Republic of Peru

Peru Health Reform Program

         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 2009, the International Bank for Reconstruction and Development (the “Bank”) and the
Republic of Peru (“Peru”) signed the financing agreement for the Peru Health Reform
Program (the “Project”). The Project closed in December 2015.

The Project was the second phase of a three-phase health reform program that aimed to
reduce maternal and infant mortality rates in the nine poorest regions of Peru. The
improvement of family care practices for women and the strengthening of health services
networks, partly through infrastructure improvements in rural health centers, was a central
Project component.

       1. Joint Ventures 1 and 2

In 2009, two companies, Company A and Company B, formed two joint ventures, JV 1
and JV 2, to bid for Project-financed contracts. JV 1 was awarded an approximately US
Dollars (“US$”) 1,250,00 Project-financed contract. JV 2 was awarded an approximately
US$ 1,500,000 Project-financed contract. Company A was designated as the lead partner
for both joint ventures, with Company A’s former owner designated as each joint venture’s
legal representative (the “Legal Representative”).

       2. Company C

Company C was awarded two approximately US$ 150,000 Project-financed contracts, one
to supervise JV 1’s work and the other to supervise JV 2’s work. Pursuant to these
contracts, Company C was required to have supervisors at both worksites.

Allegations & Methodology

Approximately 6 months after contract award, the Project Implementation Unit (“PIU”)
cancelled both of Company C’s contracts citing contractual non-compliance. A few months
later, the PIU rescinded JV 1 and JV 2’s contracts, citing fraudulent practices and
contractual non-compliance. The PIU notified the World Bank that JV 1 had allegedly
submitted a report containing a forged signature. These allegations were reported to INT.

In the course of its investigation, INT conducted interviews with Bank staff, as well as
representatives and employees of Companies A, B, and C. In addition, INT reviewed
relevant Project documents, documents supplied by interviewees, and JV 1 and JV 2 bid
documents.




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Findings


       1. Evidence indicates that JV 1 and JV 2 submitted work validation documents
          with forged signatures from engineers who had never been to the claimed
          work sites and/or never signed any work validation documents.

JV 1 and JV 2 submitted work validation documents, purportedly signed by five engineers,
detailing the progress of their individual projects. Evidence indicates that the five
engineers’ signatures were forged and that they had never actually visited the work sites
purportedly inspected. Evidence indicates that while a sixth engineer had worked on his/her
site for some time, s/he had never signed any work validation documents, which suggests
that documents allegedly bearing his/her signature were forged.

Evidence indicates that the Legal Representative, acting on behalf of the lead partner in
both joint ventures, was involved in putting together the work validation documents that
contained forged signatures. When presented with the results of INT’s investigation, the
Legal Representative offered no explanation for the signatures on the work validation
documents and claimed not to remember what had happened concerning the documents.

       2. Evidence indicates that Company C submitted work validation reports with
          forged signatures, some from supervisors who had never been to the
          claimed contract work sites.

Company C’s contract required that supervisors be present at all of the work sites it was
overseeing. Evidence indicates that Company C submitted signed work validation reports
from these supervisors and expected to be paid for their services. However, the PIU
rescinded Company C’s contracts noting that the PIU had not seen any of Company C’s
required supervisors at any of the work sites. Further, evidence indicates multiple
supervisors’ signatures were forged on various validation documents. Evidence also
indicates that three of the supervisors had never been to the sites they had purportedly
supervised.

In response to INT’s investigation, Company C’s Supervisor Coordinator (the
“Coordinator”) stated that s/he had used the “screen captured” signatures of the supervisors
who had been approved by the PIU and cut-and-pasted them onto the work validation
reports. The Coordinator further said that s/he “consolidated” all of the work validation
reports.

While Company C’s Administrator (the “Administrator”) claimed that the Coordinator was
the one in charge of managing some of the supervisors and processing the work validation
document, s/he conceded that s/he had provided the names of some of the supervisors and
had received electronic versions of the validation reports.

Evidence indicates that the Administrator, despite claims to the contrary, permitted similar
practices and instructed an employee to sign the logbooks attached to the work validation
reports using the images of signatures of three approved supervisors.

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Corrective Actions

The World Bank imposed the sanction of debarment with conditional release on Company
A, the Legal Representative, Company C, the Coordinator, and the Administrator. These
ineligibilities extend to any entity controlled directly or indirectly by the sanctioned
individuals and companies.




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