Nepal

       Second Health, Nutrition,
Population and HIV/AIDS Project

              Redacted Report




                           July 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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                                      Executive Summary

This report provides the findings of an administrative inquiry by the World Bank Group Integrity
Vice Presidency (“INT”) into allegations of misconduct in connection with the Second Health,
Nutrition, Population and HIV/AIDS Project (the “Project”) in Nepal.

Company X bid for and was awarded multiple Project contracts. Evidence indicates that Company
X submitted falsified financial statements in its bids for two Project contracts. Moreover, evidence
indicates that Company X made improper payments to government employees during the
implementation of the company’s multiple Project contracts.

The World Bank imposed the administrative sanction of debarment with conditional release on
Company X. This sanction extends to any entity Company X directly or indirectly controls.




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Background

In August 2010, the Government of Nepal and the International Development Association entered
into a Financing Agreement for the Second Health, Nutrition, Population and HIV/AIDS Project
(the “Project”). The Project, which closed in January 2016, aimed to increase access to essential
health care services and their utilization by the underserved and the poor.

Company X was awarded multiple contracts under the Project for a total of approximately US$
1.01 million.

Allegations & Methodology

INT received an allegation that Company X submitted falsified documents in two bids under the
Project––Contract A and Contract B.

INT audited Company X, reviewed Project documents, and conducted field missions to Nepal.
INT also interviewed witnesses and verified financial records as part of the investigation.

Findings

   1. Evidence indicates that Company X submitted falsified financial statements in its bids
      for two Project contracts.

Bidders for Contract A and Contract B were required to submit two years of certified copies of
manufacturers’ annual audited financial statements in order to qualify for the contracts.

Company X, as part of a joint venture, bid for and was awarded the approximately US$50,000
Contract A. As required, it submitted audited financial statements from its manufacturer (the
“Manufacturer”). However, evidence indicates that, while the Manufacturer had provided
Company X with its actual audited financial statements, Company X had altered the gross turnover
and gross profit figures contained in these statements prior to bid submission in order to satisfy the
bid requirements.

Similarly, Company X, in a separate joint venture, bid for Contract B. As required, it submitted
audited financial statements purportedly from the Manufacturer. However, evidence indicates that
the Manufacturer did not provide Company X with audited financial statements for Company X’s
Contract B bid, and that the submitted financial statements were falsified. Company X’s bid was
declared non-responsive for Contract B due to non-compliance with the technical requirements of
the procurement.




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   2. Evidence indicates that Company X made improper payments to government employees.

Evidence indicates that Company X made improper payments to government employees during
the implementation of the company’s multiple Project contracts. Specifically, evidence indicates
the payments were intended to facilitate contract execution, inspections and approvals of
extensions of time and extensions of delivery date. Evidence indicates that the payments were
calculated as a percentage of contract amount, varying with each contract.

Corrective Actions

The World Bank imposed the administrative sanction of debarment with conditional release on
Company X. This sanction extends to any entity Company X directly or indirectly controls.




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