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23.01.2009 General News

Corrupt Contractors In Trouble

By Daily Guide
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The World Bank has instituted measures to weed out corrupt practices among contractors undertaking its sponsored projects, a release issued by the Bretton Woods institution has said.

The release said the Bank had debarred seven firms and one individual for engaging in collusive practices under a major World Bank-financed roads project in the Philippines. Two of the debarments are permanent, the strongest possible sanction.

The debarments, which prevent the parties from bidding on future World Bank-financed contracts, either indefinitely or for the period of the sanctions, resulted from an in-depth inquiry conducted by the World Bank's Integrity Vice-Presidency (INT).

INT is responsible for investigating allegations of fraud and corruption in Bank-financed operations.

The INT investigation uncovered evidence of a major cartel involving local and international firms bidding on contracts under Phase One of the Philippines National Roads Improvement and Management Programme known as NRIMP I.

The release said INT closely analyzed the procurement process the firms participated in and conducted numerous interviews before closing the investigations and initiating sanction proceedings against the entities.

As a result of swift action when suspicions of collusion in the bidding process were raised by the project team, the World Bank stopped an estimated $33 million from being awarded. No World Bank funds from the NRIMP I project were disbursed to the now-sanctioned firms.

Leonard McCarthy, World Bank Integrity Vice President, said: “This is one of our most important and far-reaching cases, and it highlights the effectiveness of the World Bank's investigative and sanctions process.

 “As the World Bank Group continues to ramp up its anti-corruption work, INT will remain vigilant in investigating allegations and holding wrongdoers accountable,” he added.

Mr McCarthy said INT was in the process of conducting a worldwide review of the Bank's activity in the roads sector.

According to the release the affected firms and lengths of debarments were: E. C. de Luna Construction Corporation and Eduardo C. de Luna, owner and sole proprietor of the firm, were both debarred indefinitely - the first permanent debarments since 2004. China Road and Bridge Corporation was debarred for eight years.

The debarment can be reduced or terminated after five years if the firm puts in place a compliance programme satisfactory to the World Bank. China State Construction Corporation and China Wu Yi Co. Limited were each debarred for six years.

In the case of each firm, the debarment can be reduced or terminated after four years if that firm puts in place a compliance program satisfactory to the World Bank.

China Geo-Engineering Corporation was debarred for five years. The debarment can be reduced or terminated after three years if the firm puts in place a compliance programme satisfactory to the World Bank.

Cavite Ideal International Construction and Development Corporation and CM Pancho Construction Inc were each debarred for four years. In the case of each firm, the debarment can be reduced or terminated after two years if that firm puts in place a compliance programme satisfactory to the World Bank.

Another firm, Dongsung Construction Company Limited (Dongsung) was separately debarred in August 2008 for four years for fraudulent and corrupt practices in relation to the NRIMP 1 case, with the debarment subject to reduction or termination after two years if the firm puts in place a compliance programme satisfactory to the World Bank.

The sanctioned entities will have their names listed on the World Bank's website for the full extent of the sanctioned period and will be ineligible to bid on World Bank Group contracts during this period. James Adams, World Bank Vice President for East Asia; said: “Misuse of public money is a problem for everyone. It deprives the poorest people of the development funds that are so vitally needed and it undermines public confidence in public and private institutions.”

Based on INT investigations, the World Bank has since 1999 debarred 351 firms and individuals for their involvement in fraud and corruption in the Bank's-financed projects.

By Felix Dela Klutse

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