This is the account of how it all went terribly wrong when the World Bank formally cancelled its US$1.2 billion credit in support of the Padma Multipurpose Bridge project, citing corruption concerns. It was not only the government’s single largest infrastructure project, but also the WB’s in its 68 years of history.

 

People felt crushed that their long cherished dream was so mindlessly shattered, at least for the near future. They feel a sense of shame as the allegations have humiliated the whole country. The government is embarrassed and whether the politicians admit it or not, the Padma Bridge is destined to be an election issue.

 

The government has been discussing issues surrounding the construction of Padma Bridge over the last four years. In fact, the demand for the construction of Padma Bridge grew stronger in 1990s when it became evident that construction of Jamuna Bridge was possible. The Awami League-led grand alliance pledged in their election manifesto that the construction of Padma Bridge would receive special priority among other pledges.

 

On June 30, it was made public that the World Bank had cancelled the loan agreement on the Padma Bridge. The reason attributed was that there was a high-level conspiracy to indulge in corruption in the implementation process of the Bridge project and the negotiation with the government in this regard fell through.

 

As the Parliament is now in session, the government decided that its position on this issue should be explained before the House. On July 2, Finance Minister AMA Muhith gave a statement on Padma Bridge Project as per rule 300 of the Rules of Procedure of Parliament.

 

Turning down the World Bank’s graft allegation over Padma Bridge project, Finance Minister AMA Muhith told parliament that the Bank’s statement on the project is insulting for the country as well as the nation. “I think that the World Bank has insulted this country through the statement, and there’s no logical base for their allegation,” he said while giving his statement in Parliament.

 

“The World Bank can’t blame a country or tarnish the dignity of the people of a country this way on the basis of baseless or imperfect allegations,” the irritated Finance Minister informed the lawmakers amid a pin drop silence in the House with Speaker Abdul Hamid in the chair. Prime Minister Sheikh Hasina was also present.

 

Earlier on July 1, Muhith in a hurriedly called press conference urged the World Bank to reconsider the loan agreement for the Padma Bridge project terming the Bank’s statement in this regard disrespectful, unexpected and mysterious. “Our executive director is in negotiations with the World Bank …we’ll be waiting for their (WB) reconsideration,” he told the crowded press conference at his ministry.

 

Background

 

The ECNEC approved a project proposal worth Tk. 10,000 crore back in 2007 to construct the Padma Bridge. And since then the work for the project implementation began. The past military-backed caretaker government initiated the design work of the project with the financial assistance of the Asian Development Bank. In January 2009, the present government decided to take forward the agenda and took a decision to appoint a consulting firm for the design work. And the implementation kicked off in February. Engineering feasibility study was completed by the year-end. Then the government sought assistance for the project from the development partners and concluded loan agreements worth US$2.3 billion with four development partners (DP) in early 2011. An agreement for UD$1.2 billion was signed with the World Bank on 28 April, 2011. Loan agreements were also signed with the JICA on 18 May for US$ 415 million, with the IDB on 24 May for US$ 140 million and with ADB on 6 June for US$ 615 million. It was estimated at that time that the project would cost around US$ 2.90 billion (around Tk. 20,000 crore as per the existing exchange rate).

 

WB-Bangladesh Relations

 

Bangladesh has been maintaining a congenial relationship with the World Bank (WB) for more than 40 years as this institution started financing different development programmes in this region even before the emergence of Bangladesh. Bangladesh became a member of the World Bank in 1972 and till June 2012, it received US$ 16.80 billion as financial assistance from the Bank. Bangladesh received US$ 3.10 billion from the Bank in FY 2011 which was the highest quantum of assistance for any particular year. Currently, the World Bank is financing 41 projects/programmes worth US$ 4.23 billion. These projects/programmes are at various stages of implementation. Bangladesh also received commitments for US$ 1.55 billion from the World Bank in FY2012. In fact, the World Bank is the largest financier among the development partners. In this long journey with the World Bank, the government had differences of opinion, but, eventually it found the Bank a progressive and close associate. At times, the World Bank did not approve procurement or expenditure proposals for different projects and also decreased or increased their level of assistance to different projects. The cancellation of the loan may have some long term impact on relations between Bangladesh and the World Bank.

 

Pulling the plug

 

The World Bank canceled the $1.2 billion loan for a bridge in Bangladesh, saying the Bangladesh government failed to take action against “a high-level corruption conspiracy.”

 

“The World Bank cannot, should not, and will not turn a blind eye to evidence of corruption,” the Washington-based bank said in a statement cancelling the loan. “We have both an ethical obligation and a fiduciary responsibility to our shareholders and” the member states contributing to the fund that lends to poor countries.”

 

The World Bank suspended funding for the bridge last fall in connection with allegations that SNC-Lavalin, a Canadian engineering and construction company, made improper payments to Bangladeshi government officials in order to win a contract related to the bridge.

 

Canadian police have launched an investigation into SNC-Lavalin’s alleged role.

 

In April, SNC-Lavalin’s interim chief executive, Ian Bourne, said the company had “launched our own internal investigation when this matter was first brought to our attention, and we will continue to cooperate fully with the World Bank on this matter.”

 

Opposition’s Stance

 

On Saturday, BNP Chairperson Khaleda Zia alleged that Prime Minister Sheikh Hasina was involved in corruption of the much-talked-about Padma Bridge project. “The Padma Bridge couldn’t be built due to corruption of the Prime Minister and her government.” She branded the present tenure of the government as an ‘internationally-recognised corrupt regime’.

 

On Monday, the main opposition BNP suggested that the government take action against those charged with corruption by the World Bank, paving the way for reviving the scrapped Padma Bridge loan agreement with the global lender. “We think, there’s still a chance for building the Padma Bridge with the World Bank funding after settling the issue through tough action against the corrupt individuals as per the evidence provided by the lending agency,” BNP leader MK Anwar told reporters at a crowded press conference.

 

Communications Minister: Apparently looking dejected in an impromptu reaction, Communications Minister Obaidul Quader on Saturday termed the World Bank’s decision sad, unfortunate and mysterious to some extent.

 

“It’s sad, unfortunate and mysterious to some extent,” he told reporters while giving his reaction to the WB’s stance. He urged the foreign friends of Bangladesh to request the World Bank to reconsider its funding to the proposed Padma Bridge Project.    “I request our foreign friends to tell the new president of the World Bank to reconsider its loan for the Padma Bridge Project.”

 

Former Communications Minister

 

The World Bank has delayed the construction work of Padma Bridge by three years by accepting the ‘baseless allegations’ of different vested quarters and individuals, Information and Communications Technology (ICT) Minister Syed Abul Hossain said.

 

“Cancellation of a loan agreement based on unfounded allegation of some vested quarters is unprecedented in the World Bank’s history…It’s unexpected and serious injustice to 16 crore people of the country,” the former Communications Minister said in a statement.

 

Abul said, “I would like to categorically say that cent percent transparency, honesty, accountability and integrity has been ensured in each stage of the Padma Bridge construction.”

 

He said despite working with the highest transparency and honesty in constructing Padma Bridge, the statement of the WB blaming Bangladesh and cancelling the loan agreement is ‘unexpected and sad.’ “It’s embarrassing and frustrating for the country, especially for the people of the southeast region.”

 

The former Communications Minister claimed that he did not commit any irregularities in any stage of Padma Bridge construction. “I did neither promote any illegal work and nor I was influenced by anybody. Padma Bridge is a victim of local conspiracy and global politics.”

 

TIB statement

 

The World Bank’s cancellation of the US$1.2 billion credit as part of the US$2.9 billion Padma bridge project is deeply regrettable, embarrassing and disappointing, Transparency International Bangladesh (TIB) said.

 

The TIB called upon the government to set up a fully independent special judicial committee to investigate the allegations of corruption and ensure exemplary punishment to those found guilty.

 

The graft watchdog body also called upon the WB to continue to engage with the government to assist the investigation process and keep the credit open parallel with the investigation process.

 

Reacting to the WB decision to cancel the credit, TIB Executive Director Iftekharuzzaman in a statement said, “The decision is not the end of the story of the government’s relationship with the bank in connection with the Padma Bridge, but the beginning of a new phase.”

 

It comes as an acid-test for the government, which must demonstrate to the nation that it has the courage and capacity to bring to justice those against whom allegation of corruption has been raised and provide exemplary punishment, if found guilty, he added.

 

New World Bank chief backs cancellation of loan

 

The World Bank’s decision to cancel a US$1.2-billion loan to Bangladesh on corruption allegations was “appropriate,” the new chief of the bank Jim Yong Kim said on Monday, his first day on the job in Washington, according to a AFP report.

 

New president Kim inherited the controversy, which has angered Bangladesh government expecting the money to help fund a US$3-billion bridge, from his predecessor Robert Zoellick – the bank announced the cancellation on Saturday, Zoellick’s final day. “I think it was appropriate,” Kim said of the decision in his first meeting with journalists. “We are very concerned about the well-being of the poorest people in Bangladesh. But what I must stress is that, the bank’s position is that it does not tolerate corruption.”

 

Though the government is eagerly waiting for the WB’s review over the issue, the statement of new WB President Kim apparently hit the government hard pushing 16 crore people of the country into gloom. Now it is government’s responsibility to let people know without any delay what alternative it has to implement the dream project. They also want to know how costly will the funds from alternative sources be and what future awaits the Padma Bridge.

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