Global Policy Forum

53 Companies Barred from World Bank Projects


By M. Ziauddin

Karachi Dawn
December 13, 2000

As many as 53 international companies have been banned from participating in the World Bank-aided projects in the recipient countries, including Pakistan, for violating the bank's fraud and corruption provisions of procurement/consultant guidelines. Out of these 53, about 36 belong to the UK, six are from Nigeria, four from the USA, three from Japan, two from Canada, and one each from Uzbekistan and Netherlands.

Most of the companies on the list, which was updated on October 24 this year, have been banned permanently, while one each from Japan, Netherlands and Uzbekistan and two from the US will undergo a temporary ban of three to five years. Sources said if the government of Pakistan could prove beyond any reasonable doubt that the contractors and consultants engaged in putting up private power projects in the country, including Hubco, had in any way indulged in fraud and corruption, the WB was bound to take similar action against them as the required financial cover for these projects comes from the bank's energy window.

The World Bank has, as a policy, decided to declare a firm or an individual ineligible to be awarded a bank-financed contract if it found that the firm or individual had engaged in corrupt or fraudulent practices. Such findings are made through an administrative process that permit the accused firm or individual to respond to the allegations.

According to the relevant excerpts from the 1996 guidelines for procurement under the IBRD loans and the IDA credits, it is the World Bank's policy to require the borrowers, including beneficiaries of bank loans as well as bidders/suppliers/contractors under the bank-financed contracts, to observe the highest standard of ethics during the procurement and execution of such contracts.

For this purpose, the bank has defined "corrupt practices" as the offering, giving, receiving or soliciting of anything of value to influence the action of a public official in the procurement process or in contract execution. The term "fraudulent practice" has been defined by the bank as a misrepresentation of facts to influence a procurement process or the execution of a contract to the detriment of the borrower, and includes collusive practices among bidders (prior to or after bid submission), designed to establish bid prices at artificial, non-competitive levels and to deprive the borrower of the benefits of free and open competition.

The bank will declare a firm ineligible, either indefinitely or for a stated period of time, to be awarded a bank-financed contract if it, at any time, determines that the firm had engaged in corrupt or fraudulent practices in competing for or in executing a bank-financed contract. The findings against the 53 companies were made by the bank through an administrative process that permitted the accused firms and indivi-duals to respond to the allegations

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