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Last Updated: Monday, 29 May 2006, 11:51 GMT 12:51 UK
'Corruption' curbs Cambodia cash
Cambodian fisherman, outskirts of Phnom Penh
Around 75% of Cambodians rely on subsistence farming
Millions of dollars of World Bank funds - set to be paid to projects in Cambodia - have been suspended after corruption was found at the schemes.

The Cambodian government, which doles out the payments, froze the money after the bank uncovered a misuse of funds and irregularities in seven projects.

Cash for three ongoing infrastructure and water sanitation schemes, worth more than $64m, has been stopped.

Another four projects under suspicion, had already been completed.

Repay funds?

In a letter to colleagues, Cambodia's finance minister Keat Chhon said the World Bank had informed him of "irregularities" in the projects and that money may have to be paid back.

"The World Bank has also made it known that the problem is serious and could lead to total cancellation (of the funds), and the government would be forced to refund the World Bank any amount already disbursed under inappropriate contract," Mr Chhon said.

No details of the kind of corruption suspected have been released.

The World Bank said that it could seek repayment of misused money and suspend or close the projects involved.

It added it was looking at ways of improving audits and financial management in the country, as well as focusing on anti-corruption efforts to ensure funds were used to improve life for Cambodians

Foreign donors provide half of the Cambodian government's income and complaints about corruption, and the lack of effort to curb it, are not new.

Last year, the government repaid $2.8m to the World Bank which was allegedly misused in a scheme to demobilize the country's army.

Cambodia is one of the world's poorest nations and according to the Central Intelligence Agency (CIA), 75% of the population is involved in subsistence farming.

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