Minister of Land Management Im Chhun Lim on Tuesday challenged the World Bank’s allegation that funds had been misused at his ministry, saying consultants and auditors had monitored the $24.3 million Bank-funded land management and administration project since it was launched in 2002.
A senior Finance Ministry official said on condition of anonymity Tuesday that the National Audit Authority would examine the World Bank’s allegations, but that there was no legal requirement for the NAA to use the Bank’s finding regarding the alleged misuse of funds.
National Audit Authority Chairman Ut Chhorn said that the World Bank allegations, which have prompted the freezing of funds to three Bank-funded projects worth $64.5 million, were merely “a tip.”
“We cannot initially regard it as 100-percent true unless we conduct our own investigation,” Ut Chhorn said. “A tip for an investigation can start from a rumor people say in the market.”
Im Chhun Lim also said he believed the World Bank funds for the project at his ministry had been spent in a responsible manner.
“As far as I know…the budget has been spent very well,” Im Chhun Lim said by telephone.
“There was inside and outside auditing every six months; the outside auditing was conducted by PricewaterhouseCoopers,” he said. “The project is strictly managed and directly monitored by foreigners.”
Allegations of problems were only uncovered when the World Bank’s local office called in an outside team to take a second look at how the project was being handled, Im Chhun Lim added.
Senaka Fernando, manager in charge of auditing at PricewaterhouseCoopers in Phnom Penh, declined comment on the matter, citing client confidentiality.
Officials confirmed Sunday that the Ministry of Finance had suspended funding to three projects supported by the World Bank and worth more than $64 million after the Bank reported it had discovered irregularities in contracts and misuse of funds in a total of seven major Bank-funded projects.
Finance Minister Keat Chhon on May 22 froze funding for the three projects: the Ministry of Land Management’s project, the ministries of Rural Development and Public Works’ $20 million rural infrastructure project and the Ministry of Industry’s $19.9 million provincial and peri-urban water and sanitation project.
Im Chhun Lim said that as far as he was aware, the World Bank had only verbally informed the Ministry of Finance of the scandal.
“There were no documents given at all,” he added.
World Bank press officer Bou Saroeun said Tuesday that the Bank was still working on requests made Monday for more information about its allegations, including the names of the four other government projects in which problems have been identified.
The senior Finance Ministry official said the government was very disappointed by the affair. “These programs go to the core of poverty alleviation and pending the investigation, there is no implementation of these projects,” he said. He also said the Finance Ministry was not jumping to conclusions about whether wrongdoing had actually occurred.
Prosecutions for corruption in Cambodia are virtually unknown, and the government has yet to ratify a long-awaited anti-corruption law.
Ut Chhorn said the NAA had looked into numerous cases of alleged graft. “The punishment depends on the National Assembly,” he said. “If we find out something wrong, the Assembly will call them in and reprimand them. The way of the auditing authority is not forwarded to the court, it is to the Assembly,” he added.
Cheam Yeap, CPP lawmaker and chairman of the National Assembly’s banking and finance commission, said numerous officials had been questioned by his committee.
“I have called in many officials for questioning, like…some customs officials from Poipet and Sihanoukville,” he said. “We cannot punish them, we just write the report and forward to Samdech Prime Minister [Hun Sen] and it is up to him. It is the right of the prime minister to forward the results to the prosecutor.”
In a Tuesday statement, the Cambodian Center for Human Rights urged the Finance Ministry and the World Bank to release all information regarding the misuse of public finances. “Corruption cannot be defeated by hiding the facts,” the statement said.
“We expect the investigation announced by the government will result in court judgements against those who did wrong,” CCHR President Kem Sokha added in the statement. “The money received from the World Bank was intended for the many poor…not for the villas, Land Cruisers and mistresses of some officials.”
Other donor agencies said this week that though they have never announced major corruption findings in Cambodia, they take strong precautions to avoid misuse of funds.
European Commission Charge D’Affairs Winston McColgan said EU-funded projects are carefully guarded against corruption, and that in some instances diversion of EU funds has been uncovered.
“We take very seriously our duty to the taxpayers of the European Union…safeguards are built into the design of our projects,” he said. “By paying in installments we can and do halt payment if problems are found. We also adhere to the European Commission standards of procurement.”
In cases in which EU funds were found to have been diverted, he said, the funds were repaid, or will be.
He added that most of the contracts where diversion had occurred were small, but that diversion had been uncovered in one major EU-funded project now closed, which he declined to name.
Though it has never announced findings of corruption in Cambodia, the Asian Development Bank said it would do so if corruption were found.
“We follow the same procedures as the World Bank and periodically carry out investigations,” said Purnima Rajapakse, ADB chief country programs economist. “When any corruption is found it will be made public.”