World Bank Debars Two Chinese Companies

On July 19, the World Bank announced it would debar two large Chinese construction firms that lied about progress on an energy project in China so they could be paid early.  China Nuclear Industry Fifth Construction Co. (CNF) was debarred for two years, and China Machinery Industry Construction Group (SINOCONST) was debarred for four years.  The two companies were working on the $317 million Shandong Energy Efficiency Project, which had received a $150 million commitment from the World Bank.  The two companies will now be ineligible to participate in any other World Bank Group-finance projects for the duration of the debarment.

In its statement, the World Bank said CNF “hoping to receive advance payments, falsified documents that certified aspects of the project were completed and had met quality standards,” while China Machinery sought advance payment by “misrepresenting in falsified documents that work had been completed.”  CNF and China Machinery also “misrepresented that CNF completed work on two subcontracts that had been subcontracted to a third party.”  The World Bank added that it shortened the debarments because the two companies had coopered and taken remedial action.

Elsewhere, CNF won a contract in 2008 to serve as the project installer for the Chashma Unit‑3 and Chashma Unit‑4 nuclear power facility in Punjab, Pakistan, which were completed in 2016.  On January 21, 2016, its parent company, China Nuclear Engineering Group (CNEG), signed a Memorandum of Understanding with King Abdullah City for Atomic and Renewable Energy (KA-CARE) of Saudi Arabia for the construction of a high-temperature gas-cooled reactor.  Another subsidiary of CNEG, China Nuclear Industry Huaxing Construction Company, signed a Memorandum of Agreement on November 2, 2016 with Malaysian manufacturer BHS Industries for the joint development and maintenance of Phase 2 and 3 of the Green Technology Park in Pekan, Pahang, Malaysia.  SINOCONST is a subsidiary of state-owned behemoth, SINOMACH, which has a large global footprint, including 215 transactions globally, according to IntelTrak.