WB cancels USD 1.2 billion loan for Bangladesh

Washington/Dhaka: The World Bank today scrapped a USD 1.2 billion loan deal with Bangladesh for constructing a major multipurpose bridge, citing a "high-level corruption" in the project. In a strongly worded statement in Washington, the World Bank said that the Bangladesh government failed to take any action to check corruption despite its repeated reminder.

"In light of the inadequate response by the Government of Bangladesh, the World Bank has decided to cancel its USD 1.2 billion (International Development Association) credit in support of the Padma Multipurpose Bridge project, effective immediately," the statement said.

"The World Bank cannot, should not, and will not turn a blind eye to evidence of corruption. We have both an ethical obligation and a fiduciary responsibility to our shareholders and IDA 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," it said.

In an unusual detailed statement, the World Bank said it 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 project.

The 6-km long Padma Bridge is a multipurpose road-rail bridge across the Padma River to be constructed in Bangladesh to link the country`s underdeveloped south with the capital Dhaka and the main port of Chittagong. Reacting to the development, Bangladesh said it was "unfortunate and mysterious" and argued that the World Bank decision was based on allegations "which does not necessarily mean that corruption charges have been confirmed".

"It (decision) is unfortunate, regrettable and mysterious …their (WB) decision came as investigations into the allegations were underway at the Anti-Corruption Commission", Communication Minister Obaidul Quader said in Dhaka. The World Bank earlier promised to provide USD 1.2 billion of the USD 2.93 billion project but kept suspended the disbursement process raising the graft allegation as the construction was initially planned to start by this year and be completed by the end of 2014 to connect southern Bangladesh with the capital.

"We only finance a project when we have adequate assurances that we can do so in a clean and transparent way… We have both an ethical obligation and a fiduciary responsibility to our shareholders and (Bank) donor countries," the world bank statement said. "It would be irresponsible of the Bank not to press for action on these threats to good governance and development," it added.

Bangladesh`s Anti-Corruption Commission (ACC) had said it found allegations corruption in "contractor appointment" for the mega project "baseless" while it was still probing the second allegation about anomalies in appointing the project consultant.

The Commission in February also absolved the then Communication Minister Abul Hossain of graft allegations over the contractor appointment saying "the ACC does not think any corruption was committed in pre-qualification bidding process" of the main construction work of the Padma Bridge project.

However, under a cabinet reshuffle, Prime Minister Sheikh Hasina, changed Hossain`s portfolio and made him the minister for Information and Communication Technology (ICT) recently. Hasina had warned that her government would not accept World Bank funds for the mega project unless it could prove the allegation it raised.

Bangladesh earlier short-listed five firms for appointment as consultants including Canadian SNC-Lavalin Group Inc but the World Bank smelled corruption in the process and instead of approving the list referred the mater to Canadian authorities to investigate how the Canadian company got itself short listed.