Chinese company fined Sh1.8b by AfDB for fraudulent practices

The African Development Bank Group (AfDB) has fined a Chinese firm nearly $19 million following admission of fraudulent practices in a project financed by the institution.

It also debarred China First Highway Engineering Co. Ltd (CFHEC) for three years from its projects and said an alliance of international banks could also ban it from their projects.

The bank said following investigations conducted by its Integrity and Anti-Corruption Department (IACD), CFHEC admitted to fraudulent and collusive practices in tendering for an AfDB-financed contract in the Democratic Republic of Congo (DRC).

“As part of the settlement agreement and in accordance with the Bank’s Sanctions Procedures, the AfDB debars CFHEC for a period of three years with conditional release,” the regional multilateral development bank said in a statement released yesterday. “The debarment period may be reduced to 24 months if CFHEC complies with all conditions of the agreement,” it added.

Additionally, the bank has imposed on the company a financial penalty of $18.86 million (Sh1.8b) which flows into the support of projects and initiatives preventing and combating corruption in the Bank’s Member Countries on the African continent.

The AfDB has also reprimanded China Communications Construction Company Ltd. (CCCC), CFHEC’s parent, for one isolated incident of lack of oversight regarding a subsidiary’s bid for an AfDB-financed project.

“CCCC, however, is taking necessary remedial actions to prevent a recurrence of any such type of mistake. Under the settlement agreement, CCCC commits to maintain an effective compliance programme for it and its affiliates and to co-operate with IACD,” the statement added.

According to Anna Bossman, Director of IACD, there is no such thing as ‘too big to sanction’. She said global companies involved in development projects need to ensure that their dealings with the African Development Group are clean. She added that beneficiaries of AfDB-financed contracts have to adhere to the highest ethical standards.

“Corruption and other sanctionable practices result in social pollution and we expect companies found to have engaged in wrongdoing to contribute financially to the clean-up,” Bossman stated.

The bank said in 2012, CFHEC submitted a bid for a contract in the context of the AfDB-financed Batshamba-Tshikapa Road Improvement Project in the DRC.

In an effort to make CFHEC’s project performance experience appear more substantial, the company fraudulently represented that it had been awarded another Bank-financed contract in the past. In addition, CFHEC engaged in a collusive practice by sharing preparation of bids with a competitor.