December 6, 2022

World Bank debars South Korea-based IT services company for three years

On December 5, 2022, the World Bank Group announced the three-year debarment of Lotte Data Communications Company Limited (“LDCC”), a global information technology services company based in South Korea, for engaging in “obstructive practices” in connection with the Da Nang Sustainable City Development Project in Vietnam.  
The Da Nang Sustainable City Development Project aims to expand the access Da Nang residents have to wastewater collection and treatment services, public transportation, and roads, and to improve city drainage.  According to the World Bank, for multiple months in 2018, LDCC “materially impeded” the World Bank’s audit of LDCC by preventing World Bank investigators from accessing project-related emails and by “making inaccurate statements to World Bank investigators to prevent them from interviewing LDCC’s key staff members during an on-site audit.”  The World Bank considered LDCC’s actions to be a “serious infraction” of World Bank rules and guidelines, including breaching the World Bank’s contractual rights to inspect and audit LDCC.  

The World Bank stated that LDCC accepted responsibility for the conduct that led to the sanctions.  LDCC received a reduced period of debarment because it accepted responsibility, the sanctionable conduct occurred under prior management, and the company undertook “voluntary remedial action,” including disciplinary action against employees involved in the misconduct.  As a condition of release from debarment, LDCC agreed to develop an integrity compliance program in accordance with World Bank principles and agreed to continue to fully cooperate with World Bank investigators.

World Bank Group Press Release