World Bank formally cancels Padma bridge loan
The World Bank has cancelled $1.2 billion credit for the Padma bridge project with immediate effect, saying it has credible evidence of a high-level corruption conspiracy among Bangladeshi government officials.
"The World Bank has credible evidence corroborated by a variety of sources which points to a high-level corruption conspiracy among Bangladeshi government officials, SNC Lavalin executives and private individuals in connection with the Padma Multipurpose Bridge Project," the WB said in a statement on Friday.
"The World Bank can not, should not, and will not turn a blind eye to evidence of corruption," the Washington-based bank said.
We have both an ethical obligation and a fiduciary responsibility to our shareholders and IDA (soft loan wing of World Bank) donor countries. It is our responsibility to make sure IDA resources are used for their intended purposes and that we only finance a project when we have adequate assurances that we can do so in a clean and transparent way.
"In light of the inadequate response by the Government of Bangladesh, the World Bank has decided to cancel its $1.2 billion IDA credit in support of the Padma Multipurpose Bridge project, effective immediately," the statement added.
The development institution also said that it had provided evidence from two investigations to the prime minister, as well as the minister of finance and the chairman of the anti -corruption commission (ACC) of Bangladesh in September 2011 and April 2012.
"We urged the authorities of Bangladesh to investigate this matter fully and, where justified, prosecute those responsible for corruption. We did so because we hoped the government would give the matter the serious attention it warrants," the statement said.
In Canada, where SNC Lavalin's headquarters are located, after executing numerous search warrants and a year-long investigation based on a referral from the World Bank, the Crown Prosecution Services brought corruption charges against two former SNC executives in connection with the Padma bridge project. Investigation and prosecution are ongoing but the court filings to date underscore the gravity of this case.
Because we recognise the importance of the bridge for the development of Bangladesh and the region, we nonetheless proposed to proceed with an alternative, turnkey-style implementation approach to the project provided the government took serious actions against the high level corruption we had unearthed. It would be irresponsible of the WB not to press for action on these threats to good governance and development.
To be willing to go forward with the alternative turnkey-style approach, we sought the following actions: (i) place all public officials suspected of involvement in the corruption scheme on leave from government employment until the investigation is completed; (ii) appoint a special inquiry team within the ACC to handle the investigation, and (iii) agree to provide full and adequate access to all investigative information to a panel appointed by the World Bank comprised of internationally recognised experts so that the panel can give guidance to the lenders on the progress, adequacy, and fairness of the investigation.
We worked extensively with the government and the ACC to ensure that all actions requested were fully aligned with Bangladeshi laws and procedures, the statement said.
We proposed that when the first bids would be launched, the WB and the co-financiers would decide to go ahead with project financing if they had determined, based on the Panel’s assessment, that a full and fair investigation was under way and progressing appropriately.
In an effort to go the extra mile, we sent a high-level team to Dhaka to fully explain the WB’s position and receive the government’s response. The response has been unsatisfactory, the statement added.
Analysts say that some 30 million people in the region could directly benefit from the new road and rail connection.
At present all traffic across the Padma has to rely on ferries, which are infrequent and often unsafe.