Republic of Armenia Municipal Water Project Redacted Report February 2016 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. 1 Executive Summary This report provides the findings of an administrative inquiry by the World Bank Group Integrity Vice Presidency (INT) into allegations that Company A may have engaged in misconduct in connection with the Municipal Water Project (the Project) in the Republic of Armenia. The Armenian Water and Sewerage Company was the Project Implementing Unit (PIU). The PIU published bidding documents for a contract financed by the Project (the Contract). Company A submitted its bid for the Contract, which included a Manufacturer’s Authorization Form (the MAF) purportedly issued by Company B, authorizing Company A to supply certain equipment. Evidence indicates that following the bid submission, Company B informed the PIU that: (i) it did not issue the MAF; (ii) it did not authorize Company A to offer its goods for the Contract; and (iii) the signature on the MAF was not authentic, and the title of the signatory on the MAF was incorrect. Subsequently, the PIU rejected Company A’s bid. In response to INT’s inquiry on this matter, Company A acknowledged that the MAF had been forged by one of its employees. The World Bank Group imposed a sanction of debarment with conditional release on Company A, which extends to any legal entity Company A directly or indirectly controls. 2 Background The Municipal Water Project (the Project) in Armenia aimed to support the improvement of the quality and availability of water supply in selected areas serviced by the Armenian Water and Sewerage Company, the Project Implementing Unit (PIU). The Project was financed with an International Bank for Reconstruction and Development (IBRD)1 loan. The PIU published the bidding documents for a contract financed by the Project (the Contract). Company A submitted its bid for the Contract. Its bid included a Manufacturer’s Authorization Form (MAF) purportedly issued by Company B, authorizing Company A to supply certain equipment. Allegations Following bid submission, the PIU attempted to verify the MAF, and Company B informed the PIU that the MAF was false. Consequently, the PIU rejected Company A’s bid. The World Bank Group Integrity Vice Presidency (INT) was informed of the PIU’s correspondence with Company B. Methodology INT’s investigation consisted of, among other things, a review of: (i) Project documents; (ii) information provided to the PIU by Company B; and (iii) Company A’s response to INT’s Show Cause Letter. Findings Evidence indicates that Company A submitted a forged MAF with its bid for the Contract. The bidding documents for the Contract required bidders to submit a MAF to show that they had been authorized by the concerned manufacturer to supply certain equipment. To satisfy this requirement, Company A submitted a MAF purportedly issued by Company B. Evidence indicates that, following bid submission, the PIU contacted Company B to inquire about the validity of the MAF. According to the PIU, Company B informed the PIU that: (i) it did not issue the MAF; (ii) it did not authorize Company A to offer its goods for the Contract; and (iii) the signature on the MAF was not authentic, and the title of the signatory on the MAF was incorrect. After the PIU rejected Company A’s bid, INT issued a Show Cause Letter to Company A, requesting Company A’s response to INT’s findings. In its response, Company A acknowledged that the MAF had been forged by one of its employees. 1 The IBRD is one of the five institutions comprising the World Bank Group. The International Development Association (IDA) and the IBRD constitute the World Bank. The IBRD and the World Bank are used interchangeably throughout this Report. 3 Follow Up Action by the World Bank The World Bank Group imposed a sanction of debarment with conditional release on Company A, which extends to any legal entity Company A directly or indirectly controls. 4