Ukraine

Roads and Safety Improvement Project

                 Redacted Report



                              June 2019
                            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

In April 2009, the International Bank for Reconstruction and Development (“IBRD”) and
the Government of Ukraine signed a Loan Agreement for the Roads and Safety
Improvement Project (the “Project”). The Project received additional funding through a
Trust Fund grant. The Project became effective in September 2009 and closed in November
2014. The Project sought to improve the condition and quality of sections of a national
highway, and to increase road safety throughout Ukraine.

The Project Implementation Unit (the “PIU”) issued bidding documents for a Project
contract (the “Contract”). Company X was awarded the Contract with a price of
approximately US$ 12 million.

Allegations & Methodology

The World Bank Group Integrity Vice Presidency (“INT”) received an allegation that
Company X may have submitted false bank guarantees with its bid for the Contract.

INT’s investigation consisted of, among other steps, a review of Project documents, as well
as a review of documents and statements obtained from Company X and the purported
issuers of a Performance Security and an Advance Payment Guarantee submitted by
Company X (collectively, the “Bank Guarantees”).

Findings

       Evidence indicates that the Bank Guarantees Company X submitted were
       falsified.

The PIU notified Company X that it was awarded the Contract and requested that Company
X furnish a perfomance security. Evidence indicates that in response, Company X
submitted a Performance Security which was purportedly issued by Bank A.

The Contract also required Company X to provide an advance payment guarantee in order
to receive an advance payment from the PIU. Evidence indicates that Company X
submitted an Advance Payment Guarantee purportedly issued by Bank B.

The PIU terminated the Contract due to Company X’s failure to mobilize its resources and
commence work within a reasonable timeframe. To encash the Bank Guarantees, the PIU
contacted both Bank A and Bank B. When contacted, both Bank A and Bank B denied
having issued the Bank Guarantees submitted by Company X.

Corrective Actions

The World Bank imposed the administrative sanction of debarment with conditional
release on Company X. This ineligibility extends to any entity that is directly or indirectly
controlled by the sanctioned company.




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