WASHINGTON (Reuters) - The World Bank on Friday cancelled a $1.2 billion (764 million pounds) credit for a Bangladesh bridge project with immediate effect, saying it had "credible evidence" of a high-level corruption conspiracy among Bangladeshi government officials.
"In light of the inadequate response by the government of Bangladesh, the World Bank has decided to cancel its $1.2 billion ... credit in support of the Padma multipurpose bridge project, effective immediately," the World Bank said in a statement.
The Washington-based development institution said it had provided evidence of corruption from two investigations into the Padma bridge project to Bangladesh's prime minister and other senior government officials in an effort to press for action.
The 4-mile (6-km) bridge is meant to link the country's underdeveloped south with the capital Dhaka and the main port of Chittagong.
The bank's decision to withdraw from the project follows an "unsatisfactory" response from the government in dealing with the corruption allegations. The bank said it had sent a high-level team to Dhaka to fully explain its position and get a government response.
"The World Bank cannot, should not, and will not turn a blind eye to evidence of corruption," the bank said. "We have both an ethical obligation and a fiduciary responsibility to our shareholders and (International Development Association) donor countries."
Earlier this week, two former executives from Canadian engineering company SNC-Lavalin Group Inc, which bid to supervise the contractor on the project, appeared in a Toronto court on Monday accused of bribing officials in Bangladesh.
The executives Ramesh Shah and Mohammad Ismail were arrested by the Royal Canadian Mounted Police in February following a 2011 raid on SNC-Lavalin offices. SNC-Lavalin is one of the world's largest engineering companies.
Canadian authorities launched an investigation last year into alleged corruption in the bridge bidding process after the World Bank brought the issue to their attention.
There was no immediate response from Bangladesh's government on the World Bank's decision.