The World Bank Wednesday debarred a Chinese state-owned engineering and construction company and two subsidiaries for “fraudulent practices” involving a project in Georgia.
China Railway Construction Corporation Ltd. (CRCC), and its wholly-owned subsidiaries, China Railway 23rd Bureau Group Co., Ltd. (CR23) and China Railway Construction Corporation (International) Limited (CRCC International), were debarred for nine months.
The debarment is part of a settlement with the three companies related to misconduct during the procurement process for a highway construction contract, the World Bank said.
The debarment also extends to the parent company’s 730 controlled affiliates. During the debarment, CRCC, CR23, and CRCC International, and the 730 affiliates are ineligible to participate in World Bank-financed projects.
The settlement excludes China Railway 20th Bureau Group Co. and its controlled affiliates, which were subject to a separate settlement agreement with the World Bank in 2017.
The $164 million East-West Highway Corridor Improvement Project was designed to reduce road user costs along a highway corridor section in Georgia and to strengthen the capacity of the roads department to manage the road network, the World Bank said.
During the prequalification and bidding process for a highway construction contract, the three companies misrepresented the personnel and equipment of CR23, and falsely attributed the experience of other entities in the group to CRCC. According to the World Bank procurement guidelines, those actions are considered fraudulent practices.
CRCC is listed on both the Shanghai and Hong Kong stock exchanges and ranked 58 on the Fortune Global 500 in 2018, according to its website.
In the settlement agreement, CRCC, CR23, and CRCC International acknowledged responsibility, made voluntary remedial and corrective actions, and cooperated with the World Bank.
The three companies committed to developing an integrity compliance program consistent with the principles set out in the World Bank Group Integrity Compliance Guidelines and to continue fully cooperating with the World Bank Group Integrity Vice Presidency.
The nine-month debarment is not eligible for cross debarment by other development banks. To be eligible for cross debarment, the duration must be more than a year.
Following their nine-month debarment, the three companies and the 730 controlled affiliates will be conditionally non-debarred for 24 months. They will be eligible to participate in World Bank-financed projects during that time if they comply with Wednesday’s settlement agreement.
A list of all World Bank debarred entities and individuals is here.
Harry Cassin is the publisher and editor of the FCPA Blog.