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Chinese Construction Giants barred by World Bank
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By John Sexton and Zhou Jing

China State Construction Corporation, China Road and Bridge Corporation (CRBC, SH:600263) and two other Chinese construction companies have been debarred from bidding for World Bank financed projects for periods ranging from five to eight years, after a corruption investigation in the Philippines, according to a Bank press release.

The companies were among seven firms and one individual debarred for 'engaging in collusive practices under a major Bank-financed roads project in the Philippines", according to the World Bank press statement.

The project, the Philippines National Roads Improvement and Management Program was partly financed by a US$150 million loan from the World Bank.

An investigation by officials from the World Bank Integrity Vice-Presidency (INT) and external legal experts determined that the companies had colluded to enter non-competitive, artificially high bid prices, the Bank statement said.

CRBC is the overseas arm of state-owned giant China Communications Construction Company Ltd., which is ranked 426 in the Fortune 500. The company has undertaken more than 600 overseas projects and has branches in around 50 countries.

The other Chinese companies barred are China Wuyi Co Ltd (SHE:000797), barred for six years, and China Geo-Engineering Corp which was barred for five years.

A Philippine company, E.C. De Luna Construction Corp and its owner Eduardo le Luna were permanently disbarred from bidding for World Bank projects, the strongest possible sanction applied by the Bank.

A Korean company, Dongsung Construction Company Ltd had already been debarred for four years for fraudulent and corrupt practices in relation to the same case, according to the Bank's press statement.

Leonard McCarthy, World Bank Integrity Vice President, said, "This is one of our most important and far-reaching cases, and it highlights the effectiveness of the World Bank's investigative and sanctions process."

Asked if the companies listed had the right to appeal, World Bank Spokesman David Theis told China.org.cn, "All firms listed in the release had the right to contest the debarments as part of the World Bank's sanctions process, and did so. The bank's sanctions board (both internal and external members) then evaluated the pleadings of the Respondents against the evidence from the bank's investigative office. The release today shows the board's decision."

China.org.cn contacted both China State Construction Corporation and China Road and Bridge Corporation but they declined to comment.

(China.org.cn January 15, 2009)

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