MANILA, Philippines - Three Philippine construction companies and the owner of one firm have remained on the World Bank's blacklist for alleged fraud and corruption.
The international lender updated on Friday its list of debarred companies and individuals worldwide, with 45 more blacklisted after year-long anti-corruption investigations.
C.M. Pancho Construction Inc., Cavite Ideal International Construction and Development Corp., and E.C. De Luna Construction Corp. were accused by the institution's anti-fraud watchdog in January last year of forming a cartel to secure a major WB-financed roads project in the Philippines.
The trio, including E.C. De Luna owner Eduardo de Luna, were found to have violated the WB's Procurement Guidelines 1.15(a)(ii) pertaining to fraud in connection with the bank-funded National Roads Improvement and Management Program 1.
"'Fraudulent practice' means a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the Borrower, and includes collusive practices among bidders... designed to establish bid prices at artificial, non-competitive levels and to deprive the Borrower of the benefits of free and open competition," according to the WB.
The bank indefinitely blacklisted E.C. de Luna and its owner, the first permanent debarments since 2004.
C.M. Pancho and Cavite Ideal, meanwhile, were debarred for 4 years each. They are banned from taking part in WB-funded projects until January 12, 2013.
"The debarment can be reduced or terminated after two years if that firm puts in place a compliance program satisfactory to the World Bank," the international lender said in a press statement.
“Misuse of public money is a problem for everyone. It deprives the poorest people of the development funds that are so vitally needed and it undermines public confidence in public and private institutions," said James Adams, World Bank vice-president for East Asia.
"This case shows our processes working as they should: we detected the possibility of collusion early, we took action to investigate, we worked with the Government of the Philippines to strengthen anti-corruption controls in the next phase of the project and after an extensive and fair process, we have sanctioned the parties involved."
The debarment, however, has not prevented C.M. Pancho and Cavite Ideal from joining the bidding for other infrastructure projects.
The two companies have tendered bids for a P706-million Plaridel Bypass Road project in Bulacan that is being co-financed by the Japanese government, according to the Manila Standard.
Bank cleans house
The WB has debarred 406 firms, individuals, and non-governmental organizations since since 1999.
"The firms and individuals... are ineligible to be awarded a World Bank-financed contract for the periods indicated because they were found to have violated the fraud and corruption provisions of the Procurement Guidelines or the Consultants Guidelines. These findings were made through an administrative process that permitted the accused firms and individuals to respond to the allegations," the international lender states in its website.
Aside from placing 45 more erring companies and individuals on its blacklist this year, the bank referred 32 cases to governments and anticorruption agencies for follow-up action.
It also signed a cross-debarment agreement with other similar instutitions such as the Asian Development Bank, the African Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank.
“The results of the last two years speak volumes about the World Bank Group’s commitment to ensuring that project funds reach their intended beneficiaries. I anticipate that the next two years will even be more challenging and rewarding,” said Leonard McCarthy, the bank's Integrity vice-president.
The bank anti-corruption watchdog's Preventive Services Unit (PSU) had been focusing on finding ways to foresee problems involving high-risk projects worldwide.
The PSU reviewed risks in two particularly vulnerable sectors: the road sector and community-development projects.
It also trained 1,200 people within and outside the financial institution on prevention and integrity risk mitigation measures.
The PSU and the WB's other units have developed new advisory tools to safeguard funds intended for development programs. The tools include a handbook on fraud and corruption risks and a red-flags manual.
“As we further ramp up our operations, we must continue to assure donors and client governments that we are responsible stewards of scarce development funds,” said World Bank Group President Robert Zoellick. “Working with governments, the private sector, and other international institutions, our governance and anti-corruption efforts can also help restore the public’s trust in financial institutions and markets.”