For the
Padma Multipurpose Bridge Project
Has the
World Bank communicated to the Government the results of the investigations?
In
accordance with our policies, we submitted two reports to the Prime Minister,
the Finance Minister,
and the
Anti-Corruption Commission (ACC), first in September 2011 and again in April
2012. We urged
the
authorities of Bangladesh to investigate these matters fully and, where
justified, prosecute those
responsible
for corruption.
What were
the findings of the referral report that the Bank has given to the Government?
Referral
reports provided to Governments are meant to stimulate a robust investigation
of credible
evidence of
corruption by appropriate national entities.
The World Bank’s independent Integrity Vice
Presidency
looks into corruption allegations to determine whether the Bank’s
anti-corruption guidelines
have been
violated and whether sufficient credible evidence exists to warrant
investigation by national
authorities. The World Bank itself does not conduct
criminal investigations or make any determination
on
appropriate follow-up. This is a matter
for Bangladeshi authorities to pursue in accordance with
Bangladeshi
laws.
Given that
the World Bank has delivered reports and letters to the Government of
Bangladesh, why
won't the
Bank make these reports available to the public?
The World
Bank presented evidence of corruption under the Padma Multipurpose Bridge
Project to the
Government
of Bangladesh in September 2011 and April 2012. The World Bank has an obligation to
each member
government—including the Government of Bangladesh—to maintain the
confidentiality of
referral
reports. However, the Government of
Bangladesh may disclose these reports and related
correspondence
if it so chooses.
What were
the proposals set by the World Bank? Did the Government of Bangladesh agree to
any of
the
measures?
The World
Bank suggested that the Government adopt four measures, but the Government was
unable
to commit to
two of the four. First, the Anti-Corruption Commission (ACC) was asked to form
a special
joint
investigative and prosecutorial team to work together on the investigation and follow-up. The ACC
agreed with
this proposal. Second, the Government
accepted an alternative project implementation
arrangement
which gave co-financiers greater oversight over procurement processes. Third,
the ACC was
asked to
provide information to an external panel under World Bank auspices, allowing
the panel to
assess the
adequacy of the investigative process.
Ultimately the ACC would not accept any formal
relationship
with the external panel to share information. Finally, the Government was
unwilling to
exclude
public officials from public service for the duration of the investigation
although Bangladeshi law
permits
this. Unable to reach agreement on two
of the four measures during a last mission to find a way
forward in
June, the World Bank was left with no option other than to cancel our support
for the Bridge. Were the proposals spelled out by the World Bank in line with
Bangladeshi law?
The World
Bank made every effort to ensure that all requested measures were in line with
the
Bangladeshi
legal framework.
Statements
by Government officials allege that the World Bank favored a particular Chinese
firm in
the
pre-qualification process for the bridge construction and this led to the
troubled relationship
between the
Government and the World Bank, and ultimately to the cancellation of the
project.
This is
absolutely not true. The World Bank does
not favor certain firms over others. In
the case referred
to, the Bank
was reviewing a proposed list of firms to be classified as “pre-qualified” to
participate in the
bidding for
bridge construction. For a “billion-dollar-plus” contract such as the Padma
Bridge, it is
particularly
important to provide clear and strong justification on why each firm is
qualified to bid or
lacks the
necessary qualifications. In this
particular case, the Bridge Authority excluded the China
Railway
Construction Corporation from the pre-qualification list without providing
adequate justification.
Therefore,
in accordance with our procurement guidelines, the Bank asked for complete
information,
which
entailed several requests for clarification. As soon as all required
information was provided, the
Bank
accepted the Government’s proposed pre-qualification list and agreed with the
decision of the
Government
to exclude the firm.
Why did the
World Bank cancel the project one month prior to the effectiveness deadline for
the
project?
The World
Bank was in discussion with the Government for nearly a year, seeking a serious
commitment
to address
evidence of corruption under the project.
Unfortunately, the Government took no such action
for nearly
nine months, leading many to call for the early cancellation of the loan. Given
the tremendous
economic and
social benefits of the bridge for the people of Bangladesh, the World Bank was
not willing
to let it go
without a struggle to save the project.
The World Bank mounted an urgent mission to Dhaka
to find a
way forward in late June. After extensive discussions, Bangladeshi authorities
were unable to
agree to two
of the four measures proposed. On this
basis, the World Bank Management Team
reluctantly
took the decision to cancel the loan.
A senior
Government official noted that the project was cancelled on the last day in
office of the past
president of
the World Bank, and that the World Bank's statement was his personal statement
rather
than that of
the institution.
All
decisions by the World Bank represent the institution and not an individual. It
was a unanimous
decision of
the World Bank Management Team, and it was motivated by a lack action on the
part of
Government
to seriously address corruption. This
was a sad outcome for the people of Bangladesh and
for the
World Bank, particularly given our long-standing and productive partnership
dating back to the
birth of the
nation. What is the interest rate of
World Bank Credits to Bangladesh?
Bangladesh
receives credits from the International Development Association (IDA), the
World Bank’s
concessional
arm, which is interest free. It has a 40-year repayment period which includes a
10-year
grace
period; it carries a service charge of 0.75 percent. Between years 11-20, the country would repay
2
percent of
the original amount every year. For the remaining 20 years, the country would
pay back 4
percent of
the original amount every year.
Is
Bangladesh being treated differently than other countries in which there are
similar investigations?
No. The
World Bank has an obligation to ensure that its funds reach their intended
beneficiaries. The
World Bank
takes actions which are appropriate based on the nature of the allegations and
the evidence
obtained
during the course of investigations.
How will the
cancellation affect other ongoing World Bank operations?
The
cancellation will not affect on-going operations funded by the World Bank, and
we will continue to
work closely
with the Government and local stakeholders to support efforts to build a better
life for the
citizens of
Bangladesh. The World Bank’s current portfolio consists of over 30 projects
with commitments
amounting to
about $4.4 billion. These projects, among others, support the development of
Bangladesh’s
health and
education systems, the improved provision of local services, the increased use
of renewable
energy and
the economic empowerment of women. During the past fiscal year, which ended in
June
2012, the
World Bank approved over $860 million zero interest IDA credits, supporting
among others,
primary
education, strengthening of local governments and improving access to and
quality of water
supply in
rural areas. Disbursements in FY12 were about $500 million, significantly
exceeding the
average of
the previous three years.
What will be
different now in the areas where the World Bank remains engaged?
First, the
World Bank will undertake greater oversight in areas where financial risks
remain substantial.
This will
include independent financial transaction reviews using forensic accounting
techniques to
uncover
patterns of fraud and corruption.
Second, the World Bank will redouble project-specific efforts
to
strengthen capacity and systems for good governance. Finally—and perhaps most
importantly—the
doors and
windows will be opened wide in Bank-financed operations, through greater access
to
information
and increased citizen participation for better transparency and accountability
for results.
We have seen
through operations like the Local Governance Support Project that citizens’ own
engagement
at the local level is the best way to ensure the transparent use of resources
and sustained
progress
towards objectives like the Millennium Development Goals.
Is there any
scope to review the loan cancellation decision?
The World
Bank has a few precedents in its history of reinstating a cancelled loan in
other countries, so it
is
technically possible. However, there is little scope to revisit the decision in
the current circumstances,
as the
Government was unable to agree to two measures deemed important in the conduct
of a full and
fair
investigation into evidence of corruption.
This is an unfortunate outcome, as the bridge has the potential to
accelerate growth and transform lives
in Southwest
Bangladesh and across the nation. The
World Bank has been a strong partner in
supporting
Bangladesh in these efforts, and we remain committed to helping Bangladeshis
rise out of
poverty and
achieve their dream of a prosperous and empowered nation, built on a foundation
of good
governance.
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