WASHINGTON, July 19, 2018— The World Bank Group today announced the two-year debarment of Shanghai-based China Nuclear Industry Fifth Construction Co., Ltd. (CNF), an infrastructure construction company that provides power and electrical engineering services, and the four-year debarment of China Machinery Industry Construction Group, Inc. (China Machinery), a construction company, in connection with fraudulent practices as part of the Shandong Energy Efficiency Project in China.
The debarments make CNF and China Machinery ineligible to participate in World Bank Group-financed projects. They are part of settlement agreements, under which the companies acknowledge responsibility for the underlying sanctionable practices and agree to meet specified corporate compliance conditions as a condition for release from debarment.
The project was designed to improve energy efficiency in selected enterprises, particularly in the industrial sector of the Shandong Province, and increase the use of biomass for power and heat generation. According to the facts of the case, CNF and its sub-contractors, hoping to receive advance payments, falsified documents that certified aspects of the project were completed and had met quality standards. China Machinery also sought to receive advance payment by misrepresenting in falsified documents that work had been completed. This is a fraudulent practice under World Bank Group procurement guidelines. Both CNF and China Machinery also misrepresented that CNF completed work on two subcontracts that had in fact been subcontracted to a third company.
The settlement agreements provide for reduced periods of debarment in light of the companies’ cooperation and voluntary remedial actions. As a condition for release from sanction under the terms of the settlement agreement, the companies commit to developing an integrity compliance program consistent with the principles set out in the World Bank Group Integrity Compliance Guidelines. The companies also commit to continuing to fully cooperate with the World Bank Group Integrity Vice Presidency.
The debarments of CNF and China Machinery qualify for cross-debarment by other multilateral development banks (MDBs) under the Agreement for Mutual Enforcement of Debarment Decisions that was signed on April 9, 2010.