The World Bank debarred two big Chinese construction companies that lied about their progress on an energy project in China so they would be paid early.
Shanghai-based China Nuclear Industry Fifth Construction Co., Ltd. (CNF) was debarred for two years.
China Machinery Industry Construction Group, Inc., based in Beijing, was debarred four years.
Both construction companies were working on the $317 million Shandong Energy Efficiency Project. The World Bank committed $150 million to the project.
The debarments make CNF and China Machinery ineligible to participate in World Bank Group-financed projects.
More than 30 other companies affiliated with either CNF or China Machinery were also included in the debarment. One company associated with CNF is in Malaysia and another is in Indonesia. The rest of the affiliates named Thursday are in China.
The World Bank said CNF and its subcontractors, “hoping to receive advance payments, falsified documents that certified aspects of the project were completed and had met quality standards.”
China Machinery sought advance payment by “misrepresenting in falsified documents that work had been completed,” the World Bank said.
CNF and China Machinery also “misrepresented that CNF completed work on two subcontracts that had been subcontracted to a third company.”
The companies committed “fraudulent practices” under the World Bank’s procurement guidelines.
The World Bank said it shortened the debarments because CNF and China Machinery cooperated and took remedial action.
Both debarments announced Thursday qualify for cross-debarment by the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and the African Development Bank.
A list of all World Bank debarred entities and individuals is here.
Richard L. Cassin is the publisher and editor of the FCPA Blog.