World Bank cancels US$ 1.2 billion Padma Bridge loan

By Chris Sleight02 July 2012

The World Bank has cancelled its US$ 1.2 billion loan to the US$ 2.9 billion Padma Bridge project in Bangladesh. The scheme has been embroiled in a corruption scandal and the Bank says it is not satisfied with the government of Bangladesh's response to these allegations.

The cancellation follows charges being brought against two former SNC Lavalin executives in the company's home market of Canada last week for corruption of foreign officials. SNC Lavalin had bid to act as the client's engineer on the project.

"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 Bank said in a statement.

The World Bank also says that since the allegations of corruption first surfaced a year ago, it has tried to push ahead with the project under a turnkey procurement approach. However, it said it would only continue to fund the scheme if the government and its Anti Corruption Commission (ACC) took serious steps to prevent corruption.

Specific conditions included suspending all government officials suspected of corruption on the scheme until an investigation was completed, setting up a special team within ACC to conduct the investigation and to allow all evidence gathered to be inspected by a World Bank panel of internationally recognised experts.

The Bank said it would only go ahead with funding if it was satisfied a full and fair investigation was under way and progressing well. It said, "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."

"The World Bank cannot, should not and will not turn a blind eye to evidence of corruption," it added.

Local media have quoted Finance Minister Abul Maal Abdul Muhith as saying the allegations of corruption on the scheme as being, "Baseless." The government has consistently refuted claims of corruptionon the scheme.

The Padma Bridge was designed as a 6.5 km long structure, comprising four traffic lanes, as well as rail lines, over the Padma River, which divides east and west Bangladesh. The bridge was designed to connect southern Bangladesh with the capital, Dhaka.

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