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Eye on the IFIs

New World Bank Chief Backs Defunding Bangladesh Bridge Project

WASHINGTON, Jul 3 2012 (IPS) - On Monday, his first day in office, new World Bank President Jim Yong Kim said he sees the institution’s recent decision to pull out of a massive bridge project in Bangladesh as “appropriate”.

On Friday, the World Bank announced that it was cancelling a 1.2-billion-dollar loan to Bangladesh, which would have made up a significant chunk of a 2.9-billion-dollar bridge that would span more than six kms over the Padma River.

The bridge, envisioned to hold both cars and trains, would connect the country’s impoverished southwest with the capital, but now will face significant hurdles in getting built. Following the World Bank’s lead, the Asian Development Bank and the Japan International Cooperation Agency have made similar statements.

Citing undisclosed “credible evidence” pointing to a “high-level corruption conspiracy”, the bank stated that it was cancelling the project’s line of credit immediately. “The World Bank cannot, should not, and will not turn a blind eye to evidence of corruption,” it said.

“The cancellation is unfortunate,” Shahidul Alam, a photographer and writer in Dhaka, told IPS, “as the penalty for the suspected corruption is being paid neither by the officials in question, nor the government in power, but by the general public of Bangladesh.”

The decision, stretching back to September 2011, was actually made by Kim’s predecessor, Robert Zoellick. But speaking with journalists on Monday afternoon at the bank’s Washington headquarters, Kim said he was following the situation closely.

“Even toward the very end, there were extensions given so that there would be what we would think of as an appropriate response; and not seeing one, we cancelled the bridge project,” he said.

“Now, we’re very concerned about the well-being of the poorest people in Bangladesh, but what I must stress is the Bank’s positions is that we do not tolerate corruption … I do think it was appropriate.”

The bank, with 43 billion dollars in annual outlay and roughly 9,000 employees around the globe, has long been criticised for parts of its funding being diverted through corruption. Such leaks impinge on the effectiveness of its poverty-alleviation and development programmes.

But Zoellick’s five-year term as president saw a major new anti-corruption focus that gained widespread praise. On Thursday, Transparency International, a watchdog group, published a brief characterising the bank’s new fight against corruption as “commendable”.

Still, for some those first steps have only underscored the World Bank’s relative newness to major anticorruption efforts.

“As a new-comer to the world of openness and accountability, (the World Bank) seems to have recently adopted a policy of chopping off the head because of a perceived headache,” the executive director of Transparency International Bangladesh, Iftekharuzzaman, said in a statement following the recent Padma announcement.

“Instead of depriving the people of the benefits of funds that the Bank draws from global public sources, the Bank should be more strategic and continue to engage with the (Dhaka) Government … sharing the responsibility as a key fiduciary agent of the project to ensure integrity, transparency and accountability in the implementation process.”

Although the World Bank declined to respond specifically to the criticism that has followed its Padma decision, it seems clear that its officials feel they operated in good faith for long enough.

Over the course of two investigations since September, the bank stated on Friday, “We urged the authorities of Bangladesh to investigate this matter fully and, where justified, prosecute those responsible for corruption.”

It continued: “Because we recognize the importance of the bridge for the development of Bangladesh … In an effort to go the extra mile, we sent a high-level team to Dhaka to fully explain the Bank’s position and receive the Government’s response. The response has been unsatisfactory.”

Moral defeat

That corruption was taking place surrounding the Padma project has never been under debate. Last week, two officials from the Canadian engineering firm SNC-Lavalin were formally accused of bribing Bangladeshi officials connected to the plan, following information brought to light by the World Bank investigation.

Little action has yet been taken against Bangladeshi officials, however, though the story has roiled the national political waters, particularly tarnishing the ruling Awami League government. The bank’s highly visible accusations of corruption have made the Padma project an instant issue in the next national elections, slated for next year.

“The World Bank’s decision is a moral defeat for the government,” Moudud Ahmed, a BNP official, told journalists in Dhaka on Tuesday.

Also on Tuesday, Finance Minister A.M.A. Muhith submitted a lengthy statement to the Parliament, detailing his ministry’s involvement with the World Bank’s investigations.

“The statement of the (World Bank) has humiliated the whole country and the allegation … against us is not well founded,” Muhith stated. “It is also not true that the Government of Bangladesh has not taken any appropriate action to avert corruption. I think we have considered courteously all the recommendations of the WB going well beyond our routine procedures.”

Muhith suggests that outgoing World Bank President Zoellick “in an attempt to settle the issue in haste during his term has taken this imprudent decision which has shattered the image of Bangladesh.”

Still, for many Bangladeshis today, the perception is of a government in which corruption has, for the most part, continued as usual.

“A government that came into power with a pre-election promise that it would root out corruption should at the least have demonstrated that it took the allegations seriously,” commentator Alam says.

“Its sudden defiance against imperial powers rings hollow when faced with complete acquiescence in all previous transactions. It’s a new song and sung out of tune.”

Could this public shaming by the World Bank serve as a wake-up call on corruption for the government?

“Given the nature of corruption in Bangladesh, I don’t think so,” Abdur Chowdhury, chair of the economics department at Marquette University, here in the U.S., told IPS.

“Over the last decade, corruption has become entrenched in the society. An all-out effort is needed to root out corruption from every sphere of the society. Unfortunately, I don’t see that happening in the near future.”

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