World Bank Suspects Fraud In Big Projects

Possible collusion, fraud and bid manipulation have been un­co­vered during a review of contracts for four multimillion-dollar World Bank-funded projects in Cambo­dia, the bank announced Friday.

The review was conducted from July to December 2004. Of 632 contracts associated with the projects, 257 were identified as hav­ing possible areas of concern, 119 of which were reviewed in depth, a summary of the findings re­leased by the bank reads.

“The review…uncovered indicators of actions that may have ta­ken place to provide the appearance of competition, namely pos­si­ble collusion, bid manipulation or biased bid evaluation,” the sum­­­mary stated.

The report summary went on to say that in some cases, different contractors used the same bank accounts, and bids that were supposedly submitted by dif­ferent competitors used the same formats and contained the same mistakes.

The contracts were tendered, ac­­cepted and implemented by the go­vernment, which is also re­spon­­­sible for managing the World Bank-funded projects.

The projects reviewed by the bank were the $1.91-million     Bio­diversity and Protected Areas Management Project; the $45.31-mil­lion Road Rehabilitation Pro­ject; the $22-million Rural Invest­ment and Local Gover­nance Pro­ject; and the now-completed $35-mil­lion Flood Emer­gency Reha­bilitation Project.

The actual report has not been made public, and the summary did not say which suspect contracts belonged to which project, or how much the suspect contracts were worth.

The summary, however, said that problems also extended to the actual delivery of services and goods. “In many cases, the quality of completed sub-projects in­spec­ted exhibited poor quality or be­low-specification workmanship,” the summary reads.

The bank also admonished the government for its failure to punish civil servants involved in corruption, and described the country’s budgeting, procurement, ac­counting and internal and external controls as “weak.”

The summary said the bank would be conducting further in­ves­tigation into cases where fraud and corruption were strongly sus­pected and would not rule out criminal charges.

Local World Bank representatives referred questions to their Bangkok office, which could not be reached for comment Sunday. Kong Vibol, Finance Ministry sec­retary of state, referred questions to Finance Minister Keat Chhon, who also could not be reached for comment.

In a speech at a workshop last week, World Bank Country Di­rec­tor Ian Porter said the review was part of the bank’s new four-year strategy to improve transparency. “Ensuring transparency and accountability in the expenditure of public funds needs to be a cor­nerstone of every government’s policy,” Porter said.

This isn’t the first time the gov­ern­ment’s implementation of World Bank-funded projects has come under scrutiny.

In June 2003, misprocurement was identified in a multimillion-dollar project aimed at demobilizing 30,000 RCAF soldiers. The government repaid the bank $2.8 million following warnings by the bank that failure to do so could threaten funding for other projects.

Other organizations have faced similar problems.

In August 2004, the World Food Program an­nounced it had found large quantities of rice stock intended for its Food for Work program being sold by officials for a profit.

The program was halted and the government repaid the WFP $900,000 in compensation, WFP Country Director Thomas Keus­ters said Sunday. Several WFP of­ficials were fired and two government officials transferred from their positions following the scandal. The Food for Work program has since restarted in a limited capacity.

The World Bank’s report summary came one day after Prime Minister Hun Sen accused don­ors at the UN General Assembly of using aid money to benefit their own econ­omies and push their own agendas. One Western diplomat said on Sun­day that Hun Sen may be right in saying that international assistance is not being used as effectively as it could, but that the bigger problem is corruption within the country and the government.

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