Talks on road loan on hold indefinitely until corruption issues cleared - WB

A World Bank executive has maintained that discussions on the loan for the second phase of the National Road Improvement and Management Program will remain on hold indefinitely until the charges of anomalous procurement during the project’s first phase have been resolved. In an exclusive interview with GMANews.TV, Peter Stephens, World Bank spokesperson for the Asia-Pacific region, also said talks on the funding for the project will remain deferred unless the Philippine government shows that it has learned and applied lessons against the corruption unearthed in the first phase. “The president of the World Bank has said categorically this project will not even go back to the board for consideration until all the questions have been answered and all the doubts are allayed," Stephens said. “That could be a week that could be three weeks; that could be a month, it could be three months. It could be whatever time it takes to get it right," he added. Last week, the World Bank came out with a statement announcing that it has postponed consideration of a $232-million loan for the NRIMP-2. The international lender said talks would be delayed pending the resolution of claims that there were “signs of collusion and excessive pricing" during three successive rounds of bidding for two projects included in the NRIMP-1. A report by the Philippine Center for Investigative Journalism identified the firms that could have taken part in the “collusion" as China State Construction Engineering Corp., China Road & Bridge Corp., China Geo-engineering Corp., China Wu Yi Co. Ltd, and E.C. De Luna Construction Corp. The PCIJ based its report on information obtained from “a senior government source." The World Bank’s Department of Institutional Integrity (INT) has completed a report on the corruption charges, which the international lender has forwarded to the Ombudsman. Stephens said that corruption could mean giving bribes, taking kickbacks, having conflict of interests. “Corruption… can involve political interference in decision making and manipulation of bids. It can involve everything from outright theft to fixing of prices to companies demanding or seeking kickbacks," he explained. Stephens said the World Bank’s board, which decides whether or not to grant loan applications by sovereigns, will need to see if the government has learned and applied better procurement process as a result of experiences in the NRIMP-1 before it goes back to considering NRIMP-2. “They want the time to crosscheck whether the lessons and the findings of the investigations in phase 1 have been thought through and adapted and applied effectively and credibly to make phase 2 a project that we can be proud of," Stephens said. He also said that the lender’s board will need to check the phase 2 proposal to see whether all of its descriptions and processes are up to par with World Bank standards of anticorruption. “There is no timetable (for the review). What there is, is a commitment to do it properly," Stephens said. The World Bank official however clarified that the international lender is not necessarily waiting for the Ombudsman to recommend that charges be filed against public officials involved, if any, in the bidding anomalies during the first phase. “That’s a decision for the government to take… in their own time," he said. For its part, Stephens said the World Bank will decide to remove contractors involved in anomalies from the list of firms eligible to bid for World Bank funded projects. He said companies are normally banned for a period of three to five years, but the penalty can be greater depending on the severity of the offense. INT investigation Stephens refused to go into detail of the content of investigation but described all INT investigations as independent and “extremely thorough." “When they investigate a project or allegations of corruption. I’ve not known them to stop at a particular point… They tend to come up with a pretty full report," Stephens said. The investigation by the INT was started in 2003, prompted by “signs of collusion and excessive pricing" during three successive rounds of bidding for two projects in NRIMP-1 worth $33 million. The World Bank ended up rejecting all bids for the two projects. “When we were bidding that out, we noticed that the bids were higher and the process looked flawed so we rejected the bids… we rejected them three times and in the end we never financed those components," Stephens said. Because the collusion was “so stubborn and so pronounced," Stephens said they notified the INT to investigate the incidents. The INT then “fed information" back to the World Bank on how to prevent collusions from happening again, and also began compiling an exhaustive investigation report on what had happened and which companies and officials were involved in the collusion. This report, which was finalized last month, was what prompted the World Bank’s board to postpone talks on the $232-million loan for the NRIMP-2. - GMANews.TV