The Asian Development Bank is investigating possible bid-rigging and collusion in contracts awarded under a $27.2-million Northwest Rural Development Project loan, ADB Country Director Arjun Goswami said Wednesday.
The ADB released its 2006 auditor general’s report Tuesday, which revealed that an audit had found problems in the roads, sanitation and training project focused on Banteay Meanchey, Oddar Meanchey, Siem Reap and Battambang provinces.
The audit, conducted jointly by the National Audit Authority and ADB consultants between February and July 2006, “found indications of possible collusive practices by suppliers and contractors and potential bid-rigging,” the report states.
“We are not jumping to any conclusions,” Goswami said by telephone. “We are in the middle of a process of investigation,” he said.
Manila-based ADB investigators will arrive later this month or in March and plan to complete their investigations by the end of that month, Goswami said.
The audit reviewed $12 million out of $18.8 million in contracts awarded between November 2001, when the project was approved by the ADB, and February 2006. The project involved building roads, wells and toilets, and training for local officials.
A Ministry of Rural Development official in Banteay Meanchey province said that staff from the ministry oversaw some of the bidding, though it was unclear Wednesday whether any other ministries were involved.
The audit found that some infrastructure work carried out under the project contained substandard quality work because “contractors lacked capacity, poorly supervised the works and/or failed to comply strictly with contract specifications,” according to the ADB report.
Since 2005, rigorous site inspection has improved the work quality, the report states.
If private firms are found to have colluded to manipulate the public bidding for the contracts, then they will be blacklisted according to ADB guidelines, Goswami said.
If government officials are found to be involved, repayment of the misprocured funds could be sought, he added.
Lu Laysreng, rural development minister and deputy prime minister, said from Bangkok that he was aware of the ADB investigation.
“I am not worried at all,” Lu Laysreng said by telephone.
“I think everyone involved in the projects is corrupted—the ADB consultant, the provincial officials, the contractor, experts,” he said.
If the ADB tries to point the figure of blame, it too should be held accountable, he said.
“If they want to blame, they have to blame all, both the ADB and the Cambodian partner,” he said.
“Corruption is out of control because corruption is everywhere,” he added.
Lu Laysreng also said that both the ADB and the World Bank are difficult to work with because they use local contractors.
Goswami said that ADB staff are subject to the same rigorous integrity requirements that the ADB applies to the projects it funds.
“We are striving to ensure integrity,” he said. “We are sure the government shares the same viewpoint.”
Mao So, Banteay Meanchey’s provincial director of rural development, said that the NAA inspection last year had improved procedures in his office, which oversaw some of the ADB project bidding.
In the past, Mao So said, his department had given only 21 days for companies to submit bids, instead of the required one month’s notice. Instead of using written faxes or mail to deal with companies, officials had informed companies by word of mouth about their decisions over the telephone, he said.
As a result, the ADB had said there was not enough documentary evidence of a fair public bid process, he said.
“From now on, the bidding and procurement method is better,” he said, adding that the ADB and the Finance Ministry will be invited to observe bidding in the future.
“I will try my best for better control,” he added.
Mao So also said that 500 km of rural roads have been built under the ADB project in the four provinces and that about 100 km still need to be built.
“We are not worried that the ADB will cancel any project on rural development, we have already cleared it up with ADB,” he said.
The ADB’s investigation comes in the aftermath of allegations of corruption in five World Bank projects last year, which set the bank and government at loggerheads for months.
The World Bank revealed in mid-2006 that 43 contracts awarded under five projects, worth an estimated $11.9 million, had been misprocured, and informed the government that it would have to repay funds that had been misused.
The announcement prompted weeks of angry responses from the government, including from Prime Minister Hun Sen, who accused the World Bank of making allegations without providing evidence to back them up.
The ministries implicated in that scandal included Rural Development, though its officials denied any malpractice.
World Bank spokesman Bou Saroeun said Wednesday that the Bank is still discussing with the government the exact amount it will have to repay.
National Assembly Banking and Finance Commission Chairman Cheam Yeap warned the ADB on Wednesday that it should conduct its investigation carefully.
“I call to the ADB to study properly before issuing any public information that can spoil Cambodia’s reputation,” he said.
“So far the World Bank found no concrete evidence of corruption but it spoiled its own reputation and Cambodia’s,” he said.
“The ADB, the World Bank…always have a problem,” he claimed.
“They just read reports and are poor investigators who come out with their own wrong report,” he added.