The World Bank on Tuesday held itself up as a model for dealing with governance issues in client countries, and said it would continue its anti-poverty and anti-corruption efforts in Cambodia now that its leadership crisis with Paul Wolfowitz is over.
Wolfowitz, the Bank’s embattled president, announced on May 17 that he would step down at the end of June, bringing his two-year tenure in the position to an acrimonious close.
“While the recent crisis in the Bank has been very difficult to address, the process shows that the World Bank is determined to confront governance matters head-on within our institution, in the same way that we encourage our client countries to do,” the Bank’s Country Director for Cambodia Ian Porter said in a statement.
“Now that the Bank’s leadership issue has been resolved and is behind us, we can focus all our efforts on assisting developing countries,” he said, adding: “In Cambodia, our key priority is to address the governance challenges to high and diversified growth and poverty reduction.”
Wolfowitz’s departure followed the revelation that he had arranged a generous pay and promotion package for his companion, Shaha Ali Riza, in 2005. In accepting his carefully negotiated resignation, the Bank’s board determined that Wolfowitz had acted ethically and in good faith and was not solely responsible for any missteps that might have been made.
The hallmark of Wolfowitz’s tenure was his high-profile—and highly criticized—anti-corruption campaign, which in 2006 came to Cambodia.
That June, the Bank suspended funding on three infrastructure projects worth $68.4 million and sought repayment of $7.6 million it said had been lost to corruption. It later concluded that 43 Bank-funded contracts worth $11.9 million had been awarded in a corrupt manner.
The government launched an investigation, with top officials railing against the Bank and accusing it of failing to substantiate its allegations.
Only one official was arrested in the fall-out from the scandal—Mour Kimsan, a former Funcinpec deputy department director at the Ministry of Rural Development who was charged with embezzling over $800,000. He was later released on bail.
Government spokesman and Information Minister Khieu Kanharith declined to comment on Wolfowitz’s resignation Monday, saying only: “We hope we will continue to have good relations with the World Bank.”
SRP leader Sam Rainsy praised the bank’s handling of the Wolfowitz case. Because of its handling of the affair, he added, “The World Bank is in a better position to push the Cambodian government to be tougher in fighting corruption.”
He encouraged the Bank to continue its anti-corruption work, and urged it to push the government to adopt the long-delayed anti-corruption law.
“Any sensible person would have taken the measures the World Bank took with Cambodia,” Sam Rainsy added.
CPP lawmaker Cheam Yeap said the Bank’s corruption allegations had tarnished Cambodia’s global image. Since then, he said, “we are not happy with the World Bank’s aid.”
“The World Bank accused us without evidence,” he added. The government conducted its own investigation of the bank’s charges and found no corruption, he said.
Yoeun Sophal, director of national rural roads at the Ministry of Rural Development, said he was surprised by the claims of misconduct initially made against Wolfowitz.
He added that the Cambodian government had investigated the Ministry of Rural Development and found nothing to substantiate the bank’s allegations.
Yoeun Sophal added that he would like to learn more about how the Bank had conducted its investigation of Wolfowitz.
Nisha Agrawal, the Bank’s country manager, emphasized the Bank’s ongoing institutional commitment to good governance.
“The Bank has been working on the governance agenda for over a decade and remains committed to advancing this work through the implementation of the Governance and Anti-corruption (GAC) strategy that was unanimously endorsed by the Bank’s Board of Executive Directors, following an unprecedented consultation with thousands of stakeholders in 47 countries, including Cambodia,” she said in Tuesday’s statement.
The World Bank now provides Cambodia with $220 million in development assistance, focused on good governance, private sector development and basic health, education and infrastructure.
According to Tuesday’s statement, the Bank is working on four new projects: a power trade scheme to bring power from Vietnam and Laos to Cambodia, as well as additional funds for decentralization, efforts to combat avian influenza and general government reform.
