Two contractors punished for fraud in World Bank-funded road project

The renovation and upgrade of National Highway No. 6 was funded by the World Bank as part of VRAMP

Revoked bidding privileges

The Ministry of Transport (MoT) has tasked the Directorate of Roads of Vietnam (DRVN) with handling the violations of contracts RAP/CP15-QL6 and RAP/CP17-QL6 in VRAMP.

Last week, Deputy Minister of Transport Nguyen Hong Truong announced as the project investor that DRVN would be responsible for carrying out the handling process.

“The handling process must abide all clauses of the contracts as well as the bidding regulations of Vietnam and the donors. If the case extends outside DRVN’s jurisdiction, it will have to notify MoT to review and resolve the matter in order to ensure the project’s progress,” said Truong.

Previously, following DRVN’s proposal, MoT banned 234 Road Construction and Management Company and Thai Binh Road Management JSC from bidding on any project managed by MoT and funded by the World Bank for a duration of three years.

Thai Binh Road Management JSC’s contract will also be terminated and its bond security for RAP/CP15-QL6 forfeited. Similarly, 234 Road Management Company will face the same penalties.

This is the most severe punishment for bidding violations in ODA-funded projects or used the state budget.

Nguyen Van Huyen, director of DRVN, said the penalty has been agreed upon with the donor and matches the severity nature of the violations according to Article 122(1) of Decree No.63/2014/ND-CP, dated June 26, 2014, detailing the implementation of legal provisions on bidding regarding the selection of contractors.

Serious violations

The fraudulent activities of the two contractors mentioned above were brought to light after MoT and the World Bank received a letter of denunciation, claiming a contractor for RAP/CP15-QL6 and two contractors for RAP/CP17-QL6 had lied about their revenue and were therefore not qualified to bid.

These are two of the three contracts in VRAMP’s QL6 Maintenance PBC package, from KM 193 to KM 303, valued at more than VND632 billion (approximately $27.7 million).

MoT verified that during the bidding process, contractors from Thai Binh Road Management JSC (RAP/CP15-QL6) and 234 Road Construction and Management Company (RAP/CP15-QL6) declare false revenues in their bids.

In its bid, Thai Binh Road Management JSC declared that its revenue in 2013 was VND137 billion ($6 million), but in reality, its revenue was VND88 billion ($3.8 million). Its 2014 revenue was declared as VND138 billion ($6 million), but the real amount was VND67 billion ($2.9 million).

234 Road Construction and Management Company declared a revenue of VND45 billion ($1.9 million) in 2014, while in reality the number was VND32 billion ($1.4 million). Its revenue in 2015 was VND11 billion ($482,000), but was declared as VND66 billion ($2.9 million) in the bid.

In their explanatory reports, both companies admitted to declaring exaggerated revenues in their bid compared to data verified by the inspection team.

Article 89(4C) of Bidding Law No. 43/2013/QH13, dated November 26, 2013, defines fraudulence as including “Bidders intentionally provide dishonest information in dossiers of expression of interest, dossiers of prequalification participation, bid dossiers, dossiers of proposals falsifying the result of the selection of tenderers and investors.”

Additionally, Guidelines for Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank borrowers, Article 1(16) on Fraud and Corruption clearly defines “fraudulent practice is any act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation.”