Padma bridge and the World Bank

In 2012, when the World Bank came out with the allegation of corruption relating to Padma Bridge, all hell broke loose in Bangladesh. It was a serious allegation of 'conspiracy' plotted to stage a high-level corruption in the Padma Bridge project for which the World Bank had committed US$1.2 billion. The Bank claimed to have credible evidence corroborated by a variety of sources which pointed to a high-level corruption conspiracy among Bangladeshi government officials and SNC Lavalin and threatened cancellation of the IDA credit unless all public officials suspected of involvement in the corruption scheme are sent on leave and special enquiry team formed within the ACC to handle the investigation.

The government agreed to place and did place all public officials suspected of involvement in the corruption scheme on leave from government employment until an investigation was completed, appointed a special inquiry and prosecution team within the ACC to handle the investigation and granted access to all investigative information to an external panel of internationally recognised experts who advised the Bank and co-financiers on the credibility of the government's investigations.

But all these measures were in vain. The World Bank cancelled the US$ 1.2 billion IDA credit to Padma Bridge as the Bank remained concerned about corruption in Bangladesh in general and in the Padma bridge project in particular. Irrespective of the nature and substance of the World Bank's allegation, cancellation of US$1.2 billion to deprive the country of an important life-line was not the right thing to do. Unwittingly, the World Bank has also handed over a powerful weapon to the opposition party who would fully exploit it during the next election. The condition for reinstatement of the loan was also ill-conceived.

Five years later, the Canadian Court held that there was not a shred of evidence of Padma Bridge Bribery Conspiracy and acquitted three former top executives of SNC Lavalin. An Ontario Superior Court Justice dismissed the case at the request of the Prosecution which proved beyond any doubt that the World Bank had based its judgment on hearsay evidence and gossips. Earlier ACC's finding was also that the allegation of corruption conspiracy was false. 

This was an unprecedented episode in the 70 years history of the World Bank. Both the charges of corruption as well as the cancellation of credit line of US$ 1.2 billion hurt Bangladesh in many ways and should not be allowed to pass unchallenged. From the extracts of the judgment reported in the press, it appears that on March 2011, the World Bank contacted Royal Canadian Mounted Police saying that it received allegation of possible corruption involving SNC Lavalin and the Padma Bridge Project. Mr Paul Haynes, an investigator in the World Bank's Vice Presidency for integrity, raised the allegation on the basis of emails from tipsters whom he did not meet, nor knew the identity of all of them. Therefore, for all practical purposes, the information came from an anonymous source and should not have been the basis of any complaint by the World Bank. The Court observed that the allegation of one of the tipsters was very general in nature and was irrelevant to the allegation and that the World Bank knew that one of the tipsters had been involved in corrupt practices in the same bidding process with another bidder.

All in all, it became clear that the World Bank acted irresponsibly in raising this issue of corruption and to make it a ground for cancellation of US$ 1.2 billion IDA Credit of Bangladesh. The relationship between the Bank and Bangladesh is not that of a borrower and a lender that the Bank can just walk away from the project and terminate the relationship. Bangladesh and the World Bank have to work jointly to develop alternative project pipeline to deploy the cancelled IDA Fund of which Bangladesh is a major recipient. The initiative for an honorable resolution of the dispute should come from the World Bank who should leave no stone unturned to achieve this goal.

This was not the only time that the World Bank had cried wolf. Way back in 1974, a young, enthusiastic bank economist, responsible for writing the Annual Economic Report of Bangladesh, mentioned of stories of corruption during the course of writing of the Report. Through oversight of the senior bank as well as Government of Bangladesh (GOB) officials, these references to corruption found place in the Grey Cover of the Report which was duly circulated. On instruction from the government, I as an Alternate Executive Director (ED), challenged the economist and the director to prove on the authenticity of the incidents of corruption to enable GOB to prosecute those involved in the corruption. There was none. Nevertheless, the director did not agree to withdraw and reprint the report, but backed out when he was told about my decision to take the matter up in the next Board Meeting. The Report was withdrawn and reprinted after exclusion of all references to corruption. Through inadvertence, however, in one place the reference to corruption still remained. I insisted for a second reprinting of the Report before circulation which was duly complied with.  

World Bank President Jim Yong Kim cannot escape moral responsibility for this unhappy episode and should take the initiative to restore allocation of US$D 1.2 billion of IDA credit to the project, allow instant reimbursement of the cost so far incurred by GOB and last but not the least, draw proceedings against those staff members who had invented and initiated the false conspiracy theory. 

Matiul Islam was the first Finance Secretary, Government of Bangladesh. [email protected]