It's a defining theme for Armenia's presidential campaign.
Five case studies show how deep the debate over corruption actually goes.

Case Study #5: International Loans
In 1999, the World Bank launched a $30 million lending program designed to upgrade Armenia's battered water infrastructure and improve Yerevan residents' access to drinking water. As part of the government-backed project, hundreds of thousands of households in the Armenian capital had to purchase and install, at their own expense, water meters in their homes.

In return, the government promised to ensure around-the-clock water supplies to the vast majority of households by 2004. However, most city residents continue to have running water for only several hours a day. Veolia Eau, the French utility giant that took over Yerevan's loss-making water and sewerage network in early 2006, now says it will need a decade to end water rationing.

In a report released in March 2004, an ad hoc commission of the Armenian parliament investigating the use of this and other Western infrastructure loans concluded that the water scheme has failed to achieve its objectives due to mismanagement and corruption among government officials and private firms involved in its implementation. Both the government and the World Bank denied the commission's allegations. The scandal died down in the following months only to be revived last August by Bruce Tasker, a Yerevan-based British engineer who had participated in the parliamentary inquiry as an expert. In a series of public pronouncements, Tasker implicated not only Armenian officials and businessmen but also World Bank representatives in Yerevan in the alleged misuse of the loan.

Tasker's allegations were picked up by the Government Accountability Project (GAP), a Washington-based group scrutinizing World Bank projects around the world. It urged the bank's Institutional Integrity Department (INT) to launch an official investigation. INT reportedly told the watchdog that it considers the case a "medium priority," meaning that it is unlikely to be investigated anytime soon.
The World Bank Says:

"Our country office and teams from Washington have disclosed fully all information available on this project to the parliamentary commission ... Based on this information made available back in 2004 and 2005, when this investigation was initiated, there was no evidence of any fraud or mismanagement in this project."

-- World Bank Yerevan office head Aristomene Varoudakis, denying the allegations at an October 4, 2007 news conference



The Other Side Says:

"The fact is it was not an isolated case of a few thousand dollars here or there, it was tens of millions of dollars."

-- Bruce Tasker quoted in the British weekly The Observer on September 30, 2007




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