In some particular cases, the WB has threatened total termination of contracts already signed with the Vietnamese government. With the inspection scheduled to commence June 1st, Mr Nangia spoke on the matter.

What will the WB inspection team concentrate on? WB has funds in two projects under the management of PMU 18. One is the Rural Transport Project, which has been implemented over the last six years, and is scheduled for completion in June this year. The project has a total budget of nearly US$100mil. The other is the Road Network Improvement Project, which has only just been signed to. As the project has not started, none of budget of US$10mil has been disbursed. For each project there are a number of contracts, which results in several different transaction methods.

We have stored all the details of these two projects in a database. Our investigators will use industry approved methods to mine information from the database to determine which kinds of transactions have the highest risks in terms of fraudulent use. We have just finished compiling the database and are assessing the information it contains. Next week we will have more detailed information.

Once its inspection is finished, the team will return to the WB office in America to write a report. Base on that report, we will discuss with the Vietnamese government any issues we feel need to be addressed. Information will then be passed on to the media.

When funding different projects, what does the WB do to ensure that the funds are effectively used?

After signing lending agreements, we have mechanisms to constantly oversee the use of funds. One hundred people work for the WB in Vietnam, and they regularly work with project management units to ensure that the projects are on the right track. These supervisors also regularly report to WB leadership.

After each weekly working session we have meeting minutes, and based on those we discuss the results with the government. In many projects, it is not hard for WB supervisors to oversee activities. One example is electricity provision projects, where it is easy for them to know how many communes are provided with electricity, or how many grid lines have been installed. However, for some other projects it is difficult to oversee. Sometimes we discuss changes with the government based on results reported by our overseers, but in general no projects have been redirected in terms of objectives.

If we found that money had been used ineffectively, the case may be handed over to the Department of Institutional Integrity in Washington. In 2001, WB formed two integrity departments consisting of 50 members, all of whom are experts in fields such as auditing, construction and so forth. These departments are responsible for investigating allegations of corruption or fraud. During the last five years, they have conducted more than 2000 investigations, fined more than 200 enterprises and individuals for inappropriate use of funds. Once an enterprise is blacklisted, it will never again be eligible to participate in projects funded by WB. In some instances, even if governments say there is no problem, we may still conduct independent inspections that arrive at different conclusions. If we can not reach agreement with governments and the problems are not resolved, WB may cease disbursement for those projects, or sometimes may terminate contracts.

Six or seven years after projects have been completed we have had independent groups of experts assess implementation results. WB has funded 13 projects in Vietnam, seven of which have finished. Assessment results show that they are successful. In my opinion, we need to keep up the success of future projects.

You have said that WB workers constantly monitor projects under the management of PMUs, so why did they not find any problems with PMU 18?

Admittedly when the investigators announced these violations, we were rather surprised.

While overseeing these projects, we did have concerns about the link between the management board and contractors. This resulted in questionable purchases of materials for the projects. However, simply demanding suspension of the project as soon as we noticed some questionable activities was not an appropriate solution to the problem.

What are your thoughts on the PMU model? What could be done to improve their work?

Vietnam has several different PMU models. They are different under different ministries. The important thing is we need to have a mechanism for inspection. Officials have to be accountable when funding is used inappropriately. But we need to do it in the way that the inspection would not hinder project implementation. China has been very successful with this model.

We are going to hold seminars this week in HCM city to discuss ODA use and PMU organisation. At the seminar, experts from different countries will discuss how best to implement projects safely and still meet time requirements.

The Vietnamese government is amending Decree No. 17 which covers ODA management. WB, JBIC, ADB and other donors like Germany, Britain, France, have been consulted for its

amendment. We all think that ODA should be considered as public investment capital. Then it could be managed either in the way public investment capital is managed, or under another legal management system.

The International Organization of Transparency used to post warnings regarding corruption in Vietnam. How do you find this warning in connection with the PMU case?

We should not be concerned too greatly over such indications, even if Vietnam ranks last or second to last on the IOT list. The PMU story shows how pressing the corruption problem is. It has therefore attracted people's attention. If the case had not been uncovered, people would have ignored the problem. I have worked in many countries and have seen that tax officials and police are the two most corrupt fields. We appreciate the strong commitment of senior government officials in different countries. In some countries like Kenya for example, senior government officials are very corrupt, and they just ignore it.

Would WB consider funding an anti corruption project in Vietnam? In my opinion, if projects only concentrate on ensuring there is no internal corruption, then they will not be very feasible. We need to have a broader view to clarify those fields that are most corrupt in order to prevent problems. WB is currently funding projects on Auditing, Customs Modernization, Administration Reforms and more. The media plays an important role in preventing corruption. I, as a member of a group of experts, used to work with the media with the view to strengthen its role in informing the public in an objective and transparent way. We may implement this project in Vietnam. Recently donors had an unofficial meeting to discuss methods to end corruption and ensure the effective use of ODA. For long term goals, Vietnam needs a transparent management system like Singapore for example.

Source: VietnamNet - 16/05/2006