Kingdom of Cambodia

Provincial and Peri-Urban Water Supply and Sanitation Project

                                        Redacted Report




                                                      March 2018
                                Statement of Use and Limitations

This Report was prepared by the World Bank Group (the WBG) Integrity Vice Presidency (INT).
It provides the findings of an INT administrative inquiry (the Investigation) into allegations of
corrupt, fraudulent, collusive, and/or coercive practices, as defined by the WBG for purposes of
its own policies, rules and procedures (the WBG’s Framework regarding Anti-corruption), in
relation to the WBG-supported activities. The purpose of the Investigation was to allow the WBG
to determine if the WBG’s Framework regarding Anti-corruption has been violated.

This Report is being shared to ensure that its recipients are aware of the results of the INT
Investigation. However, in view of the specific and limited purpose of the Investigation underlying
this Report, this Report should not be used as the sole basis for initiating any administrative,
criminal, or civil proceedings. Moreover, this Report should not be cited or otherwise referred to
in the course of any investigation, in any investigation reports, or in any administrative, civil, or
criminal proceedings.

This Report is provided without prejudice to the privileges and immunities conferred on the
institutions comprising the WBG and their officers and employees by their respective constituent
documents and any other applicable sources of law. The WBG reserves the right to invoke its
privileges and immunities, including at any time during the course of an investigation or a
subsequent judicial, administrative or other proceeding pursued in connection with this matter.
The WBG’s privileges and immunities cannot be waived without the prior express written
authorization of the WBG.




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Background

The Provincial and Peri-Urban Water Supply and Sanitation Project (PPWSSP) aimed to assist the
Government of Cambodia in expanding water supply infrastructure, improving sanitation
conditions in communities across Cambodia, and providing related technical assistance in the form
of, among other things, construction management and supervision. PPWSSP was financed by the
International Development Association (IDA).1 PPWSSP was implemented by the Cambodian
Ministry of Industry, Mines and Energy (MIME) and the Phnom Penh Water Supply Authority.
PPWSSP became effective in November 2003 and closed in June 2011.

A joint venture of Company A and Company B (the JV) was awarded seven contracts under
PPWSSP (the Contracts).

Allegations

The World Bank Group Integrity Vice Presidency (INT) received an allegation that the JV made
improper payments to government employees to be awarded the Contracts.

Methodology

INT’s investigation consisted of, among other steps, a review of the PPWSSP documents, as well
as documents and statements obtained from Company A and Company B.

Findings

Evidence indicates that the JV made improper payments to government employees in
connection with the Contracts.

Evidence indicates that Company A, through a representative (Company A representative), made
improper payments to government employees after the JV was awarded the first four of the
Contracts. Evidence also indicates that Company A representative made additional improper
payments to government employees after the award of the other three of the Contracts. Evidence
indicates that these payments were recorded in Company A’s financial accounts as
“miscellaneous” expenses, “entertainment” expenses, or “other expenses.”

Evidence indicates that Company A representative, acting on behalf of Company A, paid bribes
called “success fees” to government employees. Evidence also indicates that the bribe amount for
each contract was negotiated after the contract was awarded. Evidence further indicates that
Company A used service suppliers to create fabricated receipts to account for the bribe payments
in the company’s financial records.

Evidence indicates that Company B provided funds, which were eventually used by Company A
representative to make the payments to the government employees. Company B’s principal

1
  IDA is one of the five institutions comprising the World Bank Group. The International Bank for Reconstruction
and Development (IBRD) and IDA constitute the World Bank. IDA and the World Bank are used interchangeably
throughout this Report.

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claimed no specific knowledge of the payments to government employees. Instead, s/he stated
that s/he knew that payments were made to someone, and approved the use of three to five percent
of the contract values for such payments. Evidence further indicates that Company B’s principal
reviewed Company A’s monthly financial records, and discussed the amounts of “entertainment”
fees contained in the monthly reports with Company A.

Follow Up Action by the World Bank

The World Bank Group imposed a sanction of debarment with conditional release on Company A,
Company A representative, and Company B. The ineligibility extends to any legal entity directly
or indirectly controlled by Company A, Company A representative, or Company B.




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