Alliance Blasts World Bank, Monitor Conduct

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)


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