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World Bank bans Chinese companies again for financial crimes

Temporarily bars many Chinese companies involved in infrastructure projects in Georgia

, ET Bureau|
Aug 23, 2019, 07.49 AM IST
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In 2018, China Harbour Engineering was publicly accused of offering a bribe to a government official in connection with a highway construction project in Bangladesh.
NEW DELHI: China-funded infrastructure projects in various parts of Asia have recently come under the scanner of the World Bank for alleged gross financial malpractices, and the financial institution has temporarily banned the Chinese companies involved in the projects.

The World Bank debarred China Railway Construction Corporation and its wholly owned subsidiaries, China Railway 23rd Bureau Group Co and China Railway Construction (International), for nine months recently, citing misconduct during the procurement process for the ‘East-West Highway Corridor Improvement Project’ in Georgia. This project is part of China’s mega Belt & Road Initiative (BRI).

These companies have acknowledged that they had misrepresented facts about their personnel, equipment and work experience in the pre-qualification and bidding documents of the highway construction contract. World Bank Procurement Guidelines term such misrepresentation of facts as fraudulent practice. Initially, after nine months’ debarment, the companies would be on the WB watch list for 24 months and would be eligible to participate in World Bank-funded projects as long as they complied with their obligations under the settlement agreement. In 2009, China Communications Construction Co, one of the most active companies in BRI projects, was debarred by the WB for eight years for alleged fraudulent bidding on a highway contract in the Philippines, ET has learnt.

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In 2018, China Harbour Engineering was publicly accused of offering a bribe to a government official in connection with a highway construction project in Bangladesh. The Wall Street Journal reported that Chinese officials had agreed to help bail out Malaysia’s state development fund 1 Malaysia Berhad (1MDB) by inflating cost of infrastructure projects in the Southeast Asian country.

ET has learnt that the Chinese embassies in many countries have been trying to limit the damage, and have been issuing guidelines to Chinese companies operating in those countries. In one such case in the UAE, the Chinese Embassy has asked Chinese enterprises to be aware of local social conditions, customs and abide by relevant laws and regulations, especially in project bidding, contracting and labour rights, ET has learnt. These Chinese companies were asked by the embassy to consciously resist commercial bribery and put an end to illegal employment and attach importance to safety in production and construction work. The enterprises were asked to pay attention to local public opinion, especially media reportage and public concerns related to Chinese projects. Even in Pakistan, public opposition to the China–Pakistan Economic Corridor project and anger against overwhelming Chinese presence have grown sharply since Imran Khan’s government took over. BRI-related projects are facing backlash also in parts of Africa and Europe.

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