9 June 2019
The World Bank announced on 5 June 2019 that it had debarred a Chinese state-owned engineering and construction company and two subsidiaries for “fraudulent practices” involving the East-West Highway Corridor Improvement project in Georgia. The debarment also extends to CRCC’s 730 controlled affiliates, with the exception of China Railway 20th Bureau Group Co. and its controlled affiliates, which were subject to a separate settlement agreement with the World Bank in 2017.
CR23 misrepresented its personnel and equipment, in the prequalification and bidding process for a highway project in Georgia, by falsely attributing the experience of other entities in the group to CRCC. These actions are considered fraudulent practices in the World Bank procurement guidelines.
China Railway Construction Corporation Ltd. (CRCC), and its wholly-owned subsidiaries, China Railway 23rd Bureau Group Co., Ltd. (CR23) and China Railway Construction Corporation (International) Limited (CRCC International), were debarred for nine months. The nine-month debarment does not automatically trigger automatic cross debarment by other development banks. The debarment must exceed one year for cross debarment by other financial institutions.
In the settlement agreement with the World Bank, CRCC, CR23, and CRCC International acknowledged responsibility, made voluntary remedial and corrective actions, and cooperated with the World Bank.
The three companies and the 730 affiliates will be conditionally non-debarred for 24 months. They will be eligible to participate in World Bank-financed projects during that time if they comply with the settlement agreement.
CRCC is listed on Shanghai and Hong Kong stock exchanges. According to its website it ranked 58 on the Fortune Global 500 in 2018.
China Railway Construction Corporation came under fire when China Railway Corporation punished contractors for poor quality construction work on a stretch of high-speed line in southwest China. The rail authority statement said contractors had not used correct materials in building work, illegally subcontracted work and fabricated paperwork. The report blamed several subsidiaries of China Railway Construction Corp, China Railway Eryuan Engineering, as well as firms in Guizhou and Shanxi and Gansu provinces.