The European Bank for Reconstruction and Development (EBRD) announced on Tuesday that has imposed a 35-month sanction of the Chinese construction company China Gezhouba Group Company (CGGC) and its 212 subsidiaries, in connection with fraudulent practice relating to the project Corridor VC – Tunnel Prenj in Bosnia and Herzegovina.
The sanction consists of an 11-month debarment followed by a 24-month conditional non-debarment.
Following an investigation by the EBRD Office of the Chief Compliance Officer (OCCO), the debarment makes CGGC and its 212 subsidiaries ineligible to participate in projects and operations financed by the Bank for the duration of the debarment.
This is part of a settlement agreement under which CGGC admits culpability for the underlying prohibited practice and agrees to meet specified corporate compliance conditions in order to be released from the conditional non-debarment.
The project involved the construction of a new section of motorway in central Bosnia and Herzegovina.
According to the findings of the investigation, CGGC misrepresented its prior work experience.
The settlement agreement provides for a reduced period of debarment in light of CGGC’s cooperation during OCCO’s investigation and other mitigating factors.
These include admission of wrongdoing, voluntary restraint from bidding, an internal investigation, as well as engaging a consultant to design an online qualification examination and assessment system.
In response to the findings, CGGC has proactively started to implement measures to enhance its corporate governance and compliance systems to prevent future misconduct.
Following the debarment period, CGGC has agreed to further improve and report on its compliance programme for two years as a condition for release from sanctions.
During this time, CGGC will be eligible to participate in projects and operations financed by the Bank, as long as it complies with its obligations under the settlement agreement, including continued full cooperation with the EBRD.
Otherwise, the conditional non-debarment will convert to a sanction of a 24-month debarment.
The 11-month debarment does not qualify for cross-debarment by other Multilateral Development Banks (MDBs) under the Agreement for Mutual Enforcement of Debarment Decisions that was signed on 9 April 2010, the EBRD statement noted.
(Editing by Anoop Menon) (anoop.menon@lseg.com)
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