BANGLADESH

The World Bank announced on Thursday it had banned China First Metallurgical Group Co Ltd (CFMCC), a subsidiary of the China Metallurgical Group Corp (MCC), from its projects for three years because of the company's 'fraudulent misconduct' in an urban transport project in Bangladesh.

The World Bank ban marked the latest setback for MCC in its 'venturing-abroad' process following the suspension of two of its construction projects in Libya this year and allegations of graft in an Afghan mining venture.

Chinese state-owned companies are encouraged by their government to 'go out' as part of China's grand plan of gaining international influence, but setbacks and misconduct allegations often accompany ambitious plans.

The World Bank's Integrity vice presidency, the anti-fraud unit of World Bank-financed projects, said last week that it had detected instances of irregularities in a CFMCC Bangladesh bridge project. It did not give further details.

CFMCGC stated that, the Mohakhali Flyover project in Bangladesh that involved in the resolution was obtained by CFMCGC in accordance with strict tendering procedures released by the World Bank, accompany with pre-audit of qualification and open bidding in early 2001.

The contract amount is US$20,700,000.

The approximately three year's construction project had finished (from the end of 2001 to November 2004) and the flyover is in good condition.

It was also awarded an Achievement Award by the local government.

The controversial part was the shock absorbing device STU installed under the flyover in the early stage did not meet the standard of the World Bank in terms of regulations of installation and construction.

The World Bank therefore queried and imposed the penalty. CFMCGC had reservations regarding the penalty.

According to the company's statement, the World Bank questioned its purchase and installation of shock bearing parts on the bridge after an investigation in December.

CFMCC said it purchased the equipment from TechStar, a US company, and the installation process was conducted under professional advice.

CFMCC also played down the financial impact of the World Bank decision, saying income generated from overseas projects only accounted for 6.5 percent of its total revenues in the last three years, and the Bangladesh bridge was the only World Bank project it had taken in the last decade.

MCC has come under scrutiny in 2008 over its $4.4 billion Aynak copper mine in Afghanistan and was accused of paying up to $30 million in bribes to the Minister of Mines and Industries to win the contract. The ministry denied the allegations.