The World Bank recently published a Notice of Uncontested Sanctions Proceedings regarding the debarment of China-based Hunan Zhongge Construction Group Corporation Ltd. (“Hunan Zhongge”). According to the Notice, Hunan Zhongge was debarred from participating in World Bank-financed projects for four years and six months for engaging in corrupt and fraudulent practices with respect to the (1) China Guangxi Laibin Water Environment Project and (2) the China Chongqing Small Towns Water Environment Management Project.
In the Notice, Hunan Zhongge is specifically accused of paying public officials in order to improperly influence decisions on a flood control management civil works contract as part of the Laibin Project and materially impeding a World Bank audit in connection with the Laibin Project. The company is also accused of making misrepresentations and submitting falsified documentation regarding its prior experience and certain required equipment in its bids for various contracts that were part of the Chongqing Project.
According to the World Bank, Hunan Zhongge failed to contest the World Bank’s allegations or the sanction recommended by the World Bank’s Chief Suspension and Debarment Officer (“SDO”), thereby leading to the enactment of the recommended sanction of debarment for four and a half years. The World Bank also emphasized that the length of Hunan Zhongge’s debarment reflected the company’s engagement in both corrupt and fraudulent practices. In addition, the SDO also considered aggravating factors such as “the repeated pattern of Hunan Zhongge’s fraudulent misconduct” and its “interference” with the World Bank’s investigation. The SDO also took into account, as a mitigating factor, the amount of time that had passed since the sanctionable conduct occurred.