The Bangladeshi Prime Minister Sheikh Hasina has said the country will construct the planned Padma Bridge using its own resources. The announcement follows the withdrawal of US$ 1.2 billion of World Bank financing due to corruption fears.
Prime Minister Hasina said a combination of tax increases and a US$ 750 million government bond issue - the first in Bangladesh's history - would be used to raise the US$ 2.9 billion required for the project. She has consistently refuted allegations of corruption in connection with the project.
Questions have been raised as to whether Bangladesh has the financial resources to finance the project. It has limited foreign currency reserves and the interest payable on any debt issue would be much higher than on loans from the World Bank and other donors.
The World Bank withdrew funds after it received what it described as "credible evidence corroborated by a variety of sources which points to a high-level corruption conspiracy."
It said the conspiracy involved high-level Bangladeshi government officials as well as executives of Canadian construction company SNC Lavalin, which had bid to be the government's representative engineer on the project. Two former SNC-Lavalin executives are currently on trial in Canada on charges of bribing foreign government officials.
Within Bangladesh, the local chapter of anti-corruption non-government organisation, Transparency International, said the allegations of corruption were an "acid test" of the government's integrity. "We call upon the Government to set up a special judicial committee with full powers, independence and technical support, to investigate into the matter and recommend action in accord with the relevant laws within a specific deadline," said Transparency International Bangladesh executive director Iftekharuzzaman.
However, TIB also criticised the World Bank for withdrawing from the project. "It should review the decision, and find ways to provide the credit by sharing the responsibility as a key fiduciary agent of the project to ensure integrity, transparency and accountability in the implementation process," TIB said in a statement.
"The Government's initiative to secure funds for the Padma Bridge from alternative sources may be perceived as a way to divert the attention from the allegation of corruption, but even if it succeeds, it would not help the credibility crisis that the Government faces," concluded the statement.