMATES AND FINANCING PLAN ($ ‘000)

Total

Item Cost

1.

160.0779.855.010.0

2. 100.0

3. 260.0

4. 10.0

5. 125.21,500.0

1.

60.0263.625.030.0

2. 180.0

3. 270.0

4. 15.0

5. 156.41,000.0

1. 60.0

2. 220.03. 150.04. 30.05. 40.0

500.03,000.0

PM = person month.a Financed by ADB's technical assistance funding program.b Financed by DANIDA's Human Rights and Good Governance Program.

Source: Asian Development Bank estimates.

Contingencies

b. International and Local Travel c. Reports and CommunicationsEquipment and Technology and Other ResourcesWorkshops, Training/Seminars, and Conferences

A. Asian Development Bank (ADB) Financinga

Consultants

b. International and Local Travel c. Reports and CommunicationsEquipment and Technology and Other Resources

a. Remuneration and Per Diem i. International Consultants (8 PM) ii. National Consultants (187 PM)

Miscellaneous Administration, and Support CostsWorkshops, Training/Seminars, and Conferences

Subtotal (A)

Subtotal (B)

B. Danish International Development Assistance Financingb

Consultants a. Remuneration and Per Diem i. International Consultants (3 PM) ii. National Consultants (43 PM)

Miscellaneous Administration, and Support Costs

Administrative Support

Total

ContingenciesSubtotal (C)

Office Accommodation and TransportRemuneration and Per Diem of Counterpart Staff

Contingencies

Others (including communications, etc.)

C. Government Financing (in kind and cash)

Appendix 9 57

SUMMARY GOVERNANCE AND ANTICORRUPTION RISK ASSESSMENT

1. This assessment of good governance and corruption is being done in conformity with the recommendations of the Asian Development Bank’s (ADB’s) Governance and Anticorruption Action Plan1 which specifies that program design should incorporate findings of governance, institutional and corruption risks assessments, and that project documentation clearly identifies risk and risk management and mitigation measures. Accordingly, this assessment considers (i) relevant governance issues in key institutions engaged in anticorruption and their functioning, (ii) potential risks in supporting a program in the particular sector, and (iii) mitigation measures to address the risks in the design and implementation of the Program.

A. Relevant Governance Issues in the Anticorruption Sector

2. The Government of Bangladesh’s poverty reduction strategy accepts corruption as a critical challenge within the field of governance in the country and recommends the development of a comprehensive national anticorruption strategy. The caretaker government’s priorities in its anticorruption drive manifest in the following key steps it has taken thus far, or has made a commitment to undertake.

(i) Strengthening the Anticorruption Commission by restructuring the leadership, streamlining the legal provisions, committing to adequate resourcing to enable prosecution of high-profile cases, and giving it greater powers.

(i) Strengthening the scope and role of the judiciary by separating it from the Executive and by announcing a policy on special anticorruption courts.

(ii) Committing to reforms in campaign financing that will begin to address the systemic weakness in the financing of political parties.

(iii) Continuing with improvements in public financial management. (iv) Targeting reforms in the Public Service Commission (PSC) as a step towards

addressing the problem of corruption in the civil service.

B. Nature of Risks in the Program

3. The governance and corruption risks with respect to the proposed Program can be grouped into the following three areas.

1. Legislative and Policy Framework

4. Risks in this particular category (which relate to the policy-making process both in the executive as well as the legislative branch of government) can be specified as follows

(i) An overarching national vision and strategy on anticorruption is missing. (ii) The Anticorruption Commission Act and rules and regulations are not completely

aligned to the United Nations Convention Against Corruption (UNCAC). (iii) The separation of the judiciary from the Executive is still pending although the

Supreme Court has sought cabinet’s directive on this. (iv) There is an absence of relevant legislation supporting anticorruption work (such

as on whistleblower protection and right to information). (v) Appropriate legislation prescribing qualifications of High Court judges for

recruitment is missing.

1 ADB. 2006. Second Governance and Anticorruption Action Plan (GACAP II). Manila.

58 Appendix 9

2. Institutional Arrangements

5. Risks in this category can be specified as follows:

(i) The Anticorruption Commission is still underresourced, is constrained by weak capacity, systems, and human resource base, and has weak prosecution capability. Its district and regional presence is also not effective.

(ii) The public prosecution services are underresourced and unable to carry out neutral and effective prosecution.

(iii) The Judicial Service Commission (JSC) is underresourced and there is a critical need to enhance its capability to fulfill its functions.

(iv) A regular and systematic process of monitoring subordinate judges and courts is not fully in place.

3. Accountability and Transparency

6. Risks related to accountability and transparency are as follows:

(i) There is weak accountability (including on internal audit) and grievance redress mechanisms within line ministries.

(ii) The office of the ombudsman has not yet been established. (iii) Recruitment (and mobility within the civil service) of civil servants is not merit-

based or transparent, and is excessively politicized. (iv) Citizens have no authorized access to information on government functioning

and decision making.

C. Risk Severity and Risk Mitigation Measures

1. Underlying Assumptions

7. The following are the main underlying assumptions that are made in this risk analysis.

(i) The Government will remain committed to its objective and intention of improving governance at the national, central, judicial, and sectoral levels.

(ii) Legal and institutional reforms so far brought about will be sustained in the immediate future.

(iii) Effective institution building and capacity development in key agencies, such as Cabinet Division, judiciary, the Anticorruption Commission, the Chittagong Port Authority (CPA), and power and railway sectors, will continue.

(iv) The Government shares the view that this assessment presents an accurate and adequate review of governance and anticorruption risks.

2. Risk Severity

8. Table A9.1 shows the degree of severity of these and other risks. Note that Type 1 are the most severe, followed by Type II and Type III.

Appendix 9 59

Table A9.1: Risk Severity Matrix Impact (I)

5 4 3 2 1

Very High High Moderate Low Very Low

5 Very likely Type I Public prosecution serviceunderresourced

JSC underresourced

Type II

Lack of comprehensive vision and strategy on anticorruption

Regular and systematic process of monitoring judges and courts not fully in place

Type III UNCAC not aligned to Anticorruption Commission Act

4 Likely Citizens lack access to information

Recruitment or mobility not merit-based

Judiciary not fully separate

Appropriate legislation prescribingqualifications of High Court judges not developed

Establishment of Ombudsman delayed

Low priority to grievance redress mechanism by ministries

Delays in promulgating whistleblower and right to informationacts

3 Moderately likely

Type IV

2 Unlikely AnticorruptionCommissionunderresourced

Expenditure of funds not for purposesintended

Lik

elih

oo

d o

f ev

ent

occ

urr

ing

(L

)

1 Rare

JSC = Judicial Service Commission, UNCAC = United Nations Convention Against Corruption. Source: Asian Development Bank.

3. Risk Mitigation Measures

9. Some of the mitigating measures for the more severe risks highlighted above are shown in Table A9.2.

Table A9.2: Risk Mitigation Measures Matrix Risk Proposed Mitigation Measures Adequate resources not made available by the Government for strengthening public prosecution service and the JSC.

Follow up on Government’s assurance, use donor funding for reforms in anticorruption and the judiciary, and ADB loan funds earmarked for reforms.

60 Appendix 9

Risk Proposed Mitigation Measures No right to information access for citizens. Consider drafting the right to information legislation as part of the

broader agenda on instituting good governance.

Politicization of the civil service, and the appointment process at PSC not yet independent.

Start by amending the selection process of PSC commissioners (so that selection is done by a committee), and make recruitment and mobility processes in the civil service subject to transparent criteria.

Lack of an overarching vision and strategy on anticorruption.

Ratify the UNCAC, and after development of the NIS is prepared, ensure that the provisions of UNCAC are accurately reflected not only in the NIS but also in the Anticorruption Commission Act of 2004.

Regular and systematic process of monitoring judges and courts not fully in place.

Ensure that the Supreme Court is suitably resourced to facilitate regular monitoring visits, and a system is in place to capture the results of the monitoring process as it relates to performance appraisal of district court judges.

Judiciary not yet fully separated from the Executive.

Cabinet to issue a directive on the separation after preparing all necessary ground-level work.

No legislation prescribing qualifications for high court judges.

Draft relevant laws drawing on the provisions in the Constitution and in consultation with the Supreme Court.

Establishment of ombudsman delayed. Continue to engage with Government on the need for an ombudsman; provide technical assistance, and familiarize senior government officials with good practices in this area.

Weak accountability and grievance redress mechanisms in line ministries.

Conduct VCAs in relevant line ministries, and ensure that the VCAs lead to rigorous anticorruption strategies that also highlight how to strengthen internal accountability systems in the organizations.

JSC = Judicial Service Commission, PSC = Public Service Commission, UNCAC = United Nations Convention Against Corruption, VCA = vulnerability to corruption assessment. Source: Asian Development Bank.

D. Recommendations

10. The assessment identifies several recommendations to mitigate the risks that could impact the effective implementation of the Program. These recommendations include the following.

(i) Incorporate several critical provisions as loan conditions and assurances. (ii) Review the risk analysis with government stakeholders and get their commitment

to risk mitigation strategies. (iii) Acquire information during program processing and implementation on (a)

activities undertaken and proposed to manage the governance risks; (b) risks that are seriously undermining the development of the sector (and implementation of program reforms); (c) the status on engagement of all related stakeholders in the Program, and sharing of program information; and (d) program output indicators that validate improvements in policies, legislation, capacity development, and accountability.

Appendix 10 61

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

Country/Project Title: BAN- Good Governance Program

Lending/Financing Modality: Policy-Based

Department: SAGF/SARD

A. POVERTY ANALYSIS AND STRATEGY

1. Linkages to the National Poverty Reduction Strategy and County Partnership Strategy

1. There is a clear link between the proposed Program and the Government’s national poverty reduction strategy (NPRS) and the Bangladesh country strategy and program of the Asian Development Bank (ADB).1 The NPRS reaffirms that reducing poverty and accelerating the pace of social development are the most important long-term strategic goals. In addition, the NPRS aims to halve the number of poor people by 2015, and to achieve substantial improvement in all aspects of human development.

2. In addition to achieving progress on sectoral areas, the NPRS also aims to foster good governance by improving government capacity, promoting local government, tackling corruption, enhancing access to justice for the poor, and improving security and public order. This is to be complemented by fostering partnerships between government, the private sector, and civil society organizations to improve service delivery.

3. ADB’s country strategy and program (CSP) 2006–2010 aims to assist good governance. ADB will address key governance issues on a sector and thematic basis. Hence, ADB will play a major role in supporting policy and institutional reforms to improve sector governance and increase sector efficiency (for example, in energy, transport, education, urban health and urban water supply, and sanitation sectors).

4. The caretaker government that came to power in early 2007 has stated a vision of establishing a modern democratic Bangladesh free from corruption, discrimination, and exploitation. Key among the reforms prioritized by the Government are fighting corruption and ensuring judicial independence from the Executive. The Government is making steady but slow progress in addressing some of the broad governance issues, including improving (i) fiscal management, (ii) financial management, (iii) project documentation and processing, (iv) public sector management efficiency, and (v) corporate governance in key sectors.

2. Poverty Analysis

a. Key Issues

5. The contribution of good governance to poverty reduction is well documented. As good governance creates an institutional environment that is characterized by principles of accountability, transparency, predictability, and participation, it gives poor people a say in how decisions are made in government and how services are delivered. This voice mechanism ensures that governments become more responsive to the needs of poor people, and this creates an important link between good governance and poverty reduction. The experiences of

1 ADB. 2005. Country Strategy and Program, 2006–2010: Bangladesh. Manila.

62 Appendix 10

civil society in Bangladesh in gearing service providers to be better attuned to the needs of poor people exemplify this.

6. The links between corruption and poverty are also well established. This link has a duality: corruption is often viewed as exacerbating conditions of poverty (such as in low income levels and low access to basic services), while a situation of chronic poverty invariably engenders systemic corruption. While corruption itself may not produce poverty, it does have direct consequences on economic and governance factors that, in turn, impact poverty if they are not managed properly. There is ample evidence to suggest that corruption hinders economic growth (by, for example, discouraging investment and decreased tax revenues). Bangladesh would have higher growth rates if the level of corruption was lower than it is currently.

7. Corruption also affects poverty by influencing governance factors which have an impact on poverty levels. Corruption invariably weakens institutions and diminishes the quality of service delivery which impacts the poor disproportionately. They end up having to pay more for services, and worse, the level of public trust in Government weakens; this increases the vulnerability of the poor as they can rely less on the Government to provide for their needs in an efficient, effective, and affordable manner. Thus, effectively combating corruption directly contributes to the alleviation of poverty.

b. Design Features

8. Some important features of the Program are as follows.

(i) For the first time there exists a National Integrity Strategy (NIS) that will enable agencies to critically assess their vulnerabilities to corruption. The strategy itself will be owned by Government at the highest level.

(ii) The NIS will be aligned to the provisions in the United Nations Convention Against Corruption (UNCAC), which the Government has acceded to.

(iii) It impacts upon institutions in different branches of government, and encompasses prevention as well as enforcement and sanctions.

(iv) It adheres to the harmonized approach agreed by all development partners in Bangladesh.

(v) It is wholly aligned with the outcomes and new initiatives of the Government.

9. In addition, the component on prevention under the Program includes several important pro-poor features.

(i) Wastage and mismanagement of resources will be checked in order to improve service delivery to citizens including the poor in selected sectors.

(ii) Existing accountability mechanisms in line ministries will be strengthened to minimize corruption opportunities at the sectoral and agency level.

(iii) Establishment of an ombudsman’s office will improve citizen’s access to grievance redress mechanisms.

(iv) Right to information legislation will enhance transparency of government decisions.

Appendix 10 63

3. Poverty Impact Analysis for Policy-Based Lending

Table A10.1: Poverty Impact Analysis Matrix

Reform Summary Channel Effect Effect on the Poor/Other Stakeholders

General Specific Direct short run

Indirect short run

Indirect medium run

Majorgroups affected

Key issues for poverty

reduction and targeting

Mitigation or enhancement measures to

avoid negative

social impact, if needed

Labor Market

FormalInformal

Possibility of impact of any changes in staff size inorganization

Port employees

Laborers

Daily workers

Ensure that any voluntary retirementscheme has been shared with all affectedemployees in advance

Provision of retraining needs to be made for those that wish to re-enter the labor force

Prices and Income

For consumers, producers, mediators/ Transmission

Payment of bribe by consumers reduced in servicedelivery

Betterreflection of true costs of servicedelivery

Control over mismanage-ment of resources contributing to lower prices

Greaterproductivity enhances savings

Serviceusers

Ensure that lower production costs are actually reflected in costs of access

Access for Poor

Lower actual costs of services will improveaccess for the poor to many services

Greater trust in the public sector by the poor will have a positive impact on its ability to be moreefficient and effective

All users of services

Programimpacts do not filter down sufficiently to the poor

Government,supported by civil society, has to be vigilant that the poor are benefiting from reforms in the Program

Access to Assets

Physical Financial Human SocialNatural Legal and entitlement

Quickeraccess to judicial servicesgiven separation of judiciary fromExecutive, particularly at the local level

More access to relevant informationon the judiciary

Greater trust in the court system, and lower costs of judicial services

All those seeking judicial services

Ensure that legal services are accessible at lower cost

Transfers Private transfer

Public transfer

64 Appendix 10

Reform Summary Channel Effect Effect on the Poor/Other Stakeholders

General Specific Direct short run

Indirect short run

Indirect medium run

Majorgroups affected

Key issues for poverty

reduction and targeting

Mitigation or enhancement measures to

avoid negative

social impact, if needed

Net Impact The net impact is positive but will take some time to be evident

Information Basis or Crucial Assumption

1. That lower costs in public sector transactions will ultimately positively impact the lives of the poor

1. That greater trust in the public sector by the poor will enable them to continue to benefit fromimprovements in public servicedelivery

Brief Narrative

The poverty impact of the proposed Program is expected to be reflected in two particular streams: (i) in the short term, lower costs to access services (as a result of not having to pay rents in addition to regular service costs) will positively impact the lives of the poor and marginalized populations; and (ii) in the medium to long term, a more efficient and effective public service will ensure that economic growth is sustained at a high level, and this will ultimately have a positive impact on the poor. The conceptual basis of (ii) is grounded on the positive impact of anticorruption on growth.

Source: Asian Development Bank.

B. SOCIAL ANALYSIS AND STRATEGY

1. Findings of Social Analysis

a. Key Issues

10. The key socioeconomic issues that are evident in the Program deal with the adverse impacts of corruption and mismanagement of public resources on the economy as a whole and on the lives of the citizens (largely through poor service delivery and greater costs of accessing services). While rent-seeking practices cannot be entirely eliminated in any system, the Program attempts to reduce the incidence of corruption by strengthening not only preventive measures but also by introducing enforcement measures and sanctions. These will have positive economic as well as social effects, including a greater level of public trust in Government, and more efficient and effective service delivery.

11. The primary beneficiaries of the Program will be not only the citizens who interact with the public sector on a daily basis, but also businesses, nongovernment organizations (NGOs), bureaucrats themselves, and others. All the stakeholders have the same demand: that the

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public sector provides better services more efficiently and effectively (i.e., costs charged do not exceed the true costs of service provision). The primary constraint to this occurring at the moment is the gap in existing policies, laws, rules, and regulations that inhibits effective enforcement and sanctions against those involved in corruption. Finally, there is evidence of a critical lack of capability in key government agencies to combat practices that lead to mismanagement and corruption, and this Program specifically addresses that deficiency.

2. Strategy to Address Social Issues

a. Consultation and Participation

12. Stakeholder groups engaged in the program formulation process include the Anticorruption Commission, Cabinet Division, central level Government ministers and senior level decision makers, Chittagong Port Authority (CPA), sectoral agencies (such as railways, power, and Ministry of Shipping), and others outside government (such as NGOs and development partners). The decisions made through consultation and participation processes included (i) how to structure the National Integrity Strategy (NIS), (ii) how to best meet the gaps in organizational resources, (iii) how best to engage NGOs, and (iv) how to secure commitment from top political and bureaucratic levels. Moving forward, the consultation and participation processes will involve getting commitment from all stakeholders on the NIS, and on implementation of the United Nations Convention Against Corruption (UNCAC) provisions. Further, a National Integrity Advisory Committee (NIAC) will ensure that there is broad commitment from Government, particularly on the NIS, which is the basis of the Good Governance Program.

13. What level of consultation and participation is envisaged during the project implementation and monitoring?

Information sharing Consultation Collaboration Empowerment

14. Was a consultation and participation plan prepared? Yes No

15. No specific consultation and participation plan is prepared, however, there will be formal terms of reference of the NIAC, as well as terms of reference for participation of NGOs in various program-related activities, such as reviews and evaluation.

b. Gender and Development

(i) Key Issues

16. There is empirical evidence to show that women have to pay more in bribes than men; that women have to wait longer than men to see officials, and that when they do they are three times more likely to be ‘queue-jumped’ than men. By addressing the problem of corruption, the Program will have indirectly maximized impacts on women, who (studies have shown) bear an unequal burden of the corruption problem.

(ii) Key Actions

17. Measures included in the design to promote equality between men’s, women’s and girls’ access to and use of relevant services, resources, assets, or opportunities:

Gender plan Other actions/measures No action/measure

66 Appendix 10

18. There are no specific actions or measures that are needed in the Program to ensure that gender issues of anticorruption measures are taken into effective consideration. The policy level changes are expected to have an impact across the full range of anticorruption issues, of which gender is one.

3. Social Safeguard Issues and Other Social Risks

Table A10.2: Social Safeguard Issues and Other Social Risks Issue Significant/Limited/

No ImpactStrategy to Address

Issue Plan or Other

Measures Included in Design

Involuntary Resettlement

There are no specific involuntary resettlement issues inherent in the Program

Full Plan Short Plan Resettlement

Framework No Action

Indigenous Peoples There are no specific issues in the Program that relate to indigenous people

Plan Other Action Indigenous Peoples

Framework No Action

Labor Employment

opportunities Labor retrenchment Core labor standards

Issues are likely to emerge about employment opportunities for women and marginalized populations, and also that there might be labor retrenchment at the Chittagong Port as part of a larger program of reforms in port operations.

There will be some civil works in the Program.

Given that the Program will involve some public sector reform (including the possibility of revision of the civil service law), legislation relating to the civil service will need to be specific about the particular conditions for entry and exit into the civil service.

The Executing Agency will, to the extent that it is necessary and possible, ensure that women and men are given equal opportunities for employment, and contractors will also be required to ensure equal payment for equal work.

In Chittagong Port, a voluntary retirement scheme could be in place as part of the CPA’s move towards greater productivity. Program funds will cover the adjustment costs if this were to proceed.

In reviewing the quota system in the Bangladesh civil service, and in tightening the merit requirements for entry into the civil service, care will be taken to ensure that merit principles and justifiable quota arrangements are not flouted.

Plan Other Action No Action

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Issue Significant/Limited/ No Impact

Strategy to Address Issue

Plan or Other Measures Included in

Design Affordability There are no issues of

affordability in the Program as there is no cost to participate in it. Also, the benefits of the Program will not only flow primarily to non-poor consumers, hence poor groups are not likely to remain underserved or excluded from the service.

Action No Action

Other Risks and/or Vulnerabilities

HIV/AIDSHuman trafficking Others

1. There are no major risks or vulnerabilities to the poor and marginalized populations as a result of this Program. There is a possibility that they may not see the direct benefits of the anticorruption program in the short term as policy reforms take some time to embed themselves and be evident in improved service delivery and low rent-seeking tendencies.

2. Lack of capacity of the EAs and implementing agencies for Program implementation is a potential risk.

1. One way of dealing with the issue is to ensure that the marginalized populations have access to voice opportunities. This is reflected in the Program; not only will there be greater room for voicing grievances against public sector agencies for poor service delivery but there will be also be provisions for an ombudsman’s office to ensure that there is an institutionalized mechanism in place to give voice to marginalized populations.

2. The strategy to mitigate the risk is to use the technical assistance component of the Program to develop the said capacity.

Plan Other Action No Action

CPA = Chittagong Port Authority, EA = executing agency. Source: Asian Development Bank.

4. Monitoring and Evaluation

19. Social indicators have been included in the program framework to facilitate monitoring of social development activities or social impacts during Program implementation. These include (i) measures of satisfaction of public access to services, (ii) public perception of good governance, (iii) perception of successful anticorruption drives, (iv) ready access to information on the judiciary and its activities, and (v) citizens’ report cards and their use. Reviews and evaluation in the Program will also be done, in some instances by independent NGOs, so that a more unbiased view is formed of the program outcome.