ADB unable to fund Bangladesh bridge after World Bank exit-source

Reuters News
|
Posted: Jul 02, 2012 5:01 AM
ADB unable to fund Bangladesh bridge after World Bank exit-source

DHAKA (Reuters) - The Asian Development Bank (ADB) will be unable to extend $615 million of credit for a Bangladesh bridge project after co-financier World Bank halted its funding because of alleged corruption, a person knowledgeable about the situation said on Monday.

The World Bank on Friday canceled a $1.2 billion credit for the 6.2-kilometer (4-mile) bridge over the Padma River, which would be the country's longest water crossing and would link the underdeveloped south to Dhaka and the ports of Chittagong and Mongla.

The Manila-based ADB hasn't said it is cancelling its credit, though the person with knowledge of the case said legal arrangements for the co-financing mean the ADB cannot continue its funding after the World Bank's withdrawal.

In a statement, the ADB said on Monday it "understands and respects the reasons that have led the World Bank to its decision. ADB and the World Bank follow similar policies, rules and procedures on governance and fiduciary oversight."

"However, given the importance of the project to the country and the region, ADB also deeply regrets that both parties were unable to reach a workable agreement to move the operation forward." it added.

The World Bank said its decision followed an "unsatisfactory" government response to the allegations, adding that the Washington-based lender "cannot, should not, and will not turn a blind eye to evidence of corruption."

On Saturday, Bangladesh Finance Minister Abul Maal Abdul Muhith blasted the World Bank's decision as "unacceptable" and said the country would find other means to complete the project.

Muhith also said the World Bank had breached protocol.

"Considering the words used and the message expressed in the statement, I have doubts whether the World Bank can issue such a statement to one of its member countries," the minister said.

(Reporting by Ruma Paul and Anis Ahmed; Editing by Richard Borsuk)