World Bank Bans Chinese Firms Due to Bid-Rigging Allegations

WASHINGTON -- The World Bank said on Wednesday that it barred seven firms, including China State Construction Corp., from bidding on future contracts for their alleged effort to rig bids to in a major road construction project in the Philippines.

The project, which ran between 2000 and 2007, built asphalt-paved routes between cities in the Philippines. The project was partly financed by a $150 million World Bank loan with additional funding from the Philippine government and other donors. The World Bank said that after its project team suspected collusion, it halted about $33 million in contracts from being awarded. No World Bank funds from the project were dispersed from the firms it barred, the Bank said.

China State Construction was suspected as being at the center of the bid-rigging scheme. From 2003 to 2006, the World Bank rejected three successive rounds of bidding involving the firm because of its concerns, although China State went on to win other road-building contracts in the Philippines as part of a consortium with several other Chinese firms.

Late Wednesday, the World Bank said it was barring China State Construction and China Wu Yi Co. Ltd for bidding on World Bank-finance contracts for six years, although the debarment could end after four years if the firms establish a compliance program that meets World Bank standards.

E.C. de Luna Construction Corp., in the Philippines and its owner Eduardo C. de Luna were permanently barred from bidding, the first time the World Bank has taken such a step since 2004. They were considered at the heart of the collusion.

Four other firms were barred for bidding on World Bank contracts for different lengths of time -- and all could be reinstated earlier if they also established a suitable compliance program, the World Bank said. They include China Road and Bridge Corp, which was debarred for eight years, with the possibility of reinstatement after five years. China Geo-Engineering Corp. was debarred for five years, with the possibility of bidding again after three years.

Cavite Ideal International Construction and Development Corp. and CM Pancho Construction Inc., both of the Philippines were barred from bidding on World Bank contracts for four years, but could be reinstated after two years.

Earlier, in August 2008, the World Bank barred Dongsung Construction Co. Ltd., of South Korea, for four years, which could be reduced to a two year suspension.

All the firms suspended by the World Bank had contested the debarment, but lost their appeals at the bank's sanctions board, composed of World Bank officials and legal experts from outside the bank

Leonard McCarthy, the World Bank's anti-corruption chief, said the World Bank actions "highlights the effectiveness of the World Bank's investigative and sanctions process."

The road-building loan had been controversial at World Bank headquarters too. In October 2007, the bank's governing board blocked a loan for another Philippine road project because it was concerned that World Bank President Robert Zoellick hadn't been briefed sufficiently. The board approved the $232 million loan in May 2008 after it a number of anti-corruption provisions were strengthened.


No comments: