The government’s recently contracted forest monitor, Societe Generale de Surveillance, and the partnership’s enabler, the World Bank, remain targets for criticism despite SGS’ code of ethics, raised last week in defense of corruption allegations.
The Alliance of Democrats on Sunday issued a statement under the heading “World Bank Associated with Infamous SGS in Cambodia,” which called the ethics of both organizations into question.
Referring to the World Bank publication, “Fighting Corruption in Southeast Asia,” which presents the SGS ethical code as exemplary, the Alliance wrote, “As the World Bank is still willing to do business with SGS, it would be difficult for the Bank to come up with a different conclusion in its own study.”
The Alliance repeated charges of bribery by officials of SGS and a former subsidiary, Cotecna, allegedly paid to Pakistani officials in 1992 to secure a government contract.
Although the statement cited Financial Times articles from 1997, 1998 and 2000, passages appeared to be lifted from a report available on-line titled “Exporting Corruption: Privatization, Multinationals and Bribery.”
The report—commissioned by The Cornerhouse, a British think-tank, and published in June 2000—cited those Financial Times stories.
It also said that when SGS admitted to having paid a “substantial commission,” the company was under contract to the World Bank to investigate corruption in the Bank’s projects in Poland, Kenya and Pakistan.
The Alliance also cited another charge of SGS corruption noted in the “Exporting Corruption” paper—tax evasion and operating with improper licenses in Ethiopia.
The New Vision newspaper of Kampala, Uganda, reported a more recent scandal, also included in the Alliance barrage. It reported on Nov 25 that British merchant bank HSBC sued SGS (Uganda) Limited, which is contracted to do the African nation’s pre-shipping inspection, for $7.9 million.
According to the article, SGS is being accused of falsely reporting the assets of one of HSBC’s major borrowers, a Kampala-based coffee dealer.
“The involvement of SGS in corruption known to date may be just the tip of the iceberg,” the Alliance wrote. “The World Bank should be more discerning in its selection of service providers.”
A statement on SGS’ Web site addresses the Pakistan bribery charges, saying that in 1997 SGS “started an internal investigation which confirmed that in the spring of 1994 the Company had committed itself to pay an important commission to a Geneva-based lawyer in respect of services in relation with the start up of its contract with Pakistan.”
Consequently, SGS named a new head of its government contracts division, enhanced internal controls and developed an ethics code, but maintained that “SGS does not consider to have engaged in any criminal wrongdoings,” the statement said.
SGS officials in Cambodia could not be reached for comment on Sunday.
An ardent critic of Prime Minister Hun Sen’s government, US Senator Mitch McConnell weighed in on the new forest monitor on Friday with a letter to World Bank President James Wolfensohn.
He chastised the Bank for saying it will hand over its Structural Adjustment Credit, valued at
$15 million, which originally was being withheld until the government undertook major forestry reforms.
“As the Government of Cambodia continues to fail to implement reform of the forestry sector, signing the agreement would be a grave mistake and serve only to further tarnish the World Bank’s credibility in that country,” McConnell wrote.
He questioned the “legal implications of signing a loan with a caretaker government that lacks legitimacy.”
Hun Sen adviser Om Yentieng on Friday said the government had had remarkable success cracking down on illegal logging and that the $15 million loan was for the good of Cambodia, not the government. He deflected questions about the loan’s legality, saying, “Ask a law expert.”
Peter Stephens, a World Bank spokesman in Singapore, said Sunday that because the loan was not new, and initially was due for disbursement 18 months ago, the Bank would release it.
Stephens said the loan was being held for certain conditions and “in our judgment, those conditions have been met.”
He quickly added that the Bank intends to remain active in Cambodia’s forestry sector, an area which “demands the highest level of attention and is in need of fixing.” (Additional reporting by Kay Kimsong and Daniel Ten Kate)