World Bank scraps Bangladesh loan after corruption allegations

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The World Bank canceled a $1.2 billion loan for a bridge in Bangladesh saying the country's government failed to take action against "a high-level corruption conspiracy."

"It's like a bolt from the blue," Bangladesh's Communication Minister Obaidul Quader told reporters in Dhaka today. Quader said the bank's decision is "unfortunate and mysterious."

Two former employees of SNC-Lavalin Group Inc., Canada's largest engineering company, were arrested on corruption charges in connection with the bridge project, the Royal Canadian Mounted Police said last week. The World Bank on Friday said the case also involves Bangladeshi government officials and private individuals.

"The World Bank cannot, should not, and will not turn a blind eye to evidence of corruption," the Washington-based bank said in an e-mailed statement Friday. "We have both an ethical obligation and a fiduciary responsibility to our shareholders and" the member states contributing to the fund that lends to poor countries, according to the statement.

A telephone call and an e-mail message to the embassy of Bangladesh in Washington on Friday went unanswered.

The bank said it looked for ways to continue the project because of its importance to the country's development and was ready to continue financing through a contractor outside of government control in exchange for action from Bangladesh authorities, including putting the suspected public officials on leave until the end of the investigation.

The conditions also included appointment of a special team for the case within the country's own anti-corruption body and to let a World Bank-appointed panel have access to information on the investigation.

"We proposed that when the first bids would be launched, the Bank and the co-financiers would decide to go ahead with project financing if they had determined, based on the Panel's assessment, that a full and fair investigation was under way and progressing appropriately," the bank said. The government's "response has been unsatisfactory."

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