Lao People’s Democratic Republic

                    Road Sector 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
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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 2010, the International Development Association (the “Bank”) and the Lao People’s
Democratic Republic (the “Recipient”) signed a financing agreement (the “Financing Agreement”)
for the Road Sector Project (the “Project”). In May 2010, the Bank, acting as administrator of a
trust fund grant, and the Recipient signed a grant agreement to co-finance the Project. The Project
became effective in June 2010 and closed in September 2017.

The Project sought to (1) improve road services on two main national corridors and the provincial
road network; (2) rehabilitate roads damaged by Typhoon Ketsana; and (3) establish and
operationalize a contingency fund for quick disaster response in the road sector. The Project
consisted of three parts: (1) road network improvement and preservation; (2) institutional
strengthening; and (3) disaster recovery and contingency. The Project was designed to strengthen
the institutional capacity of the transport sector by improving strategic transport sector
management and planning capacity, and by improving strategic local road development and
management capacity.

An association of Company A, as lead partner, and Company B submitted a proposal for a Project
contract (the “Contract”), signed by a Company A Director (“Director A”). The Association was
awarded the approximately USD 350,000 Contract. A Company A Project Manager (“Project
Manager A”) was also involved in the procurement process, including discussions with a member
of the Project Implementation Unit (“Government Employee X”).

Allegations & Methodology

INT received an allegation that Company A engaged in misconduct under the Project.

INT audited Company A and Company B and interviewed witnesses.

Findings

       Evidence Indicates that Company A, through Company B, Gave a Vehicle to
       Government Employee X.

Evidence indicates that in a meeting with Government Employee X, Project Manager A, acting on
behalf of Company A, agreed to purchase a vehicle to be used by the Contract team during Contract
execution, with the promise that at Contract conclusion the vehicle would be transferred to
Government Employee X for his/her private use. Evidence indicates that, after this meeting,
Project Manager A revised the projected Contract budget to allocate sufficient funds to purchase
the vehicle, allocating over twice as much as the initial budget estimates for vehicle and other
related costs.

Evidence indicates that, shortly thereafter, Company A signed its Consortium Agreement with
Company B (“Consortium Agreement”). Evidence indicates that Company B would provide a
vehicle during Contract execution. Evidence indicates that, upon Contract completion, the vehicle



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was delivered to a government employee working under the same ministry as Government
Employee X.

In their responses to INT’s administrative inquiry, Company A, Director A, and Project Manager
A maintained that Company A did not promise and did not give a vehicle to Government Employee
X. They characterized Company A’s agreement with Company B as providing a service, not just
a vehicle, on account of Company B being responsible for paying any and all costs associated with
the vehicle. Nonetheless, evidence indicates that Project Manager A arranged to provide a car to
Government Employee X with the subsequent knowledge and approval of Director A.

Corrective Actions

The World Bank imposed the administrative sanction of debarment with conditional release on
Company A and the administrative sanction of debarment on Director A and Project Manager A.
These sanctions extend to any entity controlled directly or indirectly by Company A or the two
individuals.

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




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