1. Overview
With AIIB’s focus on large-scale infrastructure projects in Asia, the need for a robust grievance mechanism is mandatory. The current AIIB Project-affected People’s Mechanism (PPM) has failed when tested and has deemed all complaints submitted to it ineligible. This includes NGO Forum on ADB and CLEAN’s dispute resolution complaint on the AIIB-financed Bhola IPP project in 2022.
For any multilateral development bank (MDB) on the scale of AIIB, the PPM is expected to be as binding as any other policy, such as environmental and social safeguards and information disclosure. AIIB’s PPM, established in 2017, has proven to be ornamental and without any meaningful purpose in terms of addressing grievances at the project level. To this end, this submission has been crafted to revise the PPM into a more robust and useful mechanism aimed at providing remedy and restoration to those affected by AIIB operations.
In 2018, Forum and its members looked forward with great anticipation to AIIB’s mechanism, given that this new Bank could draw on experiences from other banks and had the possibility of having a more pragmatic view in dealing with project-affected complaints and bank compliance issues. Leading IFI mechanisms such as the World Bank’s (WB) Inspection Panel, the International Finance Corporation’s (IFC) Compliance Advisor Ombudsman (CAO), and the Asian Development Bank’s (ADB) Compliance Review Panel (CRP) have all faced many challenges over the years in addressing grievance issues. While no existing system has proven “perfect,” there were expectations that AIIB could do things differently and be more receptive to the changing times.
With the promise of a pro-people remedy from harm, the NGO Forum on ADB and CLEAN submitted the first historical complaint to the PPM on behalf of affected communities from the Bhola IPP Project. The dispute resolution complaint was handled poorly, resulting in a very contestable ‘ineligibility’ decision, which shook the foundations of trust in the PPM itself. In the later parts of this submission, the Bhola IPP case will be elaborated on for the Complaints-resolution, Evaluation, and Integrity Unit (CEIU) to draw learnings on ‘what NOT to do’ in cases of complaints reaching the PPM.
It is now a known fact of life for MDBs and mechanisms that civil society organizations and affected communities are the most important users of any grievance mechanisms of MDBs. FORUM has been actively engaging ADB’s mechanism throughout the years with multiple complaints and, in some cases, involving multiple MDBs in co-financed projects. In this light and looking at the AIIB PPM review, we have crafted the following comments that are drawn from these experiences and have been the result of consultative action.
2. General Concerns on PPM
At first glance, the title of AIIB’s Grievance Mechanism, “Project-Affected Peoples Mechanism” (PPM), seemed promising. Unfortunately, this promise falls short as the PPM proves to be a complex read even for Forum members who are well aware of IFI policies and mechanisms. Furthermore, the PPM does not ensure from the onset that it will provide a remedy to those who are aggrieved or those who are potentially aggrieved through AIIB’s operations. The fact that the PPM does not establish that its goal is to provide a remedy demonstrates its lack of intent to be meaningful to project-affected people. FORUM underscores that the Project-Affected Peoples Mechanism’s core mission must prioritize the welfare of affected communities and their access to remedies.
Consequently, it needs to be mentioned that the complexity of the language used in sections regarding eligibility, exceptions, dispute resolution, and remedy is more legalistic rather than user-friendly. It would be safe to assume that this PPM, as it now stands, would be incomprehensible to a large number of local project-affected people who do not speak or communicate in English. Furthermore, local translations would not capture the meaning of the policy as its legal interpretation by the Bank may differ from a literal translation. The UN Guiding Principles on Business and Human Rights (Principle 31) state that for a grievance mechanism to be effective, it must be accessible, equitable, predictable, and transparent, among other criteria. The complexity of the language used in sections regarding eligibility, exceptions, dispute resolution, and remedy in AIIB’s PPM is more legalistic rather than user-friendly. It would be safe to assume that this PPM, as it now stands, would be incomprehensible to a large number of local project-affected people who do not speak or communicate in English. Furthermore, local translations would not be able to capture the meaning of the policy as its legal interpretation by the Bank may be different from a literal translation. We hope the new PPM policy will bear this in mind since the PPM needs to reach its audience: the ‘project-affected people’ themselves, and thus needs to be clear and consistent.
Moreover, the mechanism reveals that the scope of the PPM is limited only to the Environmental and Social Policy (ESP) within the broader AIIB Environmental and Social Framework (ESF). Thus, in cases where AIIB’s operations cause harm, the current PPM will only address the social and environmental impacts from a project operations perspective. This limitation prevents the Bank from identifying non-compliance in other areas of its operations, such as non-compliance in management decision-making, failure to follow directives, and non-compliance with other AIIB policy requirements (such as the Policy on Public Information [PPI], Energy Sector Strategy [ESS], and ESF, including their respective directives and guidelines). While other MDBs ensure that compliance review functions, such as the CAO of IFC and CRP at ADB, hold their respective banks accountable for all policies and directives, AIIB’s current PPM does not.
We strongly urge the Compliance, Effectiveness, and Integrity Unit (CEIU) to address this significant limitation in the PPM’s scope, as it leaves most AIIB operations non-compliant with its policies and directives without a mechanism to ensure accountability. At present, the limited scope of the PPM grossly undermines AIIB’s “clean, lean, and green” core principles and leaves it blind to numerous multidimensional non-compliance issues.
2.1 Limited Scope and Non-Compliance of the PPM
The interconnected nature of AIIB’s ESF, PPI, and PPM, especially in terms of the timely disclosure of project-related documents, is critical for the PPM’s effectiveness in addressing harm and any potential harm.
Unfortunately, the 2021 AIIB ESF fails to provide clear and specific timelines for information disclosure related to the ESF. A quick response to any harm heavily depends on having project-related information readily available for project-affected people to make critical decisions. Without the timely release of project-related information (from pre-approval to post-project completion), local communities will lack the means or rationale to engage the PPM’s concern, dispute resolution, or compliance review functions. If borrowers fail to provide project-related information that leads to harm and adverse impacts on communities, the PPM must step in to hold the borrower accountable.
We are aware that the 2021 ESF lacks clarity regarding the addressing of non-compliance by clients and fails to provide clear remedies or mitigation measures to address harm. Therefore, the new PPM must include policy language to enforce compliance by borrowers on the issue of information disclosure, serving as the last line of defense for project-affected communities. The United Nations Convention Against Corruption (Article 13) supports the role of transparency and accountability, and thus, the new PPM must include policy language to enforce compliance by borrowers on the issue of information disclosure, serving as the last line of defense for project-affected communities.
Other MDBs ensure that compliance review functions, such as the CAO of IFC and the CRP of ADB, hold their respective banks accountable for all their policies and directives. In contrast, AIIB’s current PPM does not hold itself accountable, and this must change.
2.2 On the Issue of Independence
Although the Project-Affected People's Mechanism (PPM) reports to the Board, there are concerns that the best practice safeguards for bank mechanisms, designed to insulate the mechanism from management, are not included in the current policy. These best practices, which would provide integrity and legitimacy to the mechanism, may involve:
A fixed term for the head of the mechanism
A prohibition on being employed at the Bank after their term
A selection process that involves external stakeholders (principle of inclusion), including CSOs
The proposed PPM does not specify the tenure and pre- and post-employment cooling-off periods for the Managing Director (MD) of the CEIU. We believe that the MD of the CEIU should be barred from being employed at AIIB after completing their term to prevent any biases from influencing the mechanism based on future expectations of formal engagement with AIIB. Additionally, the mechanism lacks clarity on the selection process for the MD of the CEIU and the Head of the CEIU Secretariat. It is standard practice in both the World Bank (WB) and Asian Development Bank (ADB) to involve external stakeholders, including CSO representatives, in the selection process for the respective members and directors of the mechanisms.
At present, there are two distinct structures in operation in the PPM, a) CEIU Secretariat, and b) A Task Force both of which require further inquiry. In terms of the composition of the CEIU Secretariat, it seems that the appointment of staff is decided by management which no longer leads to the CEIU being independent of management. The functions and responsibilities of the CEIU Secretariat need to be further detailed and elaborated in terms of the PPM and how they relate to concerns, dispute resolution, and compliance review.
We strongly recommend that a full-time, independent, investigative, member-driven task force be established through independent hiring by the Board, with the possibility for civil society to nominate members. The Task Force would be responsible for evaluating eligibility, investigating complaints, and ensuring the implementation of remedial action plans through on-site monitoring.
Currently, the Task Force is not composed of full-time members of the AIIB PPM but instead relies on consultants who are temporarily hired arbitrarily by the MD of CEIU. No criteria for selection are specified in the PPM, and the tenure of the Task Force members has not been detailed. As a result, the Task Force's structure may impede its ability to enforce compliance on complaints, leading to frequent reshuffling and a lack of institutional learning. This undermines the independence of the PPM, as the Task Force and the CEIU Secretariat (being ‘hired’ by management) will have most of the authority in dealing with complaints, under the discretionary power of the MD of CEIU.
2.3 On the Structure of PPM
Project-affected communities already face barriers to filing complaints, including a lack of knowledge about bank financing, the mechanism, and the shrinking space for those who criticize projects. Our primary concern is that the PPM creates additional barriers at nearly every step, impeding access to remedies. The procedures for filing a complaint are too complex and restrictive, placing undue burdens on communities and CSOs seeking to file a complaint. The PPM process should be streamlined. Here are our primary concerns:
Complaints should be accepted by one person or a group of people.
The scope of a complaint should include violations of the ESF and all other AIIB policies, guidelines, and procedures.
The complaint process should be streamlined to one type of complaint that can be filed from pre-approval to a reasonable time (10 years) after project completion. Having three types of complaints can be confusing and inaccessible for communities.
Accessing project-level grievance mechanisms and establishing ‘good faith efforts’ with management should NOT be a precondition for eligibility.
The burden on complainants wishing to move from dispute resolution to compliance is unnecessarily high. Dispute resolution is a voluntary process. If communities want to end the dispute resolution process and move to compliance, the case should be transferred, as is the practice at the CAO.
The complaint process should be gender-responsive and culturally appropriate. Complaints should be accepted in any language, and the PPM should respond and facilitate the process in that language. The burden of translation should be on the PPM. Complaints should be accepted orally, by email, or by fax.
Timelines should be included in the policy itself and must be subject to public consultation.
The PPM must also clearly define its role in designing, implementing, and monitoring the remedial action plans emerging from all complaint processes.
All Remedial Action Plans must be submitted to the affected communities, complainants, and NGO representatives for their comments and views before being approved for implementation.
We reiterate that the central objective of the PPM should be to provide effective and meaningful remedies to communities harmed by an AIIB-financed project. The policy does not mention what kind of remedies are available to communities to compensate for economic and non-economic losses. The timeline and duration of remedial actions should be explicitly provided, defining the PPM’s role from inception to monitoring of the remedial action plan.
2.4 Co-Financing and PPM
The ESF should specify circumstances under which AIIB excludes access to the PPM for co-financed projects. Under the draft ESF, when AIIB permits a client to apply a co-financier environmental and social policy to a project instead of the ESF, AIIB can agree to use the co-financiers IAM and prohibit the PPM from receiving complaints about the project. This has created a significant accessibility problem. This exclusion is unprecedented—no other major international financial institution has a provision like this. It presents a problem not only for communities, who have fewer means of raising concerns but also for the institution, as it undermines accountability and forgoes opportunities for institutional learning. Given that AIIB engages in co-financing regularly, and the exclusion of the PPM in favor of a co-financier accountability mechanism has been applied extensively, this exclusion effectively removes the PPM’s oversight from a significant number of projects. According to AIIB’s website, 55 of 95 approved projects are co-financed, with virtually all applying the co-financier’s environmental and social policies. Since 2019, when project summary documents started to include information on whether the PPM could hear complaints about projects, it was revealed that 28 of 35 co-financed projects expressly excluded access to the PPM. This means that almost half (47%) of the AIIB portfolio approved during that period has been removed from the PPM’s purview.
Restricting access to the PPM on this basis is problematic for several reasons:
It severely restricts accountability options for project-affected people. Accountability mechanisms exist to serve communities affected by projects, and the accountability mechanism process should therefore empower communities to determine how best to raise their issues. Deciding for communities where the PPM is not available limits their options for raising concerns and seeking effective resolution. Project-affected people should be able to choose where to raise a concern or whether to file complaints with multiple mechanisms.
It significantly undermines the credibility and effectiveness of AIIB. Even when project-affected people file with a co-financiers accountability mechanism, that mechanism will not have the mandate to examine AIIB’s actions and omissions but will focus on the co-financiers. Even where a co-financier’s environmental and social policy is adopted, AIIB has obligations under the ESF, such as assessing the adequacy of a co-financier’s environmental and social due diligence and monitoring. Yet project-affected people with concerns about AIIB’s compliance cannot bring a complaint to the PPM, the only accountability mechanism with a mandate to examine AIIB’s actions.
It risks creating an accountability gap. The exclusion of the PPM for a co-financed project could lead to a situation where project-affected people find themselves with no IAMs able to handle their complaints. For instance, if concerns are related to a specific project facility financed by AIIB but not by the co-financier, the complaint could be excluded from the co-financiers IAM’s mandate as well. Lastly, it undermines the ability of both the PPM and the institution as a whole to learn and improve. Contrary to AIIB policy, most accountability mechanisms commit to coordinating with each other when complaints about co-financed projects are co-filed. It would benefit the PPM, especially in its infancy, to coordinate with other mechanisms and learn from them. Furthermore, the PPM’s ability to produce institutional learning and foster continuous improvement will arise chiefly from handling complaints, which can highlight gaps in AIIB policy or practice. If the PPM is unable to process a significant number of cases because of the co-financing bar, its ability to identify lessons learned and produce systemic analyses will likewise be curtailed.
The ESF should not enable AIIB to exclude access to the PPM for co-financed projects. The new PPM must override the ESF in this regard and should allow complaints about co-financed projects to be accepted without restrictions. Even where a co-financier environmental and social policy is applied, project-affected people should be able to raise complaints about AIIB’s obligations to vet and monitor the project’s environmental and social performance.
Bhola IPP Case: A failure in PPM ImplementationThe fallacy of ‘Good Faith Effort’The complaint filed by NGO Forum on ADB and CLEAN on April 8, 2022, on behalf of affected communities from the Bhola IPP project was deemed ineligible on February 23, 2023, as per Article 5.1.8 of the PPM. Article 5.1.8 of the PPM states: "The Requestors have not made good faith efforts to resolve the issues with the Project-level GRM and with Management, or have not indicated to the satisfaction of the PPM why they have been unable to do so." It should be noted that the affected communities requested anonymity in the complaint application filed on April 8, 2022, out of fear of retaliation at the local level. Despite this, the PPM expected them to demonstrate 'good faith efforts' from Bhola Island, Burhanuddin Upazila, to AIIB HQ in Beijing, from a location where they feared retaliation from third-party contractors involved in the project. The sensitive issue of land acquisition was a core concern; therefore, the PPM’s judgment on ‘good faith efforts’ is illogical and unreasonable, especially during the COVID-19 pandemic lockdowns in 2022. Furthermore, this judgment of ineligibility clearly illustrates a deep lack of understanding of the local cultural, political, and economic context of the Bhola IPP project area by the PPM and CEIU. The concerns regarding the disputed land acquisition issue were described in detail through independent findings by the research organization AECOM, which was commissioned by the AIIB at the time. Yet, the PPM failed to consider these formal report findings as well. PPM Procedural Failure Surrounding the Bhola IPP Complaint According to the PPM's rules of procedure, the timeline is as follows:
Total number of indicative days (as per PPM procedure): 35 days Bhola IPP Procedural Timeline in Practice
It should be noted that the decision was not sent through a formal communication letter from the PPM. This is significant because the response was to a formal complaint application process that was followed according to the PPM Policy and Procedures. The PPM took 10 months and 29 days to decide ineligibility, exceeding the 35-day limit as per the indicative timelines for submission processing under PPM Procedures. First Rationale for Lack of Good Faith Efforts The requestors have not reached out directly to Management, but the rationale for why they could not do so was unclear. The authorized representatives and requestors mentioned that during 2020-2021, the severity of the COVID-19 pandemic was at its highest, with severe restrictions on movement and communication, not to mention the risk of retaliation. Bhola Island, Bangladesh — AIIB HQ Management, Beijing ChinaSecond Rationale for Lack of Good Faith EffortsAccording to the PPM, the requestors should have first reached out to the Project-Level Grievance Mechanism, then to management, and finally to the PPM. However, there is no policy guidance explicitly articulating these steps in the PPM Policy. Article 5.1.8 of the PPM does not outline these as conditional steps for eligibility regarding Good Faith efforts. Furthermore, during the complaint eligibility process, the Bhola IPP experienced a change in ownership, and the AIIB loan was repaid. During this time, NGO representatives were informed by the MD CEIU that the AIIB no longer had direct leverage over the borrower, which could impact the ability to address the harms cited in the complaint. In our view, the ineligibility decision was not necessarily based on the merits of the case or the PPM policy, but rather on a predetermined decision by the MD CEIU and the PPM towards ineligibility. We strongly believe that the change in ownership of the project should have no bearing on the complaint filed by the requestors to the PPM. According to PPM policy, the mechanism should fulfill its duty to address the complaint, as the harm was established while the AIIB was actively involved in the project and therefore must be held accountable. |
The case handling of the Bhola IPP complaint exposes a significant lack of 'good faith' by the PPM and AIIB management in addressing the first complaint in its short history. This has also undermined the faith and trust of civil society and communities at large in the current PPM and CEIU as effective mechanisms for addressing the concerns of affected communities. For an MDB with a portfolio exceeding USD 100 billion, the AIIB must establish a new PPM that is meaningful, independent, and committed to providing remedies to affected communities and the environment.
Concluding Reflections
The current PPM is a failed system that has been tested without yielding results. The ongoing review of this policy strongly suggests that the PPM is still far from meeting its objectives of ensuring AIIB compliance and providing remedies to project-affected people.
We hope the Bank will take a bold stand by considering and adopting the various recommendations highlighted in each section of this submission to make the necessary changes to the PPM. We believe that, in the case of the PPM, the goals of the AIIB and civil society align—to ensure that the most vulnerable are least adversely affected. We look forward to a new PPM policy that is more pragmatic, committed, and effective in providing remedies to those most vulnerable and affected.
Endorsed by the following organizations:
NGO Forum on ADB
Accountability Counsel, Global
Aksi! for gender, social and ecological justice, Indonesia
Asian Peoples' Movement on Debt and Development (APMDD)
Bangladesh Working Group on External Debt (BWGED), Bangladesh
Centre for Environment and Participatory Research -CEPR, Bangladesh
Centre for Environmental Justice, Sri Lanka
Centre for Human Rights and Development, Mongolia
Coastal Livelihood and Environmental Action Network (CLEAN), Bangladesh
Community Resource Centre, Thailand
DIPTO Foundation, Bangladesh
Environmental Public Society, Armenia
Equitable Cambodia, Cambodia
Freedom from Debt Coalition, Philippines
Friends with Environment in Development, Uganda
Gender Action, Global
Global Alliance for Incinerator Alternatives (GAIA), Asia Pacific
Growthwatch, India
Indian Social Action Forum, India
JUHUDI Community Support Center, Kenya
KRuHA, Indonesia
Mangrove Action Project, USA
OTWatch Mongolia, Mongolia
Pakistan Fisherfolk Forum (PFF), Pakistan
Participatory Research & Action Network- PRAAN, Bangladesh
Peace Point Development Foundation-PPDF, Nigeria
PF Nash Vek, Kyrgyzstan
Psychological Responsiveness NGO, Mongolia
Rivers Without Boundaries, Mongolia
Society of Development and Education for Small Households-SoDESH, Bangladesh
Songshoptaque, Bangladesh
Umo Isua-Ikoh, Nigeria
Witness Radio, Uganda
YouthNet Global, Bangladesh
Download the submission here.
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