What projects do you have with PMU18? Have you had any problems with them?
We have two projects, the Rural Transport Project 2 (RTP2) and Road Network Improvement Project (RNIP) with PMU18, and our supervision division is now checking all the World Bank financed operations at PMU18. We want to see the issues addressed. Roads that have been built in a bad state could be due to disaster or weather or other unexpected reasons, however, we want roads constructed according to standards. If not, then we would contact the government to ask contractors to improve the works.
And if there is a situation where we find out that the contract wasn’t awarded to the best bidders because of collusion or corruption, then we could cancel the financing.
What we normally do when we see collusion is go back to the government and say we found this contract was not done in the proper way, and ask for an explanation. If the government cannot come up with a decent explanation we can then cancel the bank finance.

How can you cancel the disbursement?
As part of the terms of ODA agreements between the government and the World Bank, or other international donors, the World Bank can immediately cancel disbursement if it discovers evidence of corruption or collusion in its funded project.

What are the initial findings of your projects with PMU18?
We discovered that two cars belonging to RTP2 had been with the police for two years and only recently returned to PMU18. We are investigating the reasons why the cars were with the police, and for how long?
If the cars were at the PMU18 and then the police came asking for help, it is a different story. If the cars were given to the police on the way it were delivered it is another. I don’t have any facts to be able to draw conclusions, but I think it is not normal to pass the car to the police.

Based on information you’ve heard so far, can you conclude there is collusion at MPU18?
No I can’t because the investigation is still ongoing. And as I said since projects must be done in provinces and decisions are mostly made in the provinces, I don’t have any evidence right now to say there was wrong doing at PMU18. What I know of MPU18 is very much related to what appeared in the press.

Concerning the PMU18 case, there are two opinions in Vietnam now. One group is afraid that if Vietnam deals with the case to its full extent, the international community will reduce ODA commitments. Meanwhile, others have said this will strengthen the confidence of the donors. What is your view?
This is a case nobody expected. If the government continues to investigate it to its full extent, the relations and confidence between the government and the donors will be stronger than before.
Strong investigation, strong findings and strong actions. That will lead to higher ODA commitments. When you have a scandal, you address it, you don’t hide it and you can’t hide it. This is the only way to overcome corruption. And we urge everyone in Vietnam that improper behaviour is not accepted. Everybody thinks that it is the decision of the government to actively investigate and make decisions. It is painful because it is embarrassing, but you have to go through it. By doing this, the government will restore the confidence of the people and international donors.

What is your forecast about ODA commitments for Vietnam this year?
It is too early to comment on this, however, it seems you have an issue of mismanagement. Firstly, according to the press , the general director of MPU18 involved in the betting scandal [had ]nothing to do with PMU18. It was a personal thing.
Secondly, there are some press reports as to how much the fortune of former vice minister of transport Nguyen Viet Tien is. And investigation is going on, and the vice minister has been suspended and arrested for the time being.
Thirdly, I know that it seems the minister supervised the Ministry of Transport improperly, and the prime minister has asked him to be removed. Issues of mismanagement and corruption can happen anywhere in the world. It is not limited to Vietnam.
The key issue is that the government reacts to [allegations of] corruption. What I know is that the government has started investigations decisively. I do think this is a positive step. If the government can demonstrate to the donors and to the people of Vietnam that it acts very decisively and removes people they found engaging in wrongful activities it will be of benefit.

Regarding ODA effectiveness, there are opinions that the World Bank should not care about the aid because it is on the shoulders of the Vietnamese people, who bear the responsibility to pay. What is your opinion?
Let me try to make it straight. First of all, the money that we are providing is interest free. It is a concession of credit that has a 40 year maturity and the government has 30 years to pay it back after 10-year grace. And the only money that Vietnam has to pay for this is 0.75 per cent, per year. Compared with the market rate, or if you look at the bank rates in Vietnam at 7-8 per cent per year, this rate is very cheap.
We are an institution of which Vietnam is a member, and we work in the interests of our members. We have been in Vietnam for more than 10 years and the projects that we have completed are all inspected or independently evaluated. We have a separate inspection unit in the bank and report to the board of directors that look into our operation whether it is effective or not. Up to now we haven’t seen any single operation in Vietnam that was unsatisfactory.

Are all the projects satisfactory?
Yes, according to all evidence I have. It means that every single contract, every kilometre of road that the World Bank has financed have been perfect. But you have a situation where there is mismanagement and not because people are corrupt but because things went wrong.
I will give you an example. In Kontum province, one agency builds a road and another builds a water reservoir nearby, yet the road will only reach the reservoir in five years.
This is a matter of mismanagement and a lack of communication.
These kinds of things happen anywhere in the world. But the point is that if you look at overall World Bank financed projects, they are effective. One of the reasons that corruption and collusion are minimised is because if there is corruption then the quality of projects is affected.

There have been rumours of 10-30 per cent of capital at construction projects being wasted, corrupted or leaked? Do you believe this?
No, because whenever I hear this number I always ask the people where they get this number from. Nobody can establish this number. I suspect because nobody investigates it in a proper way. One of the benefits of the investigation of PMU18 could be that with this case we could know more about the issue of corruption or improper behaviour in Vietnam. We do think that Vietnam, when compared with other countries at the same level of development doesn’t have dramatically more corruption.

Regarding the PMU18 case, do you think it is normal for an ODA manager to bet millions of dollars on football games?
Certainly it is unusual for people to bet such a large amount of money on football games. If the money is properly earned one can’t spend millions of dollars on football betting. It is definitely unusual and raised an issue of the general behavior of the person.

What could the donors reaction be to this case?
We will discuss this issue in the mid-term Consultative Group meeting in Nha Trang in June. For any governments in the world the only way to overcome scandal is to open up and tell the people the truth and what the government has done about it.
It is an opportunity to learn from this case and set up a system, not only in the case of MPU18, and the Ministry of Transport but all over the country.
I can’t speak for other donors but I think they have the same sentiments that if the [investigation] solves this unfortunate scandal, then Vietnam would be better off than before.

Source: Vietnam Investment Review, No. 756, 2006