China

Integrated Economic Development of Small Towns Project

                                 Redacted Report




                                               March 2020
                                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
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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 Integrated Economic Development of Small Towns Project (the “Project”) in the People’s
Republic of China (“PRC”) is financed by three International Bank for Reconstruction and
Development (the “World Bank”) loans and by additional funding from the Borrower, the PRC.

The Project’s objective is to improve public infrastructure and services to contribute to the sound
development of selected small towns in Guangdong, Gansu, and Hunan Provinces. The Project
became effective in May 2012 and closed in December 2018.

Findings

       Evidence indicates that a company submitted a falsified Letter of Bid Security with
       its bid for a Project contract.

Evidence indicates that a company (“Company A”) bid for a Project contract, submitting a Letter
of Bid Security purportedly issued by a commercial bank (the “Commercial Bank”). The Letter
of Bid Security provided the Project Implementing Unit with an approximately USD 250,000
unconditional and irrevocable guarantee on the validity of the bid and a commitment to perform
upon Contract award. Evidence indicates that the Bid Evaluation Committee recommended
Company A for Contract award.

Evidence indicates that after receiving the notice of Contract award and before the expiration of
the bid validity, Company A withdrew its bid. Evidence indicates that, subsequently, the Project
Implementation Unit tried to encash the bid security but was informed by the Commercial Bank
that the Letter of Bid Security was falsified. Subsequently, the World Bank reported the matter
to INT.

INT reviewed documentation provided by the purported issuing bank. Evidence indicates that
the bid security was falsified. Further, upon questioning by INT, Company A admitted that the
document was falsified.

Corrective Actions

The World Bank imposed the administrative sanction of debarment on Company A.




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