The World Bank has sanctioned Acres International Limited (Acres), a Canadian company, as a result of corrupt activities related to its Bank financed contract associated with the Lesotho Highlands Water Project (LHWP).
Acres was declared ineligible to receive any new Bank financed contracts for a period of three years. This action is part of the Banks broad anticorruption efforts initiated by President James Wolfensohn in 1996.
The World Banks Sanctions Committee found that Acres engaged in corrupt activities for the purpose of influencing the decision making of the then Chief Executive of the Lesotho Highlands Development Authority (LHDA), the implementing agency for the LHWP. This activity violated the Banks procurement standards.
In making its recommendation of a three-year debarment to Mr. Wolfensohn, the Committee considered a number of mitigating factors, including the fact that Acres had already been ordered to pay a criminal fine by the Lesotho courts and that the relevant persons involved in Acres work on the LHWP are no longer in positions of responsibility in the company.
In 1987 and 1991, Acres received significant contracts on the LHWP to provide technical assistance to the LHDA, the second for just under 17 million US dollar. The Government of Lesotho announced criminal indictments in connection with alleged corruption in the LHWP in July 1999.
Following the announcement of the indictments, the World Banks Department of Institutional Integrity initiated an investigation into those allegations and, in particular, into whether consultants who had received contracts financed by the Bank had engaged in corrupt practices.
At the conclusion of this earlier investigation, the Bank concluded that the evidence was not reasonably sufficient to show that the firm had engaged in corrupt practices and as a result did not sanction Acres at that time, but the Bank reserved the right to reopen the investigation in light of any additional information that might surface, including from the public proceedings in Lesotho.
Following Acres conviction of bribery in September 2002 by the High Court of Lesotho, the Bank reopened its investigation. In August 2003, the Court of Appeal of Lesotho upheld the High Courts decision on one of the two counts of bribery.
Once the indictments were announced in mid-1999, the World Bank provided extensive evidentiary support to the Lesotho prosecutors and made Bank staff available for interviews. The World Bank later assisted the Government by bringing together the Lesotho prosecutors with the various project funding agencies and EU anti-fraud officials.
The Bank has now benefited from the investigative work done by the Lesotho Government in bringing the debarment case against Acres and in reviewing the evidence against others.
The LHWP is a large development project designed principally to transfer water from the Maluti Mountains in eastern and central Lesotho to the Gauteng Province of South Africa. Work on Phase I-A of the project was completed in 1998 at a cost of some 2,6 billion US dollar. Work on Phase I-B is nearing completion and will cost an additional 1,1 billion dollar.
The World Bank disbursed 90 million dollar to finance those elements of the water transfer component that related to detailed design work, construction supervision, project studies and technical assistance to LHDA. Acres was awarded the contract to provide technical assistance to the LHDA.
Since its Sanctions Committee was established in November 1998, the World Bank has declared more than 220 firms and individuals ineligible to be awarded Bank-financed contracts, either permanently or for a limited period of time, and has issued 12 letters of reprimand.
World Bank procurement guidelines and the Sanctions Committee procedures and listings of the reprimands and debarments can be found at: www.worldbank.org/debarr.
The Bank on the Bank
World Bank funds are provided to help developing countries reduce poverty. The Bank has the responsibility to ensure that the loans and credits it extends, and the trust funds that it administers, are used for their intended purposes.
This policy is enforced through a comprehensive array of rules and procedures aimed at ensuring high standards of integrity, transparency, and accountability in Bank-supported projects. The procurement procedures for World Bank-financed projects are monitored by Bank staff to ensure that the process is free from fraudulent practices and corruption.
The World Bank Department of Institutional Integrity (INT) is charged with investigating allegations of fraud and corruption in Bank-financed projects.
The department reports directly to the President of the World Bank and is staffed by a multinational team of more than forty professionals, including investigators, legal specialists, forensic accountants, procurement specialists and experienced Bank project managers. Additional information can be found at www.worldbank.org/integrity
Allegations of fraud and corruption related to World Bank-financed projects can be reported to 1-800-831-0463 24 hours a day and an international AT and T operator with international translation is available. To reverse charges (collect calls) dial 704-556-7046. Reports may be anonymous, and can also be made in person or online at: [email protected]
The sanctions process is an internal administrative process within the World Bank. It provides for due process of all parties involved in a dispute. For more information on procurement and sanctions, see: www.worldbank.org/procure
For more information on the World Banks anti-corruption policies and activities, see: www.worldbank.org/anticorruption
Kilde: www.worldbank.org
