A $1.2bn loan for Bangladesh’s Padma bridge project has been cancelled by the World Bank on Friday, arguing that the government had not co-operated in investigating “high level” corruption in the project.
The bank said about the loan being cancelled immediately : “The World Bank cannot, should not, and will not turn a blind eye to evidence of corruption.”
The 6.2km bridge over the Padma river, which is the local name for the Ganges, is meant to connect the capital Dhaka to the country’s coastal districts.
Designed to carry a highway and railway line, the bridge will cost $3bn and is planned to go into service in 2014. It’s aim is to transform Bangladesh’s impoverished south.
After approving the loan in February 2011, the bank froze it by October due to allegations of corruption in the tender process.
Evidence from two investigations into the bridge case have been provided to Bangladesh’s prime minister, minister of finance and anti-corruption commission chairman in September 2011 and April 2012, according to the World Bank.
It said : “We urged the authorities of Bangladesh to investigate this matter fully and, where justified, prosecute those responsible for corruption.”
“We only finance a project when we have adequate assurances that we can do so in a clean and transparent way.”
Canadian contractor SNC-Lavalin is also involved in the corruption allegations. Following a year-long investigation using evidence supplied by the World Bank, Ottawa launched charges late last year against two former company executives.
“Investigation and prosecution are ongoing but the court filings to date underscore the gravity of this case,” the bank said regarding the Canadian case.
However, because of the bridge’s importance for Bangladesh’s development, the World Bank said that despite that it had decided to proceed with developing the project, “provided the government took serious actions against the high level corruption we had unearthed”.
The World Bank had asked Dhaka to place on leave all public officials suspected of involvement in the corruption until the investigation is completed, and for the government to name a special inquiry team within the corruption office in order to run an investigation.
Bangladesh was also asked to let the team work with a panel of experts chosen by the World Bank whose job would be to provide guidance and make sure that it was a fair investigation.
But the country did not follow those terms, which led to the cancellation of the World Bank’s financing.