South Korean President Lee Jae-myung has ordered the suspension of a proposed 700 billion won (US$503 million) infrastructure loan for a bridge-building project in the Philippines due to corruption concerns, even though Manila insists no such agreement was ever signed.
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Seoul’s decision has raised questions about investor confidence in the Philippines, where a sprawling corruption scandal over flood control projects has already shaken public trust.
The optics of a key partner pulling back over corruption fears despite Manila’s denial could prompt greater scrutiny of project financial management in the Philippines from other foreign donors and investors, according to analysts.
Lee said in a social media post on Tuesday that he had immediately “ordered to halt all procedures” related to the investment as the project was “deemed flawed and prone to corruption”.
“Most fortunately, the project has not yet commenced, meaning no funds – including support from the Economic Development Cooperation Fund – have been disbursed,” Lee added, referring to the agency tasked by Seoul to enhance economic cooperation between South Korea and developing countries.
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His post cited a report by South Korean newspaper The Hankyoreh explaining the investment was supposed to be allocated to a “modular bridge project” under the Philippines’ Department of Agrarian Reform, which would have financed the building of 350 modular bridges across the country.
“This decision holds significant meaning, as it prevented the unnecessary waste of a staggering 700 billion won in taxpayer money and preemptively blocked risks that could have led to mismanagement and corruption,” Lee added.