World Bank Announces Debarment for Fraudulent and Coercive Practices Relating to a Project in Aceh, Indonesia
February 21, 2014
WASHINGTON, February 21, 2014— The World Bank Group announced the debarment of Mr. Yusri Yusuf, Director of the Keumang Foundation, together with any entity that is an Affiliate directly or indirectly controlled by Mr. Yusuf, for a minimum period of five years in response to allegations of fraudulent and coercive practices under the Aceh Economic Development Financing Facility (EDFF) Project in Indonesia.
Under the debarment, Mr. Yusuf and his Affiliates are declared ineligible (i) to be awarded or otherwise benefit from a Bank-financed contract; (ii) to be nominated as a subcontractor, consultant, manufacturer or supplier, or service provider; and (ii) to receive the proceeds of any loan made by the Bank or participate further in any project or program financed by the Bank, for a period of five years. The World Bank’s decision followed an investigation by its Integrity Vice Presidency revealing evidence that Mr. Yusuf submitted fraudulent expenses and made threats in an effort to have the fraudulent expenses paid. The debarment represents the first sanctions resulting from coercive practices.
“Fraud and corruption represent a major threat to development work particularly when implementing projects in post-disaster and/or post-conflict situations,” said Leonard McCarthy, World Bank Vice President. “The outcome of this investigation and our cooperation with the project team to strengthen fiduciary supervision is a solid demonstration of the World Bank’s anti-corruption efforts in Indonesia and other countries facing similar challenges,” he added.
In parallel to investigating the allegations against Mr. Yusuf and the Keumang Foundation, the World Bank project team worked closely with government counterparts to identify any further indications of fraud or corruptions in other areas of the project. To mitigate the risks of fraud and corruption in such a high-risk project, the team also stepped up its fiduciary supervision and provided technical support on risk prevention to the project implementation unit.
The objectives of the EDFF were to assist the province of Aceh and the local and provincial governments to improve opportunities for private business and private sector jobs, and to continue fostering sustainable equitable long term economic development in Aceh in line with the Government of Aceh’s own plans for economic development.
The debarment qualifies for cross-debarment by other MDBs under the Agreement of Mutual Recognition of Debarments that was signed on April 9, 2010.
About the World Bank Integrity Vice Presidency
The World Bank Integrity Vice Presidency (INT) is responsible for preventing, deterring and investigating allegations of fraud, collusion and corruption in World Bank projects, capitalizing on the experience of a multilingual and highly specialized team of investigators and forensic accountants.
Key results of INT’s work in FY 13 - FY 14 include:
- 81 debarred entities in FY 13-FY 14 to date. Some of these debarments are the result of settlements under which entities are debarred for an agreed upon period of time, with a mitigated sanction, and usually commit to implementing a compliance program and cooperation with the Integrity Vice Presidency. Such entities include the Canadian company SNC-Lavalin and the French and Swiss company Alstom.
- 534 jointly recognized debarments among MDBs that signed the Cross Debarment agreement.
- Building precautions against fraud and corruption in high-risk projects by assiting project teams in identifying red flags during project bidding and implementation. Some of the measures include GPS-stamped photos to verify work undertaken while eliminating fictitious charges that cannot be quantified.
- The World Bank introduced its new App to report fraud and corruption allegations relating to its projects. The new App also complements other tools and information resources to support the detection of fraud and corruption red flags. The World Bank Integrity App is available for the IOS platform through the iTunes store.
- As part of its preventive efforts, INT developed a checklist to prevent the award of contracts tainted by fraud and collusion that is being piloted in post-conflict and fragile states.
- Following Alstom’s acknowledgment of misconduct in relation to a Bank-financed hydropower project in Zambia, the World Bank debarred Alstom Hydro France and Alstom Network Schweiz AG (Switzerland) - in addition to their affiliates - for a period of three years as part of a Negotiated Resolution Agreement between Alstom and the World Bank which also includes a restitution payment by the two companies totaling approximately $9.5 million.
- Training to an International Corruption Hunters Alliance which brings together 175 senior enforcement and anti-corruption officials from 6 regions to sustain momentum into global anti-corruption efforts.
- Cooperation agreements in support of parallel investigations, asset recovery and information sharing with the UK Serious Fraud Office, the European Anti-Fraud Office, Interpol, the Korean Supreme Prosecutor’s Office, the Ethiopian Ethics and Anti-Corruption Commission, the Liberian Anti-Corruption Commission and several other national and international authorities.
- Enhanced preventive training and forensic audits designed to identify and address red flags and integrity controls in World Bank-financed projects.