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World Bank punishes US investors due to corruption in Vietnam

Released at: 14:52, 04/04/2015

World Bank punishes US investors due to corruption in Vietnam

Louis Berger Group handed sanctions for one year regarding improper payments.

by Hoai An

The World Bank (WB) has announced the debarment of Louis Berger Group, Inc. (LBG) for one year for engaging in corrupt practices relating to two Bank financed projects in Vietnam. Berger Group Holdings, Inc. (BGH), LBG’s corporate parent received a one-year conditional non-debarment.

Infrastructure development relating to the Third Rural Transport works as well as Da Nang Priority Infrastructure Investment Projects were those affected. “The company made corrupt payments to government officials,” a World Bank official stated. “Additionally, BGH failed to effectively supervise LBG and thus bears responsibility for LBG’s misconduct.”

The World Bank has asked BGH and LBG to conduct their own internal investigation in accordance with terms by the Bank, to uncover the misconduct and implement an effective integrity compliance program consistent with WB guidelines. 

“A company’s response to misconduct is clear evidence of where its commitment to integrity lies,” said Leonard Frank McCarthy, World Bank Integrity Vice President. “What this case demonstrates is an investigative process and outcome that has pushed the company to take remedial action toward achieving a stronger standard of compliance and accountability across the board.”

The Third Rural Transport project was conducted from September 2007 to June 2014 with an investment of  $257 million. The World Bank's International Development Association loan was $203 million while non-refundable aid from the UK was $53.9million. After nearly seven years of implementation in 33 provinces, the project has upgraded 3,283km road and maintained a further 22,723km.

The Da Nang Priority Infrastructure Investment Projects started in 2008 and was completed in 2013, funded by the WB's Official Development Assistance loan along with local funds. The project had a total investment of $218.4 million. The WB's input was $152.4 million and domestic reciprocal capital was $66 million. The goal of this project was to improve the efficiency and sustainability of urban services in Da Nang through upgrading the city, improving environmental infrastructure, building strategic roads and enhancing institutions of investment planning and services management.

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