Odious Debts Online
December 12, 2007

The World Bank has said it will not approve a $232 million loan to the Philippines until it is convinced anti-corruption measures have been put in place to protect the project the funds are intended for. The loan, due for approval on Dec. 13, was slated for a road building contract but was blocked by the Bank after the Chinese contractor was found to have been involved in bid rigging.

Bank spokesman Peter Stephens said the Bank’s board had seen the proposed National Roads Improvement and Management Program 2 NRIMP 2, but wanted assurances that safeguard measures were in place to prevent a repeat of alleged irregularities noted in the project’s first phase.

“It takes as long as it is necessary for us as an institution to be satisfied that this project is going to fulfill the requirements and will stay and conform with the highest standards of integrity that are expected of us,” Mr. Stephens told a press briefing. Read source [PDFver here]

However, some Philippine officials have claimed the block only reveals inconsistencies within the Bank. Budget Secretary Rolando Andaya said it was “unfair” for the World Bank to accuse his government of overpricing, when “it was for all intents and purposes World Bank bidding.”

“All procurement for the National Roads Improvement Management Program was done under the auspices of the World Bank. Nothing gets approved without the imprimatur of the Bank. World Bank projects are subject to what I call close-quarter monitoring. By practice, they are there every step of the way,” Mr. Andaya said.

Meanwhile, Presidential Management Staff chief Cerge Remonde attributed the cancellation of the loan to the change in leadership in the agency and said that the government would seek clarification on the bank’s criteria for approving loans, reports the Inquirer.

The report continues: In an interview, Remonde said the country became the “first victim” with the change in leadership in the loan agency from its previous president Paul Wolfowitz to Robert Zoellick.

Andaya said that “one weakness” of the bank’s procurement system was that “it allows the bidders to quote above the approved budget for the contract. … There is no permanent ceiling.”

“In contrast, the Philippine Government Procurement Reform Act or GPRA, fixes a price ceiling which cannot be breached and there lies the big difference and the superiority of our own bidding rules,” he said. Read source