World Bank's Jim Adams rebuttal to The Wall Street Journal article on Corruption in Cambodia posted on KI-Media

Original article:
http://ki-media.blogspot.com/2007/10/world-bank-confronts-cambodia.html

I'm Jim Adams from the World Bank. I'm the Vice President who has responsibility for the East Asia and Pacific region so I keep a close eye on what's been happening in Cambodia. The Wall Street Journal's second editorial --published today-- about corruption in Bank projects in Cambodia yet again needs some clarifying since their writers have never bothered to contact me.

If they had asked, this is how I would have answered the questions they raise:

The WSJ says seven projects were identified by the Institutional Integrity Department (INT, the Bank's anti-corruption unit) as corrupt, but that we suspended only three. True. Why? Because three other projects were already closed and one was about to close at the time we received the reports from the investigation.

The WSJ also asks why is it that, if US$8.2 million were disbursed from US$12.2 million worth of contracts, only US$2.5 million were cancelled out of the remaining US$4 million.

Answer: the Bank doesn't finance the full value of contracts. In this case, the Bank's share was to fund US$10.8 million, and the Government to fund the rest. The Bank cancelled the US$2.55 million that it had not disbursed yet.

Based on that last point, the WSJ wants to know why didn't Cambodia reimburse US$8.2 million, instead of US$2.89 million, and asks what happened to the remaining US$5.3 million.

Answer: the remaining US$5.3 million are being paid following the regular schedule for the repayment of loans. Let me explain how this works:

When the Bank presented to the Cambodian Government the evidence of corruption, some evidence had to be withheld because it was given on a confidential basis. Reflecting this limitation, Paul Wolfowitz --who was the Bank's President at the time-- agreed that if the Government refunded 1/3 of the total amount immediately and took measures to address corruption, the rest could be paid back according to the normal schedule.

The Government has both paid the US$2.9 million we agreed on and has put in place the broader anti-corruption strategy that was agreed. The rest of the payments will follow, as I indicated, the regular schedule.

I very much appreciate that your site is so open to quickly publish all information and voices on this matter.

Thank you.

Jim Adams
Vice-President, East Asia and Pacific Region
The World Bank

World Bank Confronts Cambodia Corruption

October 18, 2007
The Wall Street Journal (USA)

Far from "Smiling Past Corruption" (Review & Outlook, Oct. 11) in Cambodia, the World Bank is confronting corruption head on in that country. In fact, it was bank staff in Cambodia who first raised concerns about corruption in projects there. Following World Bank investigations, in June 2006 the bank suspended the government's right to draw funds for three projects where we had identified problems.

In response, the Cambodian government agreed to new anti-corruption measures for each project, including intensified audits and the hiring of an international procurement agent. In February 2007, after the government completed all the anti-corruption measures and made substantial progress in hiring the agent (who has now been selected), former President Wolfowitz agreed to lift the suspension on the affected projects. The bank cancelled over $2.5 million in project funding, and the government subsequently repaid the World Bank $2.89 million and agreed to incorporate anti-corruption action plans into all existing and future bank legal agreements. The bank's Institutional Integrity office has initiated the process of debarring firms involved in the affected projects, working through the Sanctions Committee.

Cambodia, which suffered a genocide, needs help both to strengthen its capacity for good governance as well as to build the foundations for inclusive growth. Today, our projects are helping build roads, bring water to poor communities and enable poor people to secure ownership of their land and homes for the first time.

While in Cambodia in August, the new World Bank president, Robert Zoellick, coordinated with the donor community to make the case to the prime minister and other senior officials on the need to stay the course on governance, anti-corruption and strengthening the legal system. The Institutional Integrity office will visit Cambodia this month to follow up.

Marwan Muasher
Senior Vice President
External Affairs
World Bank
Washington

World Bank rebuttal of Wall Street Journal article posted on KI-Media

Original comment posted in:
http://ki-media.blogspot.com/2007/10/smiling-past-corruption-sr-world-bank.html

Hello, this is Jim Adams at the World Bank and I'd like to follow up on the article from the Wall Street Journal that you reproduce in this page.

The Bank feels that the Journal left out many details regarding what happened after the investigation of those projects, and we have sent a letter to the editor where we make some clarifications. The letter will likely be posted on www.wsj.com soon, but since you're discussing this matter, I thought I'd advance the main points of the letter:

• The Bank didn't ignore those cases of corruption, it was in fact Bank staff who first raised concerns about them.
• After investigations were made, the Bank suspended the Government's access to funds for those three projects.
• The Government then agreed to new anti-corruption measures for each project and to hiring an international agent (now selected) who would manage the award of contracts for Bank-funded projects.
• Only after the Government completed the anti-corruption measures and moved ahead on hiring the agent did the Bank lift the suspension on the affected projects.
• The Bank cancelled over US$2.5 million in project funding and the Government subsequently repaid the World Bank US$2.89 million.
• The Cambodian Government agreed to incorporate anti-corruption action plans into all existing and future Bank legal agreements.
• The Bank is in the process of suspending (debarring) the firms involved in the projects where corruption was detected.

Also, the WSJ criticizes the Bank for being "ready to forgive" the Cambodian government, but that's just not what happened, as you can see from the list above.

Corruption is a sad reality in many countries --as some other posters in this blog have said-- and very difficult to address. I think it is the Bank's duty to try to remedy it to the extent that it can, not to pack up and leave the country when we see signs or evidence of it. That's what we set out to do in this case.

Best,

Jim Adams
Vice President, East Asia & Pacific Region
The World Bank