During our meeting of the 22nd, which I attended with Dr. Beatrice Edwards, we were able to discuss my claim of corruption within the World Bank financed Municipal Development Project (MDP). As you know, Dr. Edwards is Director of International Programs for the Government Accountability Project (GAP), my legal council with respect to a ‘Demand Letter’ submitted March 29th this year to Ms. Suzanne Folsom, Director of the Department of Institutional Integrity (INT), in which I claim fraud, corruption and embezzlement within the World Bank financed MDP. The World Bank responded with its release of 16th October, stating that the bank and the INT have found no evidentiary basis to substantiate my assertions.
The GAP Demand Letter details twelve aspects of fraud, corruption and embezzlement, and I showed you twelve packets of documentation, which substantiate the serious nature of the wrongdoings. You studied two of the packets of documentation; firstly, the evidentiary basis which substantiated that an illegal stamp belonging to a non-existent Project Implementation Unit (PIU) was used on the MDP sub-credit agreement, and secondly, the evidentiary basis which substantiated that the value of the Yerevan Water & Sewerage Company (YWSC) assets had been grossly over-stated in an externally audited YWSC financial statement.
You did not comment on the documents relating to the illegal stamp. But your response to the 100 million dollar manipulation of company assets valuation in the YWSC 2003 financial statement was to explain that the bank has no association with the YWSC financial statements. A correspondence from Mr. Roger Robinson, the Bank’s Country Manager at the time of the study clearly articulated the contrary. In July 2004, Mr. Robinson wrote “Our review [of the YWSC 2003 statement] should not take very long and you shall have a copy of these audited accounts as soon as possible”. The World Bank review of the YWSC 2003 financial statement took four months and will have easily identified the serious manipulations. But the bank did not have the problems rectified, although there was every opportunity. Moreover, Mr. Robinson withheld release of the YWSC 2003 statement to the Parliamentary Commission until October 2004, which clearly shows his acquiescence in the wrongdoing.
The two items referred to above are references to two highly corrupt and illegal activities exposed by the Parliamentary Commission and reported to the World Bank in 2004. The other ten points of serious fraud, corruption and embezzlement detailed in the GAP Demand Letter are equally well documented and were all reported to the bank in 2004. For the record, I herewith submit to you copies of the documents I presented at the meeting.
Mr. Varoudakis, I understand that you were not the World Bank Armenia Country Manager at the time of these wrongdoings, and you have become involved in a matter that is the responsibility of the INT. But unfortunately the INT response to my claim has been most unsatisfactory. The INT has categorized my claim as ‘medium’ priority, which apparently means the INT will not carry out an investigation.
You suggested that GAP should submit the evidentiary documents to the INT, to substantiate the assertions. GAP is prepared to do that, but on the understanding that the INT will be ready to respond seriously to the claim, and that GAP and I will be adequately informed of the investigation process as it develops, in accordance with the recommendations of the recent Volcker Panel report. In the meantime, GAP will be pursuing the matter in Washington and I will be pursuing the matter in Armenia, in the manner I described and until such time that the INT is ready to agree to a full investigation.