Contacts: In Washington: David Theis: 1-202-458-8626 dtheis@worldbank.org Merrell Tuck: 1-202-473-9516 mtuckprimdahl@worldbank.org WASHINGTON, March 30, 2006 ¾ The World Bank today announced that it has debarred Universal Technology Systems (UTS), a company registered in Delaware, U.S.A.; and Mr. Andrei V. Kozhin, a Russian national and owner of the firm, for fraudulent practices in relation to a World Bank-financed project in the Russian Federation. Mr. Kozhin is debarred for five years from receiving Bank-financed contracts. The company in question, UTS, is also debarred for five years. These sanctions, part of the World Bank’s broader anticorruption efforts,were made in accordance with paragraph 1.15 (a)(ii) of the World Bank’s Procurement Guidelines. The case concerned fraudulent practices committed during the procurement process in the World Bank-financed Community Social Infrastructure Project. The project was administered by the Ministry of Nationalities and Federal Affairs of the Russian Federation through a Central Project Implementation Unit. While reviewing bids for a contract to supply medical equipment under the project, the Project Implementation Unit’s bid evaluators found that UTS had submitted a false bank guarantee. Once this fraud was detected, the contract was awarded to a different bidder and the Project Implementation Unit referred their findings to the World Bank, whose Department of Institutional Integrity (INT) launched an investigation. In the course of this investigation, INT discovered that UTS had also forged a manufacturer’s Letter of Authorization and misrepresented information contained in corporate documents, such as the annual turnover and the authorized capital of the company. These findings led INT to recommend to the World Bank’s Sanctions Committee that the firm and individual be declared ineligible to participate in future World Bank-financed contracts. Kristalina Georgieva, World Bank Country Director for the Russian Federation, welcomed the decision, saying, “The Russian people deserve to have their projects free of fraud and corruption, and their financial resources used effectively and efficiently. An open and transparent competitive bidding process is key to this system working properly. We are grateful to the Russian officials who first identified this fraudulent activity, as it allowed the right steps to be taken before any funds were disbursed or any harm came to the project.” The Department of Institutional Integrity’s investigation involved the collection and analysis of a wide array of documents as well as the interviewing of many witnesses in Russia and elsewhere. The World Bank’s Sanctions Committee issued notices of debarment to both the firm and the individual involved in the described fraudulent practices. Both the firm and the individual were granted the opportunity to dispute the charges. The $200 million Community Social Infrastructure Project, approved in August 1996, was designed to reduce the deterioration of health, education, and water supply and sanitation facilities in Novosibirsk and Rostov regions, among other objectives. The project, completed in 2004, has been broadly successful in achieving its objectives. Background on the World Bank’s Anti-Corruption Efforts
World Bank funds are provided to support the efforts of member countries in achieving prosperity and stability through sustainable and equitable growth with the goal of reducing 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 goal 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 330 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 procurement and sanctions, see: http://www.worldbank.org/procure - | 
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