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World Bank revives loan deal for key Bangladesh bridge

Publication Date : 21-09-2012


The World Bank has decided to revive its US$1.2 billion loan deal for Padma bridge, Bangladesh's biggest infrastructure project, following government steps to meet the Bank's conditions.

“The World Bank has agreed that, upon satisfactory implementation of the agreed measures by the government, and with the support of the WB's governing bodies, it will engage anew in the Padma bridge project,” said a WB statement released early today.

The WB cancelled its $1.2 billion credit for the Padma bridge project on June 29, saying it had proof of a corruption conspiracy involving Bangladeshi officials, executives of a Canadian firm and some private individuals, whose identities have remained a mystery. For it to revive the deal, the Bank set four conditions, including the removal of former communications minister Syed Abul Hossain and sending prime minister's Economic Affairs Adviser Mashiur Rahman on leave.

The global lender's "decision" to return to the project came at a final negotiation between Bangladesh and the WB at the Bank's headquarters in Washington yesterday. Prime Minister Sheikh Hasina's Foreign Affairs Adviser Gowher Rizvi led the high-level Bangladesh delegation at the talks.

On further monitoring, the statement said, “The World Bank remains vigilant to any signs of corruption in the Padma bridge project, and our determination to take a strong line against wrongdoing will never waver. If implemented properly, the bridge has the potential to deliver remarkable benefits to the people of Bangladesh, who deserve transparent use of public money, clean implementation of the project and a high-quality bridge to spur growth and development for years to come.”

The WB has already communicated its decision to the two main co-financiers -- Asian Development Bank and Jica, added the sources, quoting the Bangladesh ambassador to the US.

Regardding the corruption allegation, the WB statement said, "The Bank's investigative unit previously shared with the Government of Bangladesh credible evidence of corruption related to our financing of the bridge, and the Bank had identified a series of clear measures to be implemented by the Government for the Bank to remain engaged with the project, which the Government of Bangladesh had failed to meet."

The steps included: (i) placing all public officials suspected of involvement in the corruption scheme on leave from government employment until the investigation is completed; (ii) appointing a special inquiry and prosecution team within the Bangladeshi Anti-Corruption Commission to handle the investigation; (iii) agreeing to provide full access to all investigative information to an external panel of internationally recognized experts so that they can give guidance to the Bank and co-financiers on the progress, adequacy, and fairness of the investigation, and iv) agreeing on new implementation arrangements that gives the Bank and co-financiers greater oversight of project procurement processes.

"Following our cancellation of the credit, the Government of Bangladesh took actions necessary to fulfill the above measures. The Government of Bangladesh has now begun to address the evidence of corruption the Bank identified."

Acknowledging Bangladesh government move, it said that all government employees and officials "alleged to have been involved in corrupt acts in connection with the project" have been put on leave from government service until an investigation is completed, and that a full and fair investigation is now underway.

"In its communication with the World Bank about the fulfillment of these measures, the Government of Bangladesh requested the World Bank to consider again the financing of the Padma Multipurpose Bridge. The Government agreed to a series of measures as a pre-requisite for any renewed implementation. These include new procurement arrangements with enhanced oversight, to ensure transparency and clean construction of the bridge; investigations proceeding in a full, fair, and expeditious manner; and an independent External Panel to review the Government's investigation and report their findings to the Government and the World Bank," said the statement.

"The Bank has agreed that, upon satisfactory implementation of the agreed measures by the Government, and with the support of the Bank's governing bodies, the Bank will engage anew in the Padma Multipurpose Bridge."

Earlier yeaterday, Prime Minister Sheikh Hasina said at a cabinet meeting that the government would inform the nation about the loan revival after getting the official notification from the Bank, according to the sources.

Later in the afternoon, Finance Minister A.M.A. Muhith said the talks with the WB had reached a final stage and the government was hopeful about the revival of the credit deal.

“We are expecting a positive decision from the World Bank. I will say nothing at this stage. Let them make the announcement first,” Muhith told reporters at Cirdap auditorium in the capital.

Admitting that Mashiur would indeed remain disengaged from the Padma bridge project's work and other economic matters of the government, Muhith said, “Both the government and the World Bank have to make some concessions to reach an agreement.”

Yesterday's talks at the WB headquarters mainly focused on the fate of Mashiur, who was integrity adviser of the $2.97-billion Padma bridge project.

According to the sources, the Bank wanted a letter from the government confirming Mashiur's leave. But the Bangladesh delegation told the WB that the adviser would remain disengaged from government activities instead of going on leave.

On Wednesday, the government sent a letter to the WB headquarters in line with the Bank's demand but it was unclear if it was Mashiur's leave application, added the sources. Later in the night, the premier held a meeting with Mashiur about the latter's going on leave.

Earlier on Tuesday, Hasina, who is also president of the ruling Awami League, asked Mashiur to sit at her political office and work on the party's economic policies for its next election manifesto.

Normally, the WB does not revive a cancelled deal. It has agreed to revive the Padma bridge loan agreement mainly owing to diplomatic efforts.

Apart from Rizvi, AL General Secretary and LGRD Minister Syed Ashraful Islam made hectic efforts to convince diplomats of various countries that have representatives in the WB board, said the sources.

Eminent economist Prof Wahiduddin Mahmud in his reaction to The Daily Star said the WB's decision was "a good news".

"But both the government and the donors need to take the next steps quickly to ensure minimum procedural delays in getting the project started," he added.


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