World Bank Freezes Funds for Demobilization

The World Bank will not consider the future of funding for Cambodia’s military demobilization program until a new government is formed, World Bank officials said.

The multimillion-dollar plan to demobilize and reintegrate 30,000 soldiers into society stalled in July after the Bank declared misprocurement on a government contract.

“There has been no project activity or disbursements [since the misprocurement],” Gillian Brown, the Bank’s Bangkok-based task manager, wrote in a Dec 10 e-mail. “We are waiting now for the new government to be formed so that discussions with them and other stakeholders on the future of the project can be resumed.”

She did not say whether the Bank is planning to stop funding demobilization, which began as a prized endeavor by Cambo­dia’s donors but later became stained by the misprocurement.

“If and when activities resume, we will be placing a high priority on the implementation of this [transparency] strategy” agreed upon with the government, she said.

According to the Bank’s April 2002 fiscal year Report on the Status of Projects in Execution, East Asia and Pacific Region, all personnel recorded in the military database had been issued ID cards, but a significant number of them never served, or are not receiving salaries. “Although this undermines the justification for the project, the Bank cannot investigate further the extent to which the payroll is inflated, as the information is a matter of national security,” the report stated.

The project was further compromised when the Bank de­clared misprocurement on a contract because a company contracted to provide motorcycles as part of the soldiers’ demobilization packages did not meet the requirements of the bid documents.

Due to the misprocurement, the Bank reduced its original $18.4 million loan to $12.1 million and demanded that the government repay $2.8 million. The Bank did not respond to questions regarding the repayment.

The two men heading Cambo­dia’s Council on Demobilization of the Armed Forces, which has been a highly confidential en­deavor, would not comment this week on the loan repayment.

Svay Sitha, Council of Min­is­ters deputy-secretary of state, de­clined to comment Tuesday, saying he was in the hospital.

“I do not know, please refer to Mr Sok An,” Svay Sitha said.

Minister of Cabinet Sok An said Tuesday he was in a meeting and could not talk. Reached on Wednesday, he said again that he was in a meeting.

Claes Leijon, counselor to the Swedish Consulate in Phnom Penh, said Tuesday that the Bank is likely waiting for clarification on the circumstances surrounding the misprocurement.

Sweden provided $2.4 million for a Structural Adjustment Cred­it that was used, in part, by the Bank for Phase 1 of the de­mo­bilization, which retired 15,000 soldiers.

“There must be an ongoing investigation. It is important to have clarification, comments from the government,” Leijon said.


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