State-owned green firm gets World Bank ban

The CECEP subsidiary is shut out of contract work for two years after admitting misconduct

PUBLISHED : Wednesday, 03 July, 2013, 12:00am
UPDATED : Wednesday, 03 July, 2013, 5:16am

The World Bank has barred a subsidiary of a state-owned leader in energy conservation and environmental protection from work on projects financed by the lender after the company admitted to fraud.

The ban on China Energy Conservation and Environmental Protection Group Technology and Investment Co New Hope & Talroad (Beijing) Environmental Technology (CECEP New Hope) applies for two years.

The company is a subsidiary of China Energy Conservation and Environmental Protection Group (CECEP).

The ban followed the company's acknowledgment of fraudulent misconduct in the World Bank-financed Shandong Flue Gas Desulphurisation Project in China, the World Bank said. A World Bank report in 2011 described the project's progress as "unsatisfactory". The project, which started in October 2008 and ended on June 30 last year, had a total cost of US$86.1 million.

During the two-year ban, CECEP New Hope will not qualify for any contract financed by the World Bank. The bank's ban on CECEP New Hope means the Chinese company is also banned by all other multilateral lenders.

Parent company CECEP is the only state-owned company directly sponsored by the central government that specialises in energy conservation, emission reduction and environmental protection, its chairman Wang Xiaokang said on the company's website. CECEP is responsible for the investment of 23 billion yuan (HK$28.8 billion) in national energy conservation projects, with 172 subsidiaries and 30,000 employees, its website says.

"We are pleased with the outcome of this investigation, the co-operation and active steps taken by the company to comply with the World Bank's integrity standards following its acknowledgment of misconduct," said Leonard McCarthy, the World Bank's integrity vice-president.

We are pleased with the outcome of this investigation, the co-operation and active steps taken by the company to comply with the World Bank's integrity standards following its acknowledgment of misconduct

The case came to light as a result of a World Bank review that identified discrepancies in documentation submitted for reimbursement. During the investigation, CECEP New Hope "fully co-operated" with the World Bank investigators and disclosed information on the fraudulent scheme relating to a public works contract in the gas project, the bank said.

The ban comes amid a crackdown on corruption on the mainland. A report by the People's Bank of China in 2011 estimated 18,000 corrupt officials or employees of state-owned firms have stolen 800 billion yuan since the mid-1990s.

On September 20 last year, CECEP's wholly owned Hong Kong subsidiary CECEP (Hong Kong) Investment was established.