And they beg the question… Did the respective international firm know what their far flung “affiliates” in the “global network” were doing?
The central bank of Tajikistan was able to guarantee lending to the country’s troubled cotton sector in part because of a failure by accountants at PwC to spot that such central bank pledging was occurring, the International Monetary Fund has claimed.
Last week, the IMF ordered Tajikistan to repay $47.4m (€30.35m, £23.32m) of loans for breaching its reporting rules, a sanction that could threaten both the financial solidity and reputation of what is already central Asia’s poorest country. Mohsin Khan, director of the IMF’s Middle East and Central Asia Department, told the FT that Tajikistan’s misreporting occurred “over a number of years” but the IMF continued to support the country because “we were totally unaware of this”.
He added: “The question is why we didn’t catch it. We were shown the balance sheet of the national bank and it had unqualified reports from PwC in Rotterdam. PwC told us that these accounts were fine so we took them at face value. For several years we were just going by the audits…”
WB refutes media reports
The World Bank (WB) has refuted media reports which claimed that prior approval was not sought from it for the release of payment to KPMG, the consulting firm in a WB-funded financial sector restructuring programme implemented by the Nepal Rastra Bank (NRB). “World Bank procedures do not require prior clearance by us for payments made against contract conditions agreed between the implementing agency in this case Nepal Rastra Bank – and the firm it hired for consulting services,” the World Bank said in a press statement released Thursday, adding that execution of contracts is the responsibility of the contracting party and payments are governed by the terms and conditions of the contract.
The Bank further said it reimbursed this contract payment of US$52,538.32 on November 8, 2006 to NRB.
“The World Bank made this payment from a grant window. Our technical experts found that the work done by the consulting firm was satisfactorily carried out against the terms of their contract,” the release added.
KPMG, Sri Lanka, was the consulting firm in the World Bank-funded project. But when it failed to sent seven consultants as stated in the agreement, NRB had unilaterally terminated the agreement with it.
The Supreme Court on Tuesday convicted suspended NRB Governor Bijaya Nath Bhattarai and Executive Director Surendra Pradhan of corruption while handing the project and slapped Rs 34,49970 fine on them.
The Commission for Investigation of Abuse of Authority (CIAA) had filed a case accusing the two of embezzling US$ 51,538 as they had not taken immediate action against KPMG for failing to turn up as per the agreement and because of which NRB was deprived of the benefits of financial sector restructuring project. They were also accused of not claiming compensation from KPMG after terminating the agreement…