Agreement For Mutual Enforcement Of Debarment Decisions That Was Signed On April 9 2010
China Railway First Group Co. Ltd. (“CRFG”), a Chinese state-owned construction company, was blocked for two years in connection with fraudulent practices while working on a World Bank-funded hydroelectric project in Pakistan. [i] CRFG admitted to making several false submissions during the tendering process for the Dasu Hydropwer project, including non-disclosure of subcontracting. As the blockage is more than a year old, the CRFG is faced with reciprocal unlocking operations by the other MDBs who have signed the agreement on the mutual application of longshore decisions (“Cross Debarment”). (ii) The recent restrictions imposed by the World Bank on contractors underscore the need for institutions operating under the Multilateral Development Bank (MDB) contracts to implement effective strategies to curb the financing of corruption grounds and to prepare to defend against MDB`s storage and auditing operations. China Railway First Group Co. Ltd., PT. Suburo Jayana Indah Corp.
and Aqualia Intech S.A. are among the companies that have recently blocked MDBs. Each company resigned itself to the World Bank, agreed to be excluded and to recognize responsibility for the underlying sanctionable behaviour, and committed to take certain compliance measures as a precondition for the release exemption. With experienced advice from consultants who understand the expectations of the MDB`s anti-corruption authorities – both for project financing and for the defence of sanctions – companies involved in MDB-funded projects minimise the risk that they will be subject to enforcement action by the MDB, and perhaps cross-decon and referral of behaviour to national authorities. In order to protect expected returns, we advise companies working on MDB-funded projects to consult at an early stage to address the risks associated with such work. Finally, the Spanish company Aqualia Intech S.A. (“AISA”) was blocked for a year in Colombia for the World Bank-funded rio Bogota environmental recovery and flood prevention project in Colombia. [iv] AISA admitted that it misrepresced the composition and role of a consortium of three companies it had proposed for the execution of a contract with the World Bank. As the start period of AISA does not exceed one year, AISA is not exempt from a cross-baring by other MDBs. Cross debarment is a procedure put in place by five multilateral development banks – the African Development Bank Group (afDB), the Asian Development Bank (IBC), the European Bank for Reconstruction and Development (EBRD), the Inter-American Development Bank (IADB) and the World Bank Group (WB) – to apply their measures of detachment against four harmonised practices. Fraud, coercion and collusion. As a result, companies and individuals who have been excluded from one of these banks could be sanctioned by other banks for the same fault.
This procedure was established by the Agreement on mutual enforcement of longshore decisions (CI-APRÈS AMEDD), signed by these multilateral development banks in Luxembourg on 9 April 2010. [ii] On 9 April 2010, Asian Development Bank Group, African Development Bank, European Bank for Reconstruction and Development, the Inter-American Development Bank Group and the World Bank Group signed the agreement on the mutual implementation of longshore decisions. An unlocking decision is permitted for cross-sectional information when it applies (1) for fraud, corruption, collusion or coercion (we note that obstruction is a practice of sanctioning all signatories, but is not eligible for confinement); (2) is public; (3) unlocking exceeds one year; and (4) is not based on a decision of a national authority or other international authority.