We’ve helped AfDB overcome legal impediments to development — Gadio


Mr Kalidou Gadio, a Mauritanian national, is the General Counsel of the African Development Bank.  Prior to this position, Gadio served within the Bank as a Division Manager of the Operations Affairs Division in the Legal Department and as Country Director for North Africa Region. Before joining the Bank, he worked with Coudert Brothers in New York as an Associate Attorney and with Jeantet et Associés, an international law firm in Paris. He holds an LL.M from Harvard Law School (class of 1987), an Advanced Degree in International Law from the University of Paris II and a “License en Droit” from the University of Mohamed V in Morocco. Mr Gadio, who has practised law on both sides of the Atlantic, is a member of the New York and Connecticut Bars and a former member of the Paris Bar.

In this interview with AnnualMeetings Daily, Gadio  speaks on how the Legal Services Department has been helping the Bank Group to achieve its continent-wide objectives especially in overcoming legal impediments to sustainable economic development in RMCs,  the efforts of the African Legal Support Facility (ALSF) in assisting Heavily Indebted Poor Countries (HIPCs) to manage the growing problem of Vulture Funds, and  the role of his office  in building capacity for the usual complex international commercial negotiations as well as conflict resolution in Africa. Excerpts:

How far have the contributions of the Legal Services Department helped the Bank Group in achieving its continent-wide objectives, particularly that of overcoming legal impediments to development in RMCs?
I think this question can best be answered by putting into context the role of my department, i.e. the General Counsel and Legal Services Department, in the institutional set up of the Bank Group as this relates to the objectives of the Ten Year Strategy (TYS) of the Bank Group. On the specific issue of how we are helping the Bank Group to overcome legal impediments to development in RMCs, we note that for a long time some African countries have been grappling with how to develop and implement effective regimes for the respect of the rule of law to promote sustainable economic development. However, there are challenges, and these challenges are mostly in respect of good governance and judicial reforms in Africa. My department is assisting the Bank Group’s efforts at addressing these challenges.  For example, we have held brainstorming sessions on the rule of law and the challenges it poses for economic development in Africa. These sessions have underscored the role law plays as an essential tool for promoting economic growth and development, and have emphasized the connection between good governance, democracy, rule of law and the justice sector.

Another example is that as the legal advisor to both the Boards of Governors and the Boards of Directors of the Bank Group, and as an integral part of Management, the Legal Department has been providing independent legal opinions to the Bank Group on operations and other institutional matters. We also contribute as key players in setting institutional policy, and providing legal advisory services in the interpretation, implementation, and enforcement of policy. Other departments often consult our lawyers and consider their views in making important institutional decisions.

We have been playing active roles in the design and implementation of the Bank Group’s operations and policies. For instance, we have been very instrumental in the design of the new Integrated Safeguards System (ISS) of the Bank Group, and the establishment of the African Legal Support Facility (ALSF), which assists African governments by providing legal advice for the negotiation of large and complex commercial contracts in the natural resources sector. I believe every department of the Bank Group is applying itself to the objectives and ideals of the TYS, and for us in the Legal Department, we are happy that the Bank Group is institutionalizing governance and accountability as one of the five operational priorities of the TYS. Furthermore, the special emphasis that the TYS places on fragile states and gender-focused economic empowerment specifically as this relates to legal and property rights is very indicative of the Bank Group’s resolve to overcome the legal impediments to sustainable economic development in RMCs. In fact, legal and judicial reforms are part of the issues highlighted in the Bank Group’s Policy on Good Governance and the Governance Strategic Directions and Action Plan.

To sum up, I will say that my department is playing very significant roles in helping the Bank Group to achieve its continent-wide objectives especially in overcoming legal impediments to sustainable economic development in RMCs. However, let me also hasten to say that the Bank Group has not done much in the area of legal and judicial reforms, and, going forward, we need to redouble our efforts in this area.

The rationale for setting up the African Legal Support Facility (ALSF) was to assist Heavily Indebted Poor Countries (HIPCs) to manage the growing problem of Vulture Funds.  To what extent has this objective been realized?
Let me emphasize that the Legal Department was very pivotal in the establishment of the African Legal Support Facility and took all necessary measures to ensure that it is able to run on its own.
I believe that the Director of the African Legal Support Facility is in a better position to provide detailed information on the work and achievements of the Facility.  I can, however, say that I am aware that the ALSF has been able to assist a few African governments to deal with Vulture Fund cases. For instance, most recently the ALSF has assisted the Democratic Republic of Congo to prevail in an appeal against a Vulture Fund in the USA.

How has the partnership between the ALSF and the Pan-African Lawyers Union (PALU) influenced good investment laws and inclusive growth in Africa?  
The partnership between the ALSF and PALU has extended capacity building to African lawyers in negotiating complex commercial transactions such as infrastructure deals, major contracts in the extractive resources industry, public-private-partnerships (PPPs), and the like. The programme has provided training to over 150 lawyers. In addition to the capacity building provided, the programme has also illustrated the capacity gaps that exist for future programmes of the Bank Group and the ALSF to address.

How is the Bank tackling the challenges of financing infrastructure and other developmental projects in Africa, and in this context, what is the role of the Legal Department?
I have to say that the Legal Department is always closely involved in assisting the operations departments in resources mobilization.  If you allow me, I would like to first take the specific case of infrastructure in Africa.  It is a recognized fact that inadequate infrastructure holds back economic growth on the continent and impedes the productivity of the private sector.  Africa’s  infrastructure financing gap, which is now estimated to be USD 50 billion a year, is growing and existing financial products are not responding adequately to Africa’s needs.

The African Union and NEPAD Heads of State agreed that Africa needs an innovative solution for infrastructure delivery and signed the Programme for Infrastructure Development in Africa (PIDA) declaration, in Addis Ababa in January 2012, demonstrating a strong political commitment to infrastructure development and regional integration.  Following several initiatives by the President of the Bank Group, the Bank is now proposing the creation of the Africa50 Fund – a new financing vehicle for Africa. The Africa50 Fund will be catalytic and innovative, seeking to not only attract substantial volumes of financing and excellent expertise to African projects, but also to build up local capacity. It will establish two business lines, namely (i) Project Development and (ii) Project Finance.

The contribution of the Legal Department is crucial in this initiative as it is incumbent on it to design the most appropriate legal structure for this new and innovative vehicle. Let me say that shareholders are yet to determine most of the details of the Africa50 Fund, therefore there is very little to say by way of comments. However, it is obvious that in considering the optimal legal structure for the Africa50 Fund, the Bank Group’s overarching objective is to ensure that the Africa50 Fund would be able to function on a fully commercial basis while enjoying the operational freedoms conferred by international legal personality. The idea is to structure it as an autonomous entity, legally and financially independent of the Bank Group.

How is the Bank addressing important issues directly relating to procurement and utilization of its resources, for instance issues relating to fraud and corruption as well as to environmental and social requirements?
It is essential to underline the fact that the Bank Group has a fiduciary duty to ensure that its resources are used for the purposes for which they were intended and in conformity with its mandate, as well as its applicable policies and procedures. The Bank Group is fully aware of the fact that it can continue to fulfill its mandate to contribute to the sustainable economic development and social progress of African countries by addressing the issues relating to the fight against fraud and corruption.

As we are all aware, corruption undermines sustainable economic growth and is a major obstacle to the reduction of poverty. Therefore, the Bank Group is collaborating with other multilateral development banks or MDBs in an ongoing harmonization process that recognizes that a unified and coordinated approach is critical to the success of the shared efforts in the fight against corruption. In other words, I am talking about the Agreement for Mutual Enforcement of Debarment Decisions signed in April 2010 by the Bank Group, and other MDBs like the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and the World Bank Group.

This agreement establishes a legal framework within which International Financial Institutions or IFIs may sanction firms or individuals found to have engaged in fraud, corruption, or other harmful practices in development projects that the IFIs finance. Other participating development banks may also sanction the firms and individual for the same misconduct. Consequently, the Bank Group has had to ensure that it complies with, and applies, certain minimum standards embodied in this Agreement with respect to its investigations and sanctions process by, among other things, preserving fairness and objectivity in its investigative and sanctioning process, both internally and externally.

I would like to emphasize that the Legal Department played a leading role in setting up the Bank Group’s sanction process, in particular with respect to the establishment of the Sanctions Office and the Sanctions Appeal Board, and the Staff Integrity Office. The Staff Integrity Office is a separate mechanism set up to investigate staff misconducts that are not related to the procurement of Bank Group-financed projects. It is the Integrity and Anti-Corruption Department (IACD) that conducts investigation and the Sanctions Office and the Sanctions Appeals Board are responsible for imposing sanctions on firms and individuals guilty of sanctionable practices.

The Legal Department does not participate directly in the investigation and sanctioning processes. Indeed, we provide legal opinions whenever the Integrity and Anti-Corruption Department, the Sanctions Office, or the Sanctions Appeal Board request.  However, let me point out that the Legal Department is involved in the Staff Integrity Office work by providing technical legal support.  For instance, we drafted the Bill of Rights and Obligations for staff members under investigation for misconduct.  We also ensure that both the Bank and staff members comply with it.

As regards Environmental and Social requirements, it is worth noting that the Bank Group recently revised and adopted an Integrated Safeguards System (ISS). Under the ISS framework, the Bank Group has a responsibility to ensure that all public and private sector operations adhere to these operational safeguards, which aim to advance sustainable development through the effective management of a project’s social and environmental risks and impacts. The Bank’s RMCs need therefore to identify and develop measures to reduce and mitigate climatic and environmental risks. Examples of some of the key requirements include ensuring a meaningful and transparent consultation process with communities affected by a project, taking concrete measures to protect vulnerable groups, assessing gender-related impacts of a given project, providing mechanisms for transparency, disclosure and accountability, and maintaining mechanisms for redressing grievances to ensure optimal developmental impacts of Bank Group financing.

The role of the lawyer is to ensure that when our RMCs use Bank Group finances, they comply with the Bank Group’s applicable policies and procedures. Take for example a situation where the Bank Group has to finance a road project in a RMC. Here the Legal Department conducts legal due diligence. The idea is to ensure that legal documentation includes the obligation of the RMC on whose territory the project is being financed to adequately compensate or relocate, as the case may be, all persons affected by the project before any civil works are initiated on the concerned land and other properties in accordance with the agreed Resettlement Action Plans.

What is your Office doing towards building capacity for the usual complex international commercial negotiations as well as conflict resolution in Africa?
My office is providing legal knowledge and skills as part of the Bank Group’s resources for assisting institutions that promote inclusion and accountability by strengthening the capacities of parliamentarians, the media, and civil society organizations in improving public financial management.

I think that the question also raises the interesting issue of conflict resolution in Africa. In the specific area of conflict resolution, we have not done much, and this is rightly so considering the non-political mandate of the Bank Group. The Bank Group’s involvement in post-conflict reconstruction and development efforts in its RMCs has been selective and targeted at economic development and conflict prevention considerations. One notable example is the department’s provision of legal support as part of the Bank Group’s support to the African Union High-Level Implementation Panel (AUHIP) that mediated a co-operation agreement between the Republic of Sudan and the Republic of South Sudan in September 2012.

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