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World Bank Probes Corruption Allegations Over Philippine Road Project


The World Bank has blocked a $232 million loan for a road-building project in the Philippines to consider allegations of corruption in the bidding process for previous such projects. Douglas Bakshian reports from Manila.

The World Bank's board has postponed a decision on the new loan so that it can read the findings of an internal report on bid rigging during the first phase of the road project.

World Bank spokesman Peter Stephens says the report was published on the same day that phase two of the project went to the board for approval.

"It's actually a delay while we look in depth at a report on corruption and measures to deal with corruption on the project…the board has quite properly asked quite a few questions about what sort of procedures in place," said Stephens.

In the first phase of the project, the World Bank says it rejected two large contracts worth $33 million between 2003 and 2006, because of evidence of collusion and excessive pricing in some bidding by companies. The bank's internal investigation unit has since drawn up a report.

The Wall Street Journal reported bank investigators had concluded that a Chinese firm, China State Construction Engineering, had tried to rig bids with a cartel of construction firms. Bank spokesman Stephens would not name any firms involved in the probe. He says the World Bank and the Philippine government have established anti-corruption measures in the second phase of the project to prevent such problems.

"There is an independent group of civil society that monitors road construction and maintenance, a group called Road Watch, they look at this," he said. "We also have put in place new auditing, new bidding procedures."

Philippine cabinet secretary Ricardo Saludo says the government is committed to curbing corruption and is working with the Bank on transparency on all projects.

"As to any solid evidence of corruption, we expect that anti-graft agencies will look into this and act on it as the evidence requires," he said.

The World Bank said the first phase of the road program, had helped put in place a modern national road system.

Corruption is a big problem in the Philippines, and large infrastructure projects are especially vulnerable.

A major scandal emerged earlier this year involving a $330 million broadband contract with a Chinese company.

The head of the Philippine elections commission resigned after being accused of trying to bribe a cabinet official and a businessman to win approval for the contract. The official denied the allegations, but President Gloria Macapagal Arroyo suspended the contract.

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