The Government Accountability Project (GAP) is now satisfied that Mr. Roger Robinson, the World Bank Armenia Country Manager, was at least aware of, if not complicit in the corruption surrounding the World Bank financed Municipal Development Project (MDP) for Yerevan’s water utility. This follows a claim which GAP submitted to the World Banks investigative unit, the Department of Institutional Integrity (INT) on behalf of its client Mr. Bruce Tasker. The claim singled out Mr. Richard Walkling as the central offender; Authorized Representative of the International Operator for the project, a subsidiary of the Italian water giant ACEA - A. Utilities.
In the wake of an unresponsive attitude on the part of the World Bank and INT toward GAP-backed allegations of high-level fraud, corruption and embezzlement associated with the Municipal Development Project, Dr. Beatrice Edwards, GAP’s Director of International Programs, spent the week of the 19th November in Armenia to gather more information. The visit followed the March 2007 GAP ‘Demand Letter’ to Suzanne Folsom, INT’s director, which detailed how the project’s international operator was centrally involved in twelve activities of fraud, corruption and embezzlement. The wrongdoings were exposed by a 2004 Armenian Parliamentary Commission study into the project, and Mr. Tasker, Senior Specialist for the Commission reported the wrongdoings to the Bank’s Armenia Country Manager at the time of the study.
Despite formal support from the British Government, including written requests from the British Ambassador in Armenia to INT’s Director, urging her to carry out a full investigation into the matter, after six months of virtual silence, the INT eventually wrote to GAP and categorized the case ‘medium’ priority. That effectively meant an investigation would not be carried out. The Bank and the INT then in October responded to a UK Observer newspaper article by announcing they had found no evidentiary basis to substantiate the assertions by the British engineer who managed the Parliamentary study, or any other serious project related wrongdoings.
That astounding announcement drew a more astounding response from the British engineer, who immediately released a report in the Armenian 168 Hours newspaper entitled ‘100 Million Dollar Financial Manipulation - Not Serious?. The report refers to manipulation of the water company finances by Richard Walkling, the authorized representative of the international operator, who managed the MDP. The Bank had conveniently allowed him to perform a second and conflicting function as General Director of the Yerevan Water & Sewerage Company (YWSC). That meant Walkling was the principal party representing both sides of the Municipal Development Project Management Contract between the international operator and the YWSC, a blatant ‘Conflict of Interests’ that gave Walkling the protection he needed to comfortably perpetrate a plethora of wrongdoings – protected by a corrupt Government on the one side and a corrupt Bank on the other.
In his role as Authorized Representative for the International Operator, Walkling was centrally involved in a wide range of project related fraud and corruption, involving millions of dollars. In his parallel and conflicting role as General Director of the YWSC, he was involved in high-level embezzlement of Armenian public funds, through the manipulation of externally audited company accounts, and that amounted to considerably more than the thirty-five million dollar value of the World Bank financed project. Moreover, evidentiary documents clearly show that Roger Robinson, Armenia Country Manager, must have been aware of the agenda of corruption but did nothing to address it.
GAP found it difficult to understand that under such circumstances, the Bank’s INT categorized the claim as ‘medium’ priority, especially when the claim was made by the Senior Specialist and Analyst of a Parliamentary Commission, a Foreign Public Official, appointed by the Speaker of the Armenian Parliament, who spent a year managing a Parliamentary Commission study into the bank financed water utility project, and who exposed, documented and reported to the Bank, such high-level and wide-ranging corruption.
Moreover, six months after GAP’s lawyers had studied hundreds of the evidentiary documents and GAP had submitted the ‘Demand Letter’ to INT‘s Director, the Bank and the INT, without any prior communication to GAP or to the claimant, dismissively announced that they had found no evidentiary basis to substantiate the assertions by the British engineer. That announcement followed a scathing article in the UK’s Observer newspaper which quoted Gap's International Director, Bea Edwards as saying 'We've run into a wall, we have extensive documentation. It involves high-level government officers, a lot of money and basic services. What else do they want? They've been completely unhelpful.' The Observer article goes on to say how ‘the bank's failure to pursue the allegations underlines the critical findings of a panel chaired by former Federal Reserve chairman Paul Volcker, which revealed serious weaknesses in the way INT investigates allegations of wrongdoing’.
At a 22nd November meeting at the World Bank offices in Yerevan, the British engineer was accompanied by Dr. Edwards when he presented twelve packets of evidentiary documents to Mr. Varoudakis, the recently appointed World Bank Armenia Country Manager. Mr. Varoudakis had hosted a press conference, in which he presented the position of the Bank and the INT; that they had found no evidentiary basis to substantiate the assertions by the British engineer. But Mr. Varoudakis was not able to explain how company assets, which had been re-valued by a local auditing firm, had been over-stated in the Yerevan water company’s externally audited accounts at more than One Hundred Million Dollars - more than ten times the actual re-assessment figure. He argued that the Bank had nothing to do with the externally audited YWSC annual accounts. But Tasker’s packet of evidentiary documentation for that multi-million dollar corrupt activity included correspondence between himself and the Bank during the time of the Parliamentary Commission study, which clearly demonstrated the contrary. The correspondences detailed how Mr. Tasker had been requesting release of the YWSC 2003 financial statement since July 2004. But release of the document was finally approved by the bank only in October, with an explanation from Mr. Robinson, the Country Manager that this was “following the Bank’s own review”.
Mr. Varoudakis was not able to defend the Banks position regarding the counterfeit stamp, of a non-existent Project Implementation Unit (PIU) on the Municipal Development Project’s sub-credit agreement. He stumbled to explain that although this document was required for the approval to release bank funds, the funds were not actually released until other documents were processed. According to Mr. Varoudakis, the Bank does not disapprove the use of counterfeit stamps on Bank documents. And Mr. Varoudakis does not require that Project Implementation Units (PIU’s) or Project management Units (PMU’s) need to be registered and fully staffed for the bank to approve release of funds, although the credit agreement drawn up by the Bank clearly states otherwise.
Mr. Varoudakis declined to study the remaining ten packets of evidentiary documentation, suggesting that GAP send them to the INT. But it is comforting that he was willing to meet to at least witness the compelling documentary evidence that supports Tasker's claim, even though the meeting was after six months of several times asking. To the contrary, Vahan Hovhanissian, Deputy Speaker of Parliament and Head of the 2004 Parliamentary Commission, declined to meet with Mr. Tasker and Dr. Edwards, apparently due to lack of time. Prime Minister Sargsyan simply did not reply to a 15th October written request for a meeting, despite having said that he would be ready to re-look at the British engineers allegations.
GAP will be pursuing this case in Washington and Mr. Tasker will be pursuing the case in Armenia until such time the INT is ready to respond responsibly to the claim; to carry out a full investigation into the fraud, corruption and embezzlement, perpetrated in Armenia through the period 2000 to 2006, implemented by Richard Walkling and apparently overseen by Bank staff member Roger Robinson.
Senior Specialist and Analyst
Armenian parliamentary Commission (2004)