Enforcing Accountability: Italian Company Lotti to pay US$350,000 in restitution to Indonesia after acknowledging fraudulent misconduct in a World Bank-financed project

December 22, 2010

WASHINGTON, December 22, 2010 - The World Bank Group debarred C. Lotti and Associati Societa’ di Ingegneria S.p.A. (Lotti) in the wake of the company’s acknowledged misconduct in a World Bank investigation relating to a Bank-financed public works project in the water sector in Indonesia.


Under the negotiated resolution agreement, Lotti has committed to pay an estimated US$350,000 in restitution to Indonesia, where the World Bank-financed project was being implemented.  This is the first time the World Bank included restitution payment in resolving an investigation into fraud in a Bank-financed project. The restitution amount of US$350,000 represents the unjustified payments received by Lotti as well as its partners as a result of fraudulent invoicing.  


This moves us closer to answering a longstanding call by victim countries to return illicit gains,” said Stephen Zimmermann, Director of Operations World Bank Integrity Vice Presidency (INT).. “It is a major step in mobilizing the commitment of all concerned jurisdictions to step up global enforcement efforts.” 


This is also the first negotiated resolution agreement that is subject to cross-debarment by other multilateral development banks.  In addition, the Lotti investigation is the first negotiated resolution resulting in debarment with conditional release.  As a result, the firm is debarred for a minimum period but can be released from debarment if it demonstrates compliance with certain remedial, corrective and preventive measures such as implementation of an acceptable corporate compliance program and cooperation with the World Bank’s Integrity Vice Presidency’s (INT) investigations. 


‘This case introduces several new elements of the World Bank’s sanctions reforms agenda,” Zimmermann noted.  “The Bank’s efforts to tackle fraud and corruption in development projects are now further reinforced by its commitment to emphasize the deterrent effect of sanctions and the need to encourage companies to rehabilitate and prevent future misconduct.”


As part of the negotiated resolution agreement, Lotti will be declared ineligible for a minimum period of 27 months starting from December 20, 2010  and ending on March 20, 2013 during which time it cannot be awarded a contract or otherwise participate in new activities under World Bank Group-financed or executed  projects. 

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