Kenya

Water and Sanitation Service Improvement Project
                           – Additional Financing

                           Redacted Report




                                       November 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
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Background

In June 2008, the International Development Association (“IDA”) and the Republic of Kenya
signed a Financing Agreement for the Kenya Water and Sanitation Services Improvement Project
(the “Project”). In June 2012, IDA and the Republic of Kenya signed another Financing
Agreement for additional credit and restructuring (the “Additional Financing”). The Additional
Financing became effective in December 2012. The Project aims to: (i) increase access to reliable,
affordable and sustainable water supply and sanitation services; and (ii) to improve the water and
wastewater services in selected areas.

A company (the “Company”) bid for three lots of a Project contract.

Allegations & Methodology

INT received allegations that the Company had provided fraudulent Manufacturer’s Authorization
Letters. INT’s investigation included a review of the Company’s Project contract bids, and follow-
up inquiries.

Findings

       Evidence indicates that the Company submitted falsified Manufacturer’s Authorization
       Letters.

To qualify for the supply contracts at issue, bidders had to submit Manufacturer’s Authorization
Letters (“MALs”). MALs demonstrate that a bidder was duly authorized by the manufacturer or
producer to supply the requested goods in Kenya.

The Company submitted three MALs with its bids. Evidence indicates that at least two of these
MALs were falsified.

For the first MAL, evidence indicates that the alleged manufacturer did not issue the MAL to the
Company. Evidence indicates that the manufacturer had issued MALs to three other bidders,
which were submitted in their bids to the evaluating authority. Evidence indicates that the
Company’s MAL was an accurate reproduction of these MALs—e.g., it had the same signatory—
suggesting that the Company had access to a copy of a legitimate MAL.

For the second MAL, evidence indicates that: (i) the MAL’s signatory had never worked for the
alleged issuer; (ii) the alleged issuer is not, in fact, a manufacturer and therefore does not issue
MALs at all; and (iii) the alleged issuer has no knowledge of, nor had it conducted any business
with, the Company, or the Company’s directors or employees.

Corrective Actions

The World Bank has imposed administrative the sanction of debarment with conditional release
on the Company, extending to any legal entity the Company directly or indirectly controls.


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