The Charges of Fraud, Corruption and Embezzlement

The UK’s Observer newspaper reported 30^th September that the corruption surrounding the World Bank’s Municipal Development Project for Armenia’s Yerevan water utility was from start to finish, from top to bottom. This was seen during the Armenian Parliamentary Commission study into the project in 2004; through discussions, site meetings, and studying project related documents, which, because Richard Walkling had been improperly appointed in a dual role as General Director of the Yerevan Water & Sewerage Company (YWSC), included the YWSC accounts, which were audited through the years of the Municipal Development Project by KPMG.

The list below is taken from the Government Accountability Project (GAP) ‘Demand Letter’ to the Director of the Bank’s investigation unit, the Department of Institutional Integrity (INT), and includes the fraud, corruption and embezzlement which were comprehensively documented during the time of the Parliamentary study in 2004. Many other areas of fraud, corruption and embezzlement were witnessed, but were not sufficiently well documented to be included in the claim that GAP made on behalf of Bruce Tasker, the British engineer, who managed the Parliamentary Commission study.

• The PMU Director falsely represented the registration of the PMU;
• A conflict of interests had been created in the person of Mr. Richard Walkling;
• Project objectives had been improperly altered;
• Project targets had been improperly altered;
• Project works had been accounted for and not implemented;
• Deficient material had been used in the construction of a reservoir;
• Water meters had been purchased with project funds yet the revenues went unrecorded;
• “Ghost” consultants had been extensively used;
• Company accounts had been manipulated in annually audited financial statements, resulting in the embezzlement of public funds – through

1. The transfer of an electricity debt to a public utility under the IFRP;
2. Incorrectly stated and revalued company assets;
3. Incorrectly stated and inflated increase of company charter capital.

Mr. Tasker presented the evidentiary documentation related to the above list at a 22^nd November meeting with Mr. Aristomene Varoudakis, the Bank’s Armenia Country Manager, involving Dr. Beatrice Edwards, Director, International Programs for the Government Accountability Project.