Bangladesh scraps World Bank cash for graft-hit bridge

Bangladesh's government has withdrawn its request for World Bank financing for a high-profile bridge project that has been dogged by allegations of corruption, the bank said Friday.

The Washington-based lender cancelled a $1.2 billion loan to Bangladesh in June due to claims of graft involving senior public officials related to the financing of the $3-billion Padma bridge project.

The cancellation embarrassed Bangladesh's Prime Minister Sheikh Hasina who made construction of the 6.2-kilometre (3.8-mile) bridge, which would be the country's biggest, one of her key election pledges in 2008.

The government asked the World Bank to reconsider its move to cancel funding, but the lender maintained that a "complete and fair criminal investigation" was required to release the loan.

"The World Bank has taken note of the government's decision of not seeking renewed World Bank financing for the Padma Bridge," a statement from the bank said on Friday.

The government had informed the World Bank of the decision on Thursday, but said it would continue with an investigation into the alleged corruption, the statement said.

Finance Minister A.M.A. Muhith told online newspaper that the government would now move to build the bridge with its own resources if necessary.

"At the same time, we have requested the other donors to stay with us. I am confident they will continue to support us for this project," he said.

Other donors include the Japan International Cooperation Agency (JICA), the Islamic Development Bank (IDB), and the Asian Development Bank (ADB).

On January 23 Hasina said the government would construct the Padma bridge with funds from alternative sources if the World Bank does not give any decision on its financing of the project by the end of the month.

Construction of the Padma bridge in the southwest of the country was supposed to begin in the second half of 2010. Traffic is currently transported across the Padma river -- the local name for the Ganges -- by slow ferries.

A study by the World Bank, which says it has invested $4.3 billion in more than 30 projects in Bangladesh, said the bridge would boost growth because it will improve transport links to the capital Dhaka in the poverty-hit southwestern region.