WASHINGTON – The World Bank’s decision to cancel a $1.2 billion loan to Bangladesh on corruption allegations was “appropriate,” the new chief of the bank said on Monday, his first day on the job.
New president Jim Yong Kim inherited the controversy, which has angered officials in Dhaka expecting the money to help fund a $3 billion bridge, from his predecessor Robert Zoellick — the bank announced the cancellation on Friday, Zoellick’s final day.
But Kim stuck behind the move, which critics say will punish Bangladesh’s poor for the corrupt actions of the few.
“I think it was appropriate,” Kim said of the decision in his first meeting with journalists.
“We are very concerned about the well-being of the poorest people in Bangladesh.
“But what I must stress is that, the bank’s position is that it does not tolerate corruption.”
On Friday the bank cancelled its $1.2 billion financing for the $3 billion Padma bridge project, saying the government had not cooperated in investigating “high-level” corruption in the project.
“The World Bank cannot, should not, and will not turn a blind eye to evidence of corruption,” it said, announcing the loan was being cancelled immediately.
The proposed 6.2-kilometer (3.8-mile) bridge over the Padma river — the local name for the Ganges — will connect the capital Dhaka to the country’s coastal districts.
The $3 billion bridge, designed to carry a highway and rail line, is aimed at transforming the country’s impoverished south; traffic currently moves across the river by slow ferries.
Bangladesh’s Communications Minister Obaidul Quader called the decision “unfortunate, regrettable — and mysterious,” adding that it does “not necessarily mean that corruption charges have been confirmed.”
But the bank said it had provided evidence into the bridge corruption case to Bangladesh’s prime minister, minister of finance and Anti-Corruption Commission chairman in September 2011 and April 2012.
“We urged the authorities of Bangladesh to investigate this matter fully and, where justified, prosecute those responsible for corruption.”
“The response has been unsatisfactory,” it said.
“We only finance a project when we have adequate assurances that we can do so in a clean and transparent way,” the bank said.
Two ex-officials of Canadian infrastructure builder SNC-Lavalin are under investigation as well for their alleged role in the case, after a year-long investigation using evidence supplied by the World Bank.
The Bangladesh chapter of the Berlin-based global graft watchdog Transparency International said the decision was “embarrassing and disappointing” for the government.
But it asked the bank to reconsider, saying the bridge is much needed to reduce crushing poverty in Bangladesh’s south.
“Neither the World Bank, nor the government, can punish the people of the country for an alleged crime of a handful of people,” the chapter’s head Iftekharuzzaman said in a statement.