Contacts: Edith Wilson 202 473-1104 ewilson1@worldbank.org Merrell Tuck-Primdahl 202 473-9516 Mtuckprimdahl@worldbank.org Washington, DC, July 21, 2005 ¾ The World Bank debarred two companies, AB Hidrostatyba and AB Panevezio Statybos Trestas (PST), and seven former or current employees for collusive practices as defined in the World Bank Procurement Guidelines in relation to the World Bank-financed “Klaipeda Environment Project” (KEP) in Lithuania. These companies and individuals will be ineligible to receive any new World Bank-financed contracts for the periods of their debarments. These actions are part of the World Bank’s broad anticorruption efforts initiated in 1996. AB Hidrostatyba, three of its employees and the former Director and Deputy Director of AB Panevezio Statybos Trestas were debarred for a period of three years for serious misconduct, in contravention of World Bank procurement guidelines. AB Panevezio Statybos Trestas and two of its employees were debarred for one year. The two companies engaged in collusion in order to guarantee the success of AB Hidrostatyba in obtaining a US$3.28 million contract for the expansion of water supply and wastewater networks in Klaipeda. After the collusion was detected by the World Bank’s Task Team, the Lithuanian Competition Council (LCC) was notified. Two investigations resulted, one by the World Bank and another by the LCC. The LCC established that the companies and their employees had unlawfully colluded in violation of two sections of Lithuania’s Law on Competition and imposed fines on both companies. The fines were later reduced by the Vilnius County Administrative Court following an appeal by the respondents. The LCC cooperated actively in investigating the alleged collusion and eventually shared its findings with the World Bank. “This World Bank loan was intended to support the Lithuanian Government’s efforts to ensure the environmentally sustainable development of the coastal area. The sanctions show our readiness to safeguard the procurement process in World Bank-funded projects,” said Mantas Nocius, Country Manager for Lithuania. “The Government’s prompt actions in this matter were extremely helpful. Working together, the World Bank and member countries can be effective in the fight against fraud and corruption.” In December 1994, the World Bank approved a US$7 million loan for the KEP with co-financing from other external agencies to assist Lithuania to promote environmentally sustainable management and development of the Lithuanian coastal zone. The US$23 million project was designed to improve regional environmental management and the quality, reliability, and cost efficiency of water supply systems. No funds from any other external agency were involved in the contract in question. This project closed in December 2002 and in June 2003 the independent Operations Evaluations Department of the World Bank judged that the project had a substantial institutional development impact for the Klaipeda region. The project successfully introduced modern management of water and wastewater service delivery to local municipalities by commercially viable companies. The World Bank investigation was handled by the Department of Institutional Integrity (INT) and involved the collection and analysis of documents as well as the interviewing of many witnesses in Lithuania. The World Bank’s Sanctions Committee issued notices of debarment to companies and individuals allegedly involved in fraudulent practices under the project. The companies and individuals were granted the opportunity to dispute the charges. In making its recommendation of debarment to World Bank President Paul Wolfowitz, the Sanctions Committee considered a number of mitigating factors, including the fact that the two companies had already been ordered to pay administrative fines by the LCC and that all named parties involved in this specific tender are no longer in positions of responsibility in particular in the case of AB Panevezio Statybos Trestas. List of Debarred Firms and Individuals The company and individuals listed below have been debarred under the grounds of the World Bank Procurement Guidelines 1.15(a)(ii) dated January 1995. Their ineligibility period is for three years from July 19, 2005 to July 19, 2008: - AB Hidrostatyba from Gargzdai, Lithuania - Mr. Jonas Dumasius from Lithuania (AB Hidrostatyba) - Mr. Frantiskus Graznovas from Lithuania (AB Hidrostatyba) - Mr. Juozas Stragauskas from Lithuania (AB Hidrostatyba) - Mr. Eugenius Reciunas from Lithuania (PST) - Mr. L. Sakalauskas from Lithuania (PST) The company and individuals listed below have been debarred under the grounds of the World Bank Procurement Guidelines 1.15(a)(ii) dated January 1995. Their ineligibility period is for one year from July 19, 2005 to July 19, 2006: - AB Panevezio Statybos Trestas (PST), Lithuania - Mr. Arnas Cinga from Lithuania (PST) - Mr. Vidas Rutkauskas from Lithuania (PST) Background Information
World Bank funds are provided to support the efforts of member countries to achieve prosperity and stability through sustainable and equitable growth and to reduce poverty. The World Bank has the responsibility to ensure that the loans and credits it extends, and the trust funds that it administers, are used for their intended purposes. This policy is enforced through a comprehensive array of rules and procedures aimed at ensuring high standards of integrity, transparency, and accountability in World Bank-supported projects. The procurement procedures for World Bank-financed projects are monitored by World Bank staff to ensure that the process is free from fraudulent practices and corruption. An annual integrity report on investigations and sanctions of staff misconduct and fraud and corruption in World Bank-financed Projects is posted on the World Bank website. See http://www.worldbank.org/integrity The World Bank Department of Institutional Integrity (INT) is charged with investigating allegations of fraud and corruption in World Bank-financed projects. The department reports directly to the President of the World Bank and is staffed by a multinational team of more than fifty professionals, including investigators, legal specialists, forensic accountants, procurement specialists and experienced World Bank project managers. Additional information can be found at http://www.worldbank.org/integrity.
Allegations of fraud and corruption related to World Bank-financed projects can be reported to 1-800-831-0463 24 hours a day and an international AT&T operator with international translation is available. To reverse charges (collect calls) dial 704-556-7046. Reports may be anonymous, and can also be made in person or online at: investigations_hotline@worldbank.org Over the past five years, the World Bank Group has sanctioned over 300 companies and individuals. Debarments can be permanent or for a lesser period. A list of debarred companies is posted on the website below. The sanctions process is an internal administrative process within the World Bank. It provides for due process to all parties involved in the sanctions process. For more information on World Bank Group procurement and sanctions, see: http://www.worldbank.org/procure For more information on the World Bank’s anticorruption policies and activities, see: http://www.worldbank.org/anticorruption. |
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