China’s Four Companies Included In The World Bank Blacklist

By Himfr Paul

March 3, 2010, the Vietnamese government announced that China State Construction Engineering Corporation (the “China State Construction Company”) in Ho Chi Minh City, a project was suspended. The project is aided by the World Bank, the contract amount 85 million U.S. dollars (about 580 million yuan), the implementation period of 3 years, is nearing completion.

Outsourcing operations in Vietnam over 20 years in the construction company, a good local reputation. But then one thing in the Philippines, has affected the company in the construction business in Vietnam.

For the four Chinese companies, the World Bank’s specific rulings are as follows: China Road and Bridge Group is prohibited from bidding in 8 years (if performed well, after lifting the ban will be in 5 years or reduce the sanctions); China State Construction Engineering Corporation and Wuyi Company 6 years were barred from bidding (if good, will be lifted after 4 years or reduce the sanctions); China Geo-Engineering Corporation five years are prohibited from tendering (if performed well, 3 years or reduce the sanctions will be lifted).

“We have a rigorous evaluation determined mechanism, by increasing the transparency of financial management, strengthen tax and customs administration and other methods and means, and actively combat corruption effectively and to help local government to improve services and economic regulatory mechanisms.” World Bank China Office Ye Ying, director of procurement in the acceptance of “Financial State Weekly” interview, said.

During the investigation, the World Bank will normally flow through the two-step sanctions to curb corruption management.

Ye Ying said, “At present, four of the assessment officer with the World Bank Group, IBRD and IDA separately for the International Finance Corporation, the Multilateral Investment Guarantee Agency, provided by the World Bank partial risk guarantee of the investment projects in four categories case of audit. For the three types of sanctions after the case has established the Sanctions Committee with expertise in internal and external experts responsible for hearing, in order to effectively guarantee the impartiality of the Bank’s decision and objectivity. ”

In 1996, the World Bank President James? Wolfensohn to combat the “cancer of corruption” as the World Bank’s top priority. Year, the General Assembly passed a resolution to require States to prohibit in international commercial transactions to pay bribes to public officials, and do not allow such payments for tax cuts.

Since 1999, the World Bank announced that it will not give any to the corruption of international companies qualified to bid, and to prohibit their participation in all Bank-financed by the project. From 2001 to the end of February 2010, worldwide there are more than 367 companies and individuals subject to sanctions, the World Bank’s public and was included in the blacklist of the World Bank’s business.

Relevant to the latest World Bank blacklist, “Finance and Economics National Weekly” reporter provided a long blacklist.

World Bank sanctions period is 2 to 8 years, have 15 years, as long as full term, you will be automatically deleted the names of companies. The most severe punishment is banned for life.

Chinese Academy of Social Sciences researcher Li Min public accept the “Financial State Week” interview, said, “World Bank-funded projects on its own a review process, the main tender for the project, the construction process exists to monitor corruption and fraud. The audit is based on the world Bank project procedures guide, the guide has two articles on corruption and fraud, respectively. Firms, once was blacklisted for a certain period of time will be prohibited to participate in any Bank-financed projects. to be included in the list of enterprises can raise objections or supplements, and if included in the list of companies with good performance, it may shorten the duration of the sanctions. ”

Leaves England on the “financial national magazine,” said the March 16, 1999, two Canadian companies were punished for permanent loss of participation in World Bank projects eligible for financing. This is the world’s first was the World Bank imposed the most severe penalties in the enterprise.

According to Ye Ying said the British company, without exception, all 35 scores were nullified by the “most severe punishment.” April 8, 1999, the World Bank found that the British construction company, Armani, including four London, permanent loss of eligibility of participation in World Bank financed projects.

World Bank’s blacklist, the companies from both developed and developing countries a lot. This seems Western countries have frequently accused the companies of developing countries against the standard and levels of corruption, said it was a big difference.

“National Financial Weekly” reporter found that companies in the latest World Bank blacklist, a total of 25 countries of 148 construction companies top the popular list. Of these, 72 were classified as the most severe sanctions. Sanctioned the company the largest three countries: United Kingdom (35), Bangladesh (27), Indonesia (14).

In the blacklist, the permanent loss of businesses involved in World Bank financed project eligibility, the top three countries: United Kingdom (35), Sweden (11), United States (8). Moreover, Germany, Korea, Singapore, Uzbekistan, Saudi Arabia and Ireland were a business.

Ye Ying said that Senegal’s two construction companies being punished was the lightest, are only banned for two years.

Blacklisted Chinese enterprises at present only the above four.

Black list effect “on business, once included in the blacklist of the World Bank, it is like being in the world market-wide arrest warrant.” Shanghai Pacific International Institute for Strategic Studies senior analyst Zhu Xiaolin told “Financial State Week” interview, said that despite the World Bank financed projects in the global market share is small, but the World Bank’s approach on a global scale with a demonstration effect, in the Asian Development Bank, the Inter-American Development Bank and other major financial system with a warning. Although we can not say “a black 100 black,” but companies will face in the global credit crisis and market crisis.

Lee Chung Min, said the World Bank enterprise blacklist direct impact on the business or large, in addition to these enterprises in the penalty period can not participate in the construction of any other than the World Bank-funded projects, but also enable them to Southeast Asia, Africa, Latin America’s development severely affected.

In addition, Lee Chung Min said, it is difficult to avoid in the future there will be more and more institutions (such as the Asian Development Bank, etc.) to take and learn from similar measures, and if so, the loss will be even greater.

Ye Ying said that in recent years, the Philippines, the construction market more serious corruption, the World Bank was very unhappy, so the World Bank spent a lot of time and energy to deal with the matter.

“In the Philippines, the project found there after the 5-year contract violation, we have done a lot of investigation and evidence collection. According to the World Bank states: If any company is accused of funded projects in fraud, corruption, coercion, collusion, obstruction law enforcement misconduct, the immediate implementation of rigorous investigation and handling. “Ye Ying said,” these awards is to promote better governance and curb corruption, effectively making the World Bank aid projects to achieve sustainable development worldwide . ”

The World Bank’s decision to build its overseas business in the general manager, said Chen was “great respect for the World Bank’s decision.” He said, “For our enterprises, do have certain responsibilities. As the project in the Philippines against the standard phenomena of many, we are also involved in the violation of standard, operating in the Philippine market, the existence of improper operation of the process of behavior.”

“The World Bank’s standard is unified, international. The standard of the Philippine Government is regionalization, the World Bank can not use the standards of the Philippines this event.” Chen was told, “Financial State Week,” “In fact, this things on our business in the Philippines has created a significant impact. because the World Bank’s blacklist came out, it is well known, we have the mouth Nanbian. ”

However, with the face sanctions, China Wuyi Company Limited’s view is different. The company said in a public statement: “Prior to the World Bank Independent Investigation Board to be positive with the process and procedures in strict accordance with the World Bank participate in the respondent and the respondent, but the question is not related to the company’s effective response to the World Bank . Although the World Bank’s sanctions are the World Bank internal procedures, but should not violate basic legal principles, can not avoid its legal consequences. In view of the sanctions directly affect the company’s reputation and future business development, said China Wuyi reserves the right to appeal. ”

For China Wuyi statement, Zhu Xiaolin that “meaningless” and said, “this view there is no market in the international community. With international standards will have to accept the internationally accepted rules of the game. If not, follow-up are problems.”

“Going out” To be more accepting of Commerce Research Institute Huo Jianguo, “Financial State Week” interview, said, “More and more Chinese enterprises to go abroad, join the wave of international competition. But , due to international capabilities, ability to grasp the international rules and the internal project team configurations relatively poor, so we need to strive to improve business communication and management capabilities. ”

Despite being included in the blacklist of the World Bank are not many Chinese enterprises, but experts say we should take warning. “Because this four illegal Chinese enterprises, making not included in the list of Chinese companies will be adversely affected. Over time, the outside will cause Chinese enterprises to the level of business ethics, poor image, once formed this impression, it will severely restrict China business overseas. “Lee Chung Min said.

Chinese Academy of Social Sciences in the world economic and political cross-border investment, research director Zhang Jinjie are told, “Financial National Weekly” reporter, “Chinese enterprises need to do bigger and stronger, needs to learn countless things. Each should be the result of a failure of their own wealth. to companies from other countries to adapt to international markets seeking the ‘competition’. ”

For Zhang Jinjie view, foreign trade liberalization of China Economic Research Institute of the University of He Weiwen, agrees. He said the overseas contracted projects of Chinese enterprises has two urgent need to improve: First, the market level is not high enough; second is room for improvement in financial sectors.

He Weiwen, Shui, the Chinese enterprises to undertake projects abroad, are third-party financing, but with large foreign exchange reserves of China, fully capable of financing themselves Zhexie projects. Chinese enterprises should consider opening up the domestic financing channels, qualified enterprises can create their own financing platform, the premature enterprises to the government’s support of U.S. dollar bills by means of financing in the domestic market.

Chen said it “will learn a lesson.” He said that has been in the Philippines Construction Company in the market is not profitable, and the emergence of black incident adds to its further development in the Philippines, the negative impact. “We may be planning to withdraw from the Philippines, the shift is more suitable for our long-term stable development of the market and the state.”

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