by Trinh Anh Duc
23-1-2001
Speaking at a meeting in Hanoi in early January 2001 to discuss the Tranport Ministry's 2001 plans, Mr. Le Ngoc Hoan, transport minister said that as of January 1 the World Bank and the Asian Development Bank would no longer allow enterprises under ministries, including Defense, to bid for projects with their funding, adding that state enterprises would also be banned from joining projects overseen by their controlling ministries, and companies under provincial transport authorities could not participate in projects in their provinces. The move by the two international lending agencies delivered a blow to State-run construction enterprises, especially those under ministries, but was expected to provide an equal footing for all sectors. Hoan said the WB and ADB wanted to create favorable conditions for enterprises from all sectors to bid for communications projects with their financing.
Corruption
The prime factor in this decision was that this ruling would provide a tool against increasingly rampant corruption by Vietnamese state officials of WB and ADB-financed projects. Typically, state enterprises were employed to provide goods and services to these projects, usually at inflated prices and also through illegal means. The difference was being pocketed by officials, some as high as government ministers.
This method of diverting development funds by corrupt and greedy Vietnamese government officials from those who needed them the most--the Vietnamese people--came to light in gross misappropriations of funds from the ADB-financed Irrigation and Flood Protection Rehabilitation Project by officials of the Central Project Office (CPO) and the three provincial sub-project offices of the Ministry of Agriculture and Rural Development (MARD) that handled construction projects in the field. The worst case was on the project to reconstruct the Bai Thuong Dam in Thanh Hoa Province. Investigators have discovered that a little over one million dollars were diverted from the construction budget through goods and services provided by the Thanh Hoa Sub-Project Office No. 406, an illegal conflict of interest, and through Thanh Hoa Hydraulic Construction Company No. 1. The general contractor for the project, the China International Water & Electric Corp (CWE) was forced to hire the Thanh Hoa Hydraulic Construction Company No. 1 through extortive practices that involved causing bureaucratic delays in getting the construction started and delaying tactics during construction. They went through a fake short-listing of firms, but the CWE was ordered under threat of serious disruptions to hire the Thanh Hoa Hydraulic Construction Company No. The CWE stated they had not wanted to hire this particular company because they felt they were incompetent for the work, a prediction that turned out to be true and was manifested by nearly farcical construction problems.
In a meeting with investigators in late November 2000, the CWE representatives detailed many of the practices used by SPO staff and engineers and certain members of the CPO to extort money from the CWE and cause very expensive changes in construction scope such as switching from roller-compacted concrete to lean concrete in order to siphon off the difference in cost as well as allow certain high-ranking government officials connected to cement fabrication to profit because of the shortage of cement inherent in the country. They also explained they were forced to hire the SPO No. 406 to provide goods and services to the construction camp even though this practice is patently illegal in Vietnam and is a conflict of interest as the SPO also acted as the contract employer for the dam project. Mr. Nguyen Van Chuong, the former director of the SPO No. 406 was arrested and charged with economic mismanagement of the dam project and of the SPO as well. The CWE engineers recounted how the Thanh Hoa Hydraulic Construction Company No. 1 purposely disobeyed orders or used expensive and unnecessary practices during construction. In the end, the CWE lost nearly $2.5 million in the construction out of an $8.9 million contract.
Subsequent to presenting their report to the National Assembly's Special Investigations Committee on Corruption, members of the CWE still in Vietnam to deal with attending to matters under the warranty clause for the Bai Thuong Dam construction contract were threatened for having provided this information. On December 24, Ms Pan Dong, the CWE's translator and interpreter, and the CWE's project contracts specialist were attacked in the streets of Ho Chi Minh by two Vietnamese youths on a motorcycle who shouted warnings as they sped off after the attack. Ms. Dong suffered serious fractures in one arm during the attack, and she and the contracts specialist had to immediately return to Beijing before they were able to complete their duties under the contract.