12 FEBRUARY 2009

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SPECIAL REPORT

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 i    R E P O R T  —  WORLD BANK REPORT: A MIX OF FACTS, RUMOR, INNUENDO


EXPOSED TO SCRUTINY
But the INT may not have missed the mark not only in coming up with concrete evidence to back up its findings. It may have also fallen short in dealing fairly with the interviewees who have now been exposed, unwittingly, to public scrutiny.

Two of those interviewed by the INT told PCIJ that they had not been fully apprised that their conversation was part of a formal investigation. They also said that they were not told as well that they could opt to secure anonymity and did not have to disclose their identities, and that whatever they say — no matter how self-incriminating it was — would be enrolled in printed form in a World Bank report.

Too, even as each of the hundreds of pages of the INT report has been stamped “STRICTLY CONFIDENTIAL,” loose, random pages have circulated out of the World Bank network and into the hands of Filipino politicians and journalists, exposing not just the debarred companies, but also all the other interviewees to public scrutiny, and even possible criminal liability.

For instance, one of the interviewees, the president of a Filipino firm, had nonchalantly declared that his company does not disclose or pay its lawful taxable income so that it could accommodate the commissions demanded by some politicians from public-works projects.

But filing suit in a court of law seems farthest from the INT’s mind. On the World Bank website, the INT has clarified that the nature of its investigation is “administrative…not intended to prove a criminal or civil offense.”

THE INTERVIEWERS
Those who conducted the interviews for the INT included:

  • W. Michael Kramer, a U.S. licensed attorney and consultant who “has conducted investigation and civil prosecution of serious fraud and corruption cases throughout his professional career.” He had served as a special attorney in the Criminal Division, Organized Crime and Racketeering Section, of the U.S. Department of Justice.
  • David Hawkes, senior institutional integrity officer of the World Bank INT “with expertise in anti-money laundering, investigative and forensic auditing of fraud and corruption in Bank-financed projects.”
  • Edil Dushenaliyev, a financial specialist at the World Bank
  • Tom McCarthy
  • Tim Carrodus
  • Duncan Smith

BID-RIGGING REPORT
It must be noted that before the INT investigations, a study conducted by the consulting firm of former Prime Minister Cesar Virata for the Japan Bank for International Cooperation (JBIC) had found that bid-rigging and overpricing were quite rife in many foreign-funded national road projects.

The study released in early 2007 concluded that there was lack of competition in biddings for road building contracts owing to procurement policies of the government and the lenders.

It said: “With limited competition, a potential environment for collusion among few bidders is created which would cause the processing entity, the DPWH, to pay for a higher cost of works than would otherwise be required.”

Virata and Associates also found that qualified construction firms were kept from bidding to eliminate genuine competition.

“Contractors capable of performing contract works are precluded or pre-disqualified from participating in bidding, thus depriving the procuring entity of a wider range of bids and possibly from receiving a more advantageous bid proposal,” the consulting firm said.

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