Republic of Yemen Civil Service Modernization 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. 1 Background The Civil Service Modernization Project (the Project) in Yemen sought to support the Government of Yemen (the Borrower) in creating capacity, and putting in place institutions and systems, for sustained and improved utilization of human and financial resources. Objectives included the development of core personnel and financial management systems in order to establish a mechanism to reduce the number of unqualified civil servants across all ministries. The Project was financed by the International Development Association (IDA)1 and trust funds. The Project became effective in November 2000 and closed in June 2010. The Project Implementation Unit (PIU) was responsible for the implementation of the Project, including financial management, procurement, disbursement, and management functions. The PIU Director for much of the Project was Mr. E, who at the time held a second post, in violation of the World Bank’s Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits by World Bank Borrowers (January 1999) policy. From 2001 to 2009, the PIU procured several technical assistance consultancies for the design and implementation of core personnel and financial management systems. Fourteen Project contracts were awarded to four consultants, Consultants A, B, C, and D. Allegations The World Bank Group Integrity Vice Presidency (INT) received allegations that Consultant A simultaneously worked for the World Bank as a Consultant on the Project and for the Borrower, and that Consultant A financially benefited from steering contracts to him/herself and employees of his/her company, Company A. Methodology INT’s investigation consisted of a review of relevant procurement and contract documents and interviews of all relevant parties. Findings 1. Evidence indicates that PIU officials misrepresented to the World Bank that ten consultancy contracts were competitively awarded when, in fact, they were not. First, evidence indicates that proposals submitted by competitors for the contracts were not on file. Evidence indicates that, during a three-year period, PIU officials submitted documentation to the World Bank containing false information that ten technical assistance consultancy contracts for Consultants A, B, C, and D were awarded based on competitive selection processes, although they failed to provide any documentary evidence supporting this claim. Second, evidence indicates that invitation letters were not sent to competitors for the contracts. INT contacted eight of 11 losing bidders, who confirmed that they did not receive letters of 1 IDA is one of 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. 3 invitation, did not submit curriculum vitae (CVs) or proposals to compete as individual consultants, nor did they authorize anyone to submit their CVs as individual consultants for the Project.2 When confronted with this issue, PIU officials confirmed that letters of invitation were not sent to competitors for the contracts. Additionally, they confirmed that the ten contracts were preselected on a non-competitive basis by a World Bank staff member, Project component coordinators, the PIU Director, and Consultants A and B. Third, evidence indicates that the Bid Evaluation Reports were not drafted by the PIU. According to PIU officials, evaluation reports were drafted for the PIU by Consultant A and another World Bank staff member, and were then provided to committee members for signature. PIU officials related that the award of consultant contracts should have been designated as Single Source selections but they presented them as competitive procurements based on instructions from the PIU Director, a World Bank staff member, and Consultant A. 2. Evidence indicates that Consultants A and B provided CVs of unwitting competitors to the PIU. Consultants A and B claimed that they submitted CVs of consultants in response to a PIU official and a World Bank staff member’s request to expand the PIU consultancy applicant pool, and that they were unaware that the PIU would use the CVs in evaluations for which they would themselves be competing. However, Consultant A confirmed that s/he submitted CVs of competitors to the PIU without authorization from competitors. Similarly, Consultant B confirmed that s/he submitted CVs for three of his/her five competitors, but only after having non-contract specific discussions with them about opportunities in Yemen. INT contacted two of his/her competitors who confirmed that they never spoke with Consultant B about contracts in Yemen nor had they authorized him/her to submit CVs in their names. In addition, Consultant A and B’s assertions were contradicted by a PIU official. PIU officials, a World Bank staff member, and Consultants A and B confirmed that Consultants A and/or B recommended Consultants D and C for contracts. According to a PIU official and Consultant B, Consultant B provided CVs for Consultants D, C, and their respective competitors, with full knowledge that the CVs were to be used in the same competitions. While Consultants A and B claimed they were not involved in the misrepresentation of competitive processes, evidence indicates that two PIU officials confirmed that Consultant A, with a World Bank staff member and the PIU Director, preselected Consultants C and D’s consultant contracts in a non-competitive manner. While INT confirmed that none of Consultant C’s competitors applied for consultant contracts in Yemen, INT could not confirm that Consultant C was aware of Consultant B’s submission of the CVs or the non-competitive nature of his/her consultancy award. Follow Up Action by the World Bank The World Bank imposed sanctions on Company A, Consultant A, and Consultant B, which extend to any legal entities directly or indirectly controlled by Company A, Consultant A, or Consultant B. 2 Two competitors were not contacted by INT because they are co-workers of Consultant A and B at Company A. The third competitor could not be reached by INT. 4