April 17, 2022

World Bank debars international hydropower equipment manufacturers based in Germany and China

On April 14, 2022, the World Bank Group announced sanctions on German hydropower equipment manufacturer Voith Hydro Holding GMbH & Co. KG (VHZ) and two of its subsidiaries, Germany-based Voith Hydro GmbH & Co. KG (VHH) and China-based Voith Hydro Shanghai Ltd. (VHS), for engaging in improper activities in connection with the Tarbela 4th Extension Hydropower Project (Tarbela 4 Project) in Pakistan and the AFCC2/RI-Regional and Domestic Power Markets Development Project (PMEDE Project) in the Democratic Republic of Congo.  

According to the World Bank, between 2012 and 2016, VHH and VHS engaged in collusive practices in connection with the Tarbela 4 Project by working with a third-party commercial agent to obtain an improper tender advantage from public officials (including by obtaining advance access to confidential information).  VHS also engaged in corrupt practices by making three improper payments to the commercial agent in an effort to obtain a favorable decision from public officials during the execution of its contract.  Separately, in 2012, VHH engaged in a fraudulent practice in connection with the PMEDE Project by failing to disclose in its bid certain payments intended for a commercial agent.  VHZ failed to properly supervise its subsidiaries during the time period in which they were engaging in these activities.

The World Bank stated that VHZ, VHH, and VHS each received reduced periods of debarment for their cooperation with the World Bank and for implementing voluntary remedial actions.  VHS received a 34 month debarment followed by 6 months conditional non-debarment; VHH received a 15 month debarment followed by 6 months conditional non-debarment; and VHZ received 21 months of conditional non-debarment.  Under the settlements, VHS and VHH are ineligible to participate in World Bank projects during their debarment periods and are subject to cross-debarment by other multilateral development banks.  VHZ, VHH, and VHS agreed to pay approximately €1.7 million in restitution to the affected countries and to develop and implement an integrity compliance program that reflects the principles in the World Bank Group Integrity Compliance Guidelines.  Failure to comply with these obligations will result in the companies’ periods of conditional non-debarment converting to additional periods of debarment.  

World Bank Press Release