New Manager Takes Over World Bank Concession Project

A new official will take over the World Bank’s forest concession management project today, amid questions regarding the value of continuing with the concession system in Cambodia.

Peter Jipp, based in Washington, replaces William Magrath as head of the $4.8 million Learning and Innovation Credit. The credit funds the Forest Concession Management and Control Pilot Project, which aims to reform the management of the country’s forest concessions, in which tracts of lands are awarded for companies to log on a sustainable basis, according to a World Bank document.

But a report released April 23 by an independent donor-funded review of forestry in Cambodia said that the concession system “is no longer viable and should be stopped.”

It said the system is “in theory possible” but cited graft as a key stumbling block. The review was funded by a host of donors, including the World Bank itself.

“There continues to be major scope for front-line corruption, which, given the current governance environment, is unlikely to change in the short term,” the report said.

Jipp and Magrath both said Thursday it was still an option within the Bank project to abandon concessions and opt for alternative ways of managing forestry.

“There’s a lot of flexibility,” Magrath said.

But the decision would come out of an ongoing evaluation of the concessionaires management plans. Currently, logging in forest concessions is on hold until the logging companies’ management plans have been approved by the government.

Prime Minister Hun Sen halted operations in forest concessions in late 2001, largely in response to pressure from the World Bank, and re­quired concessionaires to submit plans to prove both economic viability of concessions and safeguards for the environment and human rights.

Magrath and Jipp said that issues of corruption in the concession system could be addressed through the enforcement of rigorous management plans, which detail exactly how many trees would be cut and where by the companies, and would thus allow others to audit compliance. But some worry that some Forestry Administration officials—and the concessionaires—would have more to gain from concessions that operate without complying to sustainable logging plans.

“Part of the problem was that [forestry officials] were deriving so much of their under-the-table income from forest concessions, that they are invested in the system,” said Mike Davis of forestry watchdog Global Witness.

Initial drafts of the concessionaires’ management plans, released in late 2002, were widely criticized amid allegations that the plans included false claims and that they had ignored the rights of villagers living in the vicinity of concessions.

For now, the Bank-funded forest concession project is proceeding with an assessment of the companies’ 20-year management plans, which were revised after the criticisms of their first drafts. The revised drafts have not been released to the public.

Yann Petrucci, who was hired by the Bank to work with the Forest Administration to review plans submitted by concessionaires, said on Wednesday that four companies have had their 20-year plans recommended for approval and six have had their plans canceled.

Jipp said once the government accepts the 20-year plans, companies will have to prepare five-year plans, which will deal more extensively with issues of community rights and complex environmental issues.

Recommendations from a second independent review of the companies’ 20-year plans, organized and funded by donors, is also scheduled to begin in mid-June, and will also be considered in the Bank’s forest concession project, Jipp and Magrath said.

That review is a response to allegations by some NGOs and donors that both the World Bank and the Forestry Administration were too invested to fairly examine the concession system, Davis said. He said the Bank was “quite determined” to prove this system works, because it had invested so much time and money in it.

“The main thrust of the project is to reform something that is unreformable,” he added.

Magrath denied the allegation that the Bank had a vested interest in seeing the concession continue.

Meanwhile, the US Senate Foreign Re­lations Committee is investigating allegations of corruption in World Bank projects in Cambodia and other countries.

An April 9 letter from US Senator Richard Lugar to World Bank President James Wolfensohn expressed concern about the “potential for abuse of World Bank funds in Cambodia,” and asked what the Bank is doing to “minimize the misappropriation of funds,” a Reuters report said Wednesday.

Magrath said, “The Bank intends to cooperate in this to the fullest.”

While it seems unlikely that World Bank funds have been misappropriated with the Learning and Innovation Credit loan, Davis said, “the Bank does bear the responsibility to ensure it is not putting money into an institution that is corrupt.”

 

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