Wednesday, May 14, 2008
World Bank approves US$232 million road loan to RP (3:56 p.m.)
MANILA -- The World Bank approved on Wednesday a US$232 million (euro150 million) loan for a Philippine road project after putting in place safeguards to detect corruption that halted its implementation six months ago.
The safeguards include an independent procurement evaluation, stronger internal controls at the Philippine Public Works Department, and for the first time, oversight by civil society groups to ensure transparency, said Bert Hofman, World Bank director for the Philippines.
"It is, in part, about ensuring that both government and World Bank money is used properly," Hofman said. "But even more, it is about putting in place standards that will apply to other projects and sectors and reduce misallocation of money, for the benefit of the Philippines."
Corruption is considered pervasive and business leaders often complain that bribing officials and securing kickbacks in exchange for approving deals is turning away huge Western investments being drawn by China and other regional economic powerhouses.
An annual survey of 1,400 business people by Hong Kong-based Political and Economic Risk Consultancy Ltd. in March found that the Philippines was seen as most corrupt among 13 Asian economies, followed by Thailand, China and Indonesia.
The Philippines has one of the lowest investment rates in the region, about 15 percent of gross domestic product, while comparable economies were attracting 20 percent or higher.
The first phase of the national road project, which the World Bank started financing in 2000, has resulted in about 870 miles (1,400 kilometers) of roads that were built or surfaced as the country's main tool for modernizing infrastructure, Hofman said.
But bank officials soon detected collusion and excessive overpricing among bidding companies linked to government procurement. Between 2003 and 2006, the bank rejected two large road contracts in three successive rounds of bidding worth about US$33 million (euro21 million), Hofman said.
Last November, the bank put the project's second phase on hold until it developed measures to address graft in the bidding process.
Neither the bank nor the Philippine government named any companies that were allegedly involved in bid-rigging. Wall Street Journal reported Wednesday that China State Construction Engineering Co. said it was being investigated together with other contractors from South Korea, the Philippines and Thailand.
Finance Secretary Margarito Teves said Wednesday the anti-corruption measures developed by the bank and the government will "improve governance through greater transparency, more efficient systems, and increased accountability."
President Gloria Macapagal-Arroyo has recently scrapped a US$330 million (euro213 million) broadband contract with China's telecommunications company ZTE Corp. after a Senate hearing implicated former elections chief as a broker in the allegedly overpriced deal, as well as Arroyo's husband.
Both men have denied wrongdoing. (AP) |
