A bribery investigation by the World Bank has discovered misconduct by a major Canadian construction firm that was awarded a $5 million contract to help expand access to electricity in rural Cambodia, the bank said.
In a statement from Washington on Wednesday, the World Bank Group said it had reached an agreement with Montreal-based SNC-Lavalin Inc. to debar, or ban, the company from winning contracts on the bank’s projects for 10 years.
The bank has already provided Canadian police with evidence of wrongdoing by the company in an electricity infrastructure project in Cambodia that was overseen by the Ministry of Industry, Mines and Energy, the statement says.
The bank’s integrity vice presidency—responsible for probing fraud, collusion and corruption in World Bank projects—had been investigating bribery schemes between SNC-Lavalin and Bangladeshi government officials relating to a stalled $50 million bridge project in Bangladesh.
“While the investigation was ongoing, the World Bank’s Integrity Vice Presidency also learned of misconduct by SNC-Lavalin Inc. in relation to the World Bank-financed Rural Electrification and Transmission project in Cambodia,” the statement says.
In December 2009, SNC-Lavalin announced that it had been awarded an 18-month contract worth $5 million to design and build a national control center and energy management system in Phnom Penh for state-owned power company Electricite du Cambodge (EdC) as part of the donor-funded project.
Referring to both the company’s operations in Bangladesh and Cambodia, the World Bank statement says, “SNC-Lavalin’s misconduct involved a conspiracy to pay bribes and misrepresentations when bidding for Bank-financed contracts in violation of the World Bank’s procurement guidelines.”
The statement does not provide specific details of the allegations in Cambodia or other parties that were possibly involved.
“Once we had evidence of the company’s misconduct, we referred the matter to the Royal Canadian Mounted Police whilst the World Bank finalized its investigation,” World Bank Integrity Vice President Leonard McCarthy was quoted in the statement as saying. Canada can prosecute company staff that pay bribes overseas under its Corruption of Foreign Public Officials Act.
SNC-Lavalin issued a statement saying that the details of its settlement with the World Bank are confidential, but did say the deal did not include a financial penalty.
“The Company launched an internal investigation when this matter was first brought to its attention and has worked closely with the World Bank throughout the settlement process,” the statement says.
Officials at the World Bank office in Phnom Penh did not respond to requests for comment.
Keo Rotanak, director-general of EdC, declined to comment. However, Chea Sun Hel, director of EdC’s distribution unit, said that the national control center—which is the operational hub for the national grid—had been completed.
“It’s been operating for a while,” he said, claiming that he had never heard of SNC-Lavalin and declining to comment on the allegations of corruption in the deal to build the center.
The implementation of the Rural Electrification and Transmission Project—which ran from 2003 to 2012 and cost a total of nearly $68 million—was the responsibility of the Ministry of Industry, Mines and Energy.
The World Bank’s website says the project helped bring modern electricity services for the first time to more than 500,000 people, but failed to reduce the cost of power significantly—a failure put down to rising oil prices.
Many Cambodian provinces are still powered by large and expensive diesel generators, and blackouts are still commonplace in the dry season throughout the country.
