China

Chongqing Urban-Rural Integration Project

                       Redacted Report




                                  March 2020
                            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

The Chongqing Urban-Rural Integration Project (“CURIP”) aims to increase the access of
residents in participating countries and districts to improved public services including
roads, water supply, employment training, and primary healthcare. CURIP became
effective in October 2010, and closed in June 2017. CURIP was financed by the
International Bank for Reconstruction and Development (“IBRD”).

In late 2011, the Project Implementing Unit (“PIU”) awarded a Project contract (the
“Contract”) to a company ( “Company A”). Company A was required to provide the PIU
with a commercial bank-issued performance security that was valid and enforceable until
28 days after the end of the one-year defects liability period. Company A provided, as
required, the performance security. The PIU and Company A signed the approximately
US$ 2 million Contract.

Allegations & Methodology

The World Bank Group Integrity Vice Presidency (“INT”) received an allegation that
Company A submitted a false performance security

INT’s investigation consisted of, among other things, a review of: (i) the CURIP
documents; and (ii) statements provided to the PIU by the purported issuer of Company
A’s performance security (the “Commercial Bank”) (as the Commercial Bank declined to
communicate directly to INT).

Findings

       Evidence indicates that Company A provided the PIU with a fraudulent
       performance security with a false validity date.

Company A was required to provide the PIU with a commercial bank-issued performance
security within 14 days of receipt of the Notice of Contract Award. The performance
security had to be valid and enforceable until 28 days after the end of the one-year defects
liability period.

To satisfy this requirement, Company A provided the PIU with a performance security
purportedly issued by the Commercial Bank to Company A (the “Performance Security”)
in early 2012. Evidence indicates that the Performance Security represented that it was
valid until 28 days after the end of the defects liability period.

Evidence indicates that in early 2013, Company A ceased Contract performance. By
stipulated Contract completion day, evidence indicates that work remained substantially
incomplete. Evidence suggests that, despite several notices from the PIU and the
supervisor, Company A did not resume performance of the required work or provide any
explanation for its cessation of work.

In late 2013, the PIU visited the Commercial Bank to encash the Performance Security.
Evidence indicates that the Commercial Bank told the PIU that the Performance Security
was not authentic. Evidence further indicates that, while the Commercial Bank had issued

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Company A a performance security, it had only been valid until late 2012, and not until the
date claimed on the Performance Security.

Corrective Actions

The World Bank has imposed the administrative sanction of debarment with conditional
release against Company A, extending to any legal entity Company A directly or indirectly
controls.




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