People's Republic of Bangladesh Health Sector Development 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. 1 Background The Health Sector Development Program (the “Program”) in the People’s Republic of Bangladesh aimed to enable the government of Bangladesh to strengthen its health systems and improve its health services, particularly for the poor. The Program, which became effective in October 2011 and closed in June 2017, was financed by the International Development Association (“IDA”) and two trust funds. In January 2012, Company X submitted its approximately US$ 2.0 million bid for a Program-financed contract (the “Contract”) to provide medical supplies to an entity within the Ministry of Health and Family Welfare (the “Recipient”). The Contract’s bidding documents required that a bidder provide documentary proof that it had manufactured or satisfactorily supplied two contracts similar to the Contract in the five years prior to the bid opening date. To satisfy this requirement, Company X included with its bid both four purchase orders (the “Purchase Orders”) from Company A and a List of Major Supplies. Allegations & Methodology The World Bank Group Integrity Vice Presidency (“INT”) was informed that Company X’s Purchase Orders were possibly falsified. INT’s investigation consisted of, among other things, a review of Program documents, as well as statements obtained from Company X officials. Findings 1. Evidence indicates that Company X misrepresented its past experience in order to be awarded the Contract. Evidence indicates that Company X’s Business Development Manager (the “Company X BDM”), who was responsible for preparing Company X’s bid for the Contract, falsified the Purchase Orders and the List of Major Supplies. During the bid evaluation process, a subcommittee of the technical evaluation committee (“TEC”) questioned Company X about its past experience. Evidence indicates that, in response, the Company X BDM falsified and signed invoices purportedly representing Company X’s supply to Company A of medical supplies (the “Invoices”). Evidence indicates Company X did not make those claimed shipments of medical supplies to Company A. 3 2. Evidence indicates that Company X underdisclosed the amount of its agent’s commission in its bid for the Contract. In its bid for the contract, Company X claimed that it would pay a commission of approximately US$ 1,000 to its agent (the “Agent”). Evidence indicates that Company X officials, including the Company X BDM and a Company X Partner (“Individual A”), agreed with the Agent to pay a 10 percent commission (approximately US$ 200,000) prior to drafting and signing Company X’s bid. 3. Evidence indicates that the commission Company X offered the Agent may have been used for improper payments to government employees. Evidence indicates that before entering into an agency agreement with the Agent and submitting the bid, the Company X BDM believed that the Agent would use a portion of its 10 percent commission to make improper payments to government employees in order to secure the Contract. Further evidence indicates that Individual A was aware that the Agent may have intended to use a portion of the commission to make improper payments related to Contract procurement process. Evidence indicates that when the TEC had declared Company X’s bid non-responsive as a result of its suspicions about the authenticity of the Purchase Orders, the Company X BDM decided to submit the falsified Invoices to the TEC and the Recipient, in support of Company X’s representation of having supplied the claimed medical supplies to Company A and to undo the non-responsiveness of its bid. Evidence further indicates that, after the Invoices were submitted to the TEC and the Recipient, Company X instructed the Agent to convince the TEC and the Recipient to undo Company X’s non-responsiveness. Evidence indicates that subsequently, before the TEC had overturned Company X’s non- responsiveness, the Agent requested Company X to pay an “extra expense” or additional commission to it, amounting to two percent of the Contract value (approximately US$ 40,000). Evidence indicates that the Company X BDM believed that the Agent was going to use this amount to make improper payments to government employees in order to overturn the decision that declared Company X’s bid as non-responsive. Corrective Actions The World Bank imposed the administrative sanction of debarment with conditional release on the Agent for misconduct in another case. This ineligibility extends to any entity the Agent controls directly or indirectly. The World Bank imposed the administrative sanction of debarment with conditional release on Company X and the Company X BDM. These ineligibilities extend to any entity the sanctioned company or individual control directly or indirectly. 4