WB may cancel funding soon

Wednesday, May 9, 2012Front PagePadma Bridge Project
WB may cancel funding soon
Govt's inaction to graft allegations seen as reason; another corruption report submitted to Muhith
Rejaul Karim Byron, back from Washington

The World Bank may soon cancel its funding for the Padma bridge project, as the government took no effective steps in response to the donor agency's reports on corruption allegations involving the project.

Getting such a hint from the World Bank, Finance Minister AMA Muhith has taken initiative to find alternative sources of funding for the project.

Muhith on Monday told The Daily Star that the government will prepare a new proposal for fresh financial arrangements for the project after consultation with all parties concerned.

“We do not want to keep any lead financier. We [Bangladesh government] will coordinate [the implementation of the whole project],” he said.

The WB is likely to convey to the government its final decision on financing the project before the organisation's President Robert Zoellick's tenure expires on June 30.

The Daily Star correspondent talked to WB officials at the donor agency's headquarters in Washington during the spring meetings of the IMF-World Bank Group from April 16 to 22.

Asking not to be named, a WB official told The Daily Star that the bank may finally cancel its funding for the project as it does not want to linger over the issue.

The WB has submitted to the government two reports about corruption allegations involving the Padma bridge project. The latest one was submitted to Muhith in Dhaka in the second week of last month.

An official of the bank's Integrity Vice Presidency from Washington and Ellen Goldstein, the bank's country director in Bangladesh, met the finance minister at the latter's residence and handed over the report to Muhith, said a WB official at the bank's headquarters.

The report contained findings of the Canadian government's probe into the corruption allegations over selection of Canadian company SNC-Lavalin as the consulting firm to supervise the main bridge's work. Details of the report could not be known.

A source said the report claimed some influential people in the government -- in and outside the cabinet -- demanded commission from SNC-Lavalin for giving it the consultancy job.

The WB submitted another report to Muhith in September last year on the sidelines of the WB-IMF annual meeting in Washington.

The report raises allegations that former communications minister Syed Abul Hossain and his family-owned company Sahco sought to coerce multiple companies into using Sahco as a paid "silent agent" for getting permission to bid for the contract of the main bridge.

Later, the WB temporarily suspended its part of $1.2 billion of the total $2.9 billion funding for the Padma bridge project.

A WB official in Washington said the donor agency was not happy with the step the government took on the basis of this report. The WB verbally indicated that the government should rethink the portfolio of the then communications minister Abul Hossain. But the government did not take any action. Hossain was shifted to another ministry much later.

A recent statement of WB Country Director Goldstein also reflected the donor agency's unhappiness over the issue. On April 17, in an e-mail to The Daily Star from Washington, Goldstein said, “The World Bank began sharing findings of serious corruption with the Bangladeshi government related to the Padma Bridge project in September 2011.”

Clarifying Goldstein's statement, a WB official in Washington said Goldstein in her statement mentioned the bank's two reports submitted to the finance minister.

Goldstein said, “The World Bank stands by its investigations, and we strongly urge the Government of Bangladesh to pursue its own investigation into these serious matters under its sovereign laws and hold wrongdoers accountable.”

Referring to the latest WB report, the finance minister on Monday told The Daily Star, “It seems I have got it.”

Asked about the details of report, Muhith said, “No, I do not want to make any comment.”

When Prime Minister's International Affairs Adviser Gowher Rizvi met two top WB officials on the sidelines of last month's IMF-WB meetings in Washington, the donor agency clarified its stance to Rizvi.

Bangladesh usually does not send any representative to the IMF-WB spring meetings. But this time Rizvi represented Bangladesh there. His main task was to hold talks with WB high-ups about the financing of the Padma bridge project.

Rizvi called on WB Managing Director Sri Mulyani Indrawati and Vice President Isabel M Guerrero to discuss the Padma bridge issue. Rizvi was told that the WB wants to see what action the Bangladesh government took to hold the wrongdoers accountable, a WB official in Washington told this correspondent.

On his return from Washington on April 25, Rizvi met the finance minister at the latter's residence and informed Muhith about the WB's stance, said a finance ministry official preferring anonymity.

Following the developments, the finance minister moved to find alternative sources of funding for the project.

On May 2, Muhith went to Manila to join the ADB annual meeting. He discussed with ADB officials alternative sources of funding for the project, on the sidelines of the meeting.

The ministry official said if the WB does not finance the project, the government will separately put forward proposals to the ADB, Japan International Cooperation Agency (Jica), and the Islamic Development Bank (IDB) to fund the project.

On Monday, Muhith told The Daily Star, “We have not yet made any proposal. We have had discussions with all concerned. We will make it.”

It is up to the development partners whether they will finance the project or not, said Muhith.

About the government's proposal for fresh financial arrangements, the finance minister declined to give any details. “You will know when we write letters [to donors].”

He said under the new arrangements, the project will be divided into different components that include two approach roads, river training, bridge construction and resettlement.

“These are the jobs. Now they will decide who takes what,” said Muhith.