Chinese company Sinohydro, which might bag the contract for $780 million Padma river training, has admitted to the government that it is under temporary suspension by the World Bank over an accusation of fraud.
The company held back this information while placing its financial bid for the river training work of the Padma Bridge Project on June 19.
Backed by an influential political lobby, Sinohydro offered a price of around Tk 8,778 crore, about Tk 4,000 crore less than the sums quoted by the other two bidders -- Korean Hyundai and Belgian Jan De Nul.
The two companies later informed the government that the Chinese firm had concealed information about the WB suspension and was ineligible to contest.
Though the bridge project is not being funded by the WB, the entire project will be implemented under the Bank's guidelines.
According to the tender documents, “A firm or an individual may be declared ineligible to be awarded a (World) Bank-financed contract upon completion of the Bank's sanctions proceedings as per its sanctions procedures, including inter alia: (i) temporary suspension in connection with an ongoing sanction proceedings.”
The bids of the three companies are still under evaluation.
Sinohydro had earlier got the expansion work of a major part of the Dhaka-Chittagong Highway in 2010 by offering a very low price. But the company couldn't finish even half the work in the last four years, and now demands more money for its completion.
Sinohydro's offer of low price in the river training tender has irked the director of the Dhaka-Chittagong highway expansion project.
On June 22, the director wrote to the communications secretary about Sinohydro's abysmal performance, expressing doubts that if the Chinese company is awarded the job, it might not be able to carry out the complex task. (See related story)
Maunsell AECOM, consultant of the Padma Bridge Project, last month asked the Bridges Division to probe the issue of WB sanction against Sinohydro before completing the evaluation.
The Bridges Division on July 16 sought clarification from Sinohydro, and asked it to confirm if it was debarred, cross-debarred or under suspension by the WB, the Asian Development Bank or any other multilateral financing institutions.
Sinohydro replied on July 20 that it was under temporary suspension by the WB for "a single accusation of fraud that took place years ago on a successfully completed project".
The company said it was vigorously contesting the accusation and the WB's sanction proceedings were at preliminary stage. "No sanction has been issued and no sanction is anticipated in the near future," it said.
Citing the WB regulations, the company declined to provide details of the temporary suspension but said, "We can confirm that the temporary suspension by the World Bank will not have any unfavourable implication on the project [Padma Bridge]."
According to sources, Sinohydro is now trying to convince the Bridges Division that there was "no sanction" on it and there would be no negative implication of this temporary suspension.
Wishing anonymity, an official of the Bridges Division said, "The company has already committed a serious violation of the tender rules by concealing information of temporary suspension.
Padma Bridge Project Director Shafiqul Islam said it was an internal issue that should not be discussed for the sake of evaluation of the tender process.
The evaluation committee and the project's consultant are looking into everything, he said.
Sources said the Prime Minister's Office instructed the Bridges Division to make sure that all tenders relating to the bridge project are above controversy.
Sinohydro is represented by a company owned by the family of a former minister, who also represents China Major Bridge Corporation (CMBC) that bagged the $1.32 billion contract for constructing Padma Bridge. River training is the second largest component of the $3 billion bridge project.
In 2011, allegations popped up in Malaysia against the company for its low quality work in constructing a dam in Bakum. The dam was built at such a low price that it qualitatively failed to serve the purpose and ended up as a white elephant of the government, according to sarawakreport.org, an online news resource focusing on investigative journalism in Malaysia.
On February 11, 2010, the South China Morning Post published a report headlined “Quality issues pose threat to Sinohydro's global ambition”, shedding light on the company's poor environmental, safety and management records.
The report also mentioned that Sinohydro was fined by the Chinese government for “shoddy work and has been criticised for its projects in places such as Myanmar and many African countries”.
“In 2006, the State Assets Supervision and Administration Commission (Sasac), which manages state-owned enterprises [in China], reprimanded Sinohydro in a performance review for safety or environmental pollution breaches. Sasac gave Sinohydro a D rating, on a scale of A to E,” it noted.
In 2004, Sinohydro along with other Chinese companies was fined for poor work on flood control structures on the Yangtze river.