African Development Bank and Sinohydro have reached a settlement agreement on fraudulent practices.Sinohydro Corporation has agreed to a comprehensive verification of its compliance programme by the African Development Bank following the detection of a fraudulent practice in tendering for works contracts in Uganda.
Sinohydro has been awarded contracts in Zimbabwe, which include Kariba South extension and Hwange Power Station. The tender for Kariba South was awarded at a total cost of $533 million, a figure which was criticised for being double the price of similar expansion works on the other side of Zimbabwe.
On June 15, 2017, the African Development Bank Group (AfDB) announced the conclusion of a settlement agreement with Sinohydro Corporation.
An investigation conducted by the AfDB’s Office of Integrity and Anti-Corruption established that Sinohydro Corporation engaged in a fraudulent practice in bidding for works contracts in the context of the AfDB-financed Road Sector Support Project in Uganda.
As part of the settlement, the AfDB imposes a conditional non-debarment for a period of three years, subject to the company enhancing its global corporate compliance programme within that period to the institution’s full satisfaction.
The AfDB will verify the adequacy of Sinohydro Corporation’s compliance framework and the robustness of its implementation prior to any release decision.
In addition, Sinohydro Corporation committed to co-operate with the Office of Integrity and Anti-Corruption in its investigations of unrelated cases of misconduct in AfDB-financed projects. The period of conditional non-debarment may be reduced to 24 months if Sinohydro Corporation complies with all conditions of the agreement early.
“The purpose of the Bank’s sanctions regime is in equal measures the deterrence of sanctionable practices such as fraud and corruption and the rehabilitation of entities found to have engaged in such.
“Engaging with companies and ensuring the implementation of robust corporate compliance safeguards is key to avoid recidivism,” says Anna Bossman, Director of the AfDB Office of Integrity and Anti-Corruption.
In 2013, Sinohydro Corporation is said to have participated in a tender for works contracts under the Bank-financed Road Sector Support Project in Uganda.
The investigation by the Office of Integrity and Anti-Corruption found that Sinohydro Corporation misrepresented its prior project experience by using not yet successfully and substantially completed contracts as references.
The Office of Integrity and Anti-Corruption of the African Development Bank Group is responsible for preventing, deterring and investigating allegations of corruption, fraud and other sanctionable practices in Bank Group-financed operations.
The investigation by the Office of Integrity and Anti-Corruption of the African Development Bank was conducted by Mohamed Konneh and Esther Lynn Mhone. African Development Bank staff and the general public can use the Office of Integrity and Anti-Corruption secured hotlines to report sanctionable practices within the Bank or operations financed by the Bank Group.
Since 2006, investment from China has rapidly increased in Africa. According to a World Bank report in 2008, most of the Chinese investment goes to the infrastructure sector, mostly hydropower, railroad, and telecommunications.
The hydro-power projects are widely blamed for negative impacts on local community and natural environment. Sinohydro was also fired as Botswana’s primary contractor on Gaborone’s Sir Seretse Khama International Airport (SSKIA) Expansion Project Phase 2.
At the time of termination of the contract, Sinohydro had completed approximately 90 percent of the project and had been paid about P527 million. — Online.