By
Ian Porter
Country Director, The World Bank
Phnom Penh, September 13, 2005 Excellency Vongsey Vissoth, Deputy Secretary General of the Ministry of Economy and Finance, Excellencies, Distinguished Guests, Ladies and Gentlemen: On behalf of the World Bank, I have great pleasure in welcoming all of you to this workshop on Dissemination of the Cambodia Fiduciary Review and Official Adoption of the new Standard Operating Procedures. Ensuring transparency and accountability in the expenditure of public funds needs to be a cornerstone of every government’s policy, and never more so than in developing countries where so much socio-economic development remains to be done to raise family incomes above the poverty line. In the case of Cambodia, the Government has certainly recognized the importance of transparency and accountability and has acknowledged that corruption is currently a major impediment to growth. The Government has also put in place its new Rectangular Strategy for Development to fight corruption and improve governance and is implementing a number of critical measures including the Public Finance Management reform program, public procurement reform, and the proposed introduction and enforcement of an anti-corruption law. As some of you may know, the World Bank’s new Country Assistance Strategy for Cambodia for the four years until 2008 focuses on supporting the Government in improving governance as a centerpiece. Through the Social Accountability Agenda in this Strategy, the Bank is working with Government, community groups, and other members of civil society to build a demand for governance reform and reduced corruption in the country, and then assisting the Government to respond to that demand. Another pillar of the Strategy is Public Sector Reform, in which we are working with other donors and the Government for a more credible budget, more transparent use of resources, and greater efficiency of service delivery, enabling the public to hold Government accountable for results. As part of this Strategy, we are also assisting the Government to pilot civil service employment reform with merit-based pay. The Country Assistance Strategy also embodies Private Sector Development Reform. Drawing on the findings of a recent World Bank investment climate survey of 800 firms, which revealed that corruption is among the greatest obstacles to investment in Cambodia, the Government is pursuing a plan to reduce the time needed to register a business; to overhaul the trade facilitation system where bribes are endemic; and to develop a new Law on Concessions that will inject transparency, accountability and competition into the system. The Bank is supporting the Government in achieving these challenging goals with a new Trade Facilitation Project, policy advice, technical assistance and donor coordination. While strategic reforms are being implemented to address the critical governance challenges facing Cambodia, the donor community – and indeed civil society and the private sector in Cambodia as well as the Government are concerned at the levels of possible diversion of project funds for personal gain. Members of the development community have a responsibility to their shareholders to ensure that their funds are spent appropriately and efficiently to maximize their impact on development. Thus, in full collaboration with the Government, the World Bank decided to conduct a Fiduciary Review of a sample of ongoing World Bank-financed projects in Cambodia, to identify how and at which stages of the project cycle leakage of funds may occur, and to design project-level safeguards to minimize these leakages. We commend the Government for its collaboration and openness for the successful completion of the Fiduciary Review which promotes two core values of the Government’s Rectangular Strategy, transparency and accountability. One purpose of today’s Workshop is to disseminate the results of the Fiduciary Review and you will hear of the extent of investigations carried out in the second half of 2004 on four projects and hundreds of contracts, a summary of the findings, and a series of measures that will now be applied to ongoing and future World Bank-financed projects. These are designed to tighten financial management and procurement procedures, enhance disclosure and improve the World Bank’s supervision practices. Additional measures are also needed to help the Government develop its own internal control mechanisms for better enforcement and greater involvement of project beneficiaries and civil society. To promote transparency, the World Bank and the Government have also taken the additional step of making a summary of the Fiduciary Review available to the public. The second item on today’s agenda, very closely linked with the first, is to disseminate the new Standard Operating Procedures which include a Procurement Manual and a Financial Management Manual. These Manuals were developed in 2004 and early 2005 under grant assistance from both the Asian Development Bank and the World Bank, with expert consultants working closely with staff of the MEF and both banks. They harmonize and streamline procedures for day-to-day management and administration of Cambodia’s portfolio of donor-assisted projects funded by credits, loans and technical assistance grants, regardless of the source of funds. There are sections dealing with roles and responsibilities, project identification and formulation, project management and implementation, and activities required on completion of a project. It is hoped that these Manuals will be quickly adopted on the majority of donor-funded projects in Cambodia and result in a standardized and more efficient approach to project design and implementation. In conclusion, I would like to thank you all for giving up your valuable time to be here today and hope that you find the proceedings instructive and valuable for your future work. I am confident that if we all work hard together in the coming months to implement the measures that we are discussing today, we will be able to contribute to the more effective use of donor and government resources in Cambodia. Thank you.
 Summary Fiduciary Review (130kb pdf)
Press Release
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