Samy Vellu surfaces in Bangladesh over controversial RM9bn bridge

Hello, hello, hello, our intrepid Samy Vellu has surfaced in Bangladesh this time over a controversial RM9.1bn bridge project.

The Padma Bridge is supposed to be a two-level 6.2km long steel truss bridge that will have a four-lane highway on the upper level and a single track railway on the lower level. (Why don’t we have rail links on our Penang bridges?) It will also have 15km of approach roads.

According to a report in the Daily Star of Bangladesh on 28 June, the Malaysian government will invest around Tk3bn for the construction of the Padma Bridge under an arrangement in a final draft proposal. Construction work will take three years and it will operate the bridge for 37 years before handing over the bridge to the Bangladesh government, the report said, citing sources. This was the proposal reportedly placed before Bangladesh Communications Minister Obaidul Quader by “Malaysian Prime Minister’s Special Envoy for infrastructure affairs for South Asia” Samy Vellu.

Days earlier, the Bangladesh government had rejected compromise conditions imposed by the World Bank following corruption probes on the US$2.9bn (RM9.1bn) bridge project.

In September 2011, the World Bank suspended its funding for the project after committing US$1.2bn in credit for the project. (The other financiers were ADB, IDB and JICA.) The World Bank submitted two reports on the corruption allegations, the second based on the findings of a Canadian government probe into graft allegations over the appointment of a bridge supervising consultant.

In a letter to the Bangladesh PM in early June, the World Bank listed several key conditions/suggestions for the funding:
– form a high-power team to probe allegations of corruption in the bridge project.
– appoint an independent body to monitor the implementation of the project and make recommendations.
– do not allow those linked to the corruption allegations to be part of the project implementation.
– allow co-financiers to be actively involved in the procurement process for the bridge.
– increase the capacity of the Anti-Corruption Commission (ACC) in the long-term.

The World Bank also wanted to be kept informed of the progress of the investigation.

On 29 June, the World Bank finally cancelled its $1.2bn financing for the project, pointing out that it had “credible evidence corroborated by a variety of sources which points to a high-level corruption conspiracy among Bangladeshi government officials”. This was reported by the Independent of Bangladesh.

On Tuesday, 3 July, Bangladesh Finance Minister AMA Muhith felt compelled to provide a lengthy explanation of the government’s version of events in Parliament. See his statement in the Daily Star. “The statement of the World Bank is not acceptable and the allegation that Bangladesh Government did not take appropriate action against corruption is also not correct,” he said.

“We prequalified five bidders and sent our recommendation to the World Bank in March, 2011. Without raising any objection against these firms they repeatedly advised us to prequalify a Chinese company named X. This advice was not accepted by our evaluation team comprised of specialists. The Bridge Division informed after an inquiry that X never applied for reconsideration and its Bangladeshi partner named Y resorted to fraudulent practice in this connection. This scheming firm established an office in China and applied for reconsideration in the name of X. On coming to know this, X informed in writing that they are not interested in this project. At the same time, they severed partnership with Y. The owner of Y is right now absconding. The World Bank went on repeatedly recommending X without examining properly the objection raised by X.”

The finance minister said the problem with the World Bank conditions was that “we were forced to admit the corruption allegations before they were substantiated. Therefore, we did not accede to their proposal and resorted to other means to dispel their concerns. Their second proposal was redundant as the ACC (the anti-corruption agency) formed their investigation team much earlier. Their third proposal is in contravention with the existing laws of the ACC which is independent and is not bound to be guided by the dictates of any foreign agency.”

For good measure, Muhith slammed the World Bank: “I consider that the statement of the WB has humiliated the whole country and the allegation labelled against us is not well founded. It is also not true that the Government of Bangladesh has not taken any appropriate action to avert corruption. I think we have considered courteously all the recommendations of the WB going well beyond our routine procedures.”

So now, enter the corruption-free Malaysians?!

Samy Vellu needs to brief Malaysians about what exactly is going on and who exactly will provide the financing for the project. Why go into such a project given the controversial background?

The larger question is, does Bangladesh really need a RM9bn bridge when there is so much poverty in the country?

Who or which company is ultimately going to profit the most?

Follow the money trail and see who benefits and who usually pays in projects like this:

Where is the money coming from?
Loans from (international?) financiers or government agencies. What do they get in return? Interest income.

Where does the money go?

• Giant (foreign?) construction firms, often from the same country that provides the financing.
• Design firms
• Steel and concrete firms
• Road builders
• Consultants
• Toll concessionaires
• Shareholders of these firms (including rent-seekers)
• (Corrupt?) intermediaries (‘commissions’, ‘success fees’, ‘consultants’ fees’)

Who foots the bill (costs plus profits/returns for the above parties) in the end?
Ordinary citizens – through taxes and/or tolls

Thanks to blog reader Loke for the tip off.