The World Bank Group
Integrity Vice Presidency
Republic of India
Health Project
REDACTED REPORT
APRIL 25, 2011
Statement of Use and Limitations
This Report was prepared by the World Bank Group’s (Bank’s) Integrity Vice Presidency (INT).
It provides the findings of an INT administrative inquiry (the investigation) into allegations of
corrupt, fraudulent, collusive, and/or coercive practices, as defined by the Bank, regarding one or
more Bank-supported activities.
The purpose of the investigation underlying this Report is to allow the Bank to determine if its
own rules have been violated. This Report is being shared to ensure that its recipients are aware
of the results of the INT investigation. However, in view of the specific and limited purpose of
the investigation underlying this Report, this Report should not be used as the sole basis for
initiating any administrative, criminal, or civil proceedings. Moreover, this Report should not be
cited to in the course of any investigation, in any investigation reports, or in any administrative,
civil, or criminal proceedings.
This Report is provided without prejudice to the privileges and immunities conferred on the
Bank and its officers and employees by its Articles of Agreement and other applicable sources of
law. The Bank reserves the right to invoke its privileges and immunities, including at any time
during the course of an investigation or a subsequent judicial or other proceeding pursued in
connection with this matter.
Executive Summary
This Redacted report (the report) summarizes the findings of an administrative inquiry (the investigation)
by the World Bank Group’s (the Bank’s) Integrity Vice Presidency (INT) into an allegation of fraudulent
practices in a Bank-financed Project in the Health Sector in India (the Project).
In 2008, the procurement support agency for the Project awarded a contract to Company A to supply
medical equipment to the Project. After numerous efforts to obtain a satisfactory Performance Security
from Company A, the procurement support agency decided to annul the award of the contract to Company
A and to recommend that the contract be awarded to the next-lowest-priced responsive bidder. The
procurement support agency also notified the World Bank that Company A’s Bid Guarantee appeared to
be fraudulent.
INT conducted an investigation into the authenticity of Company A’s Bid Guarantee and other documents
submitted to the procurement support agency by Company A’s representative. INT also interviewed both
Company A and its representative.
INT’s investigation found evidence indicating that Company A’s Bid Guarantee was fraudulent, and that
Company A’s representative, acting on the company’s behalf, also supplied the procurement support
agency with a fraudulent performance security.
1
Background
In 2008, the procurement support agency for the project awarded a contract to Company
A to supply medical equipment to the Project. After numerous efforts to obtain a satisfactory
Performance Security from Company A, the procurement support agency decided to annul the
award of the contract to Company A and to recommend that the contract be awarded to the next-
lowest-priced responsive bidder.
Thereafter, Company A’s agent supplied the procurement support agency with a
“Performance Guarantee.” Following unsuccessful efforts to execute on the Guarantee, the
procurement support agency sought to confirm the validity of the Guarantee by contacting a
branch of the purportedly-issuing bank which, in turn, confirmed they have never issued such
document. Following its inquiry, the procurement support agency contacted World Bank
procurement personnel who, in turn, notified INT of the apparent fraud.
Methodology
INT collected and reviewed relevant Project and bidding documentation, including
correspondence among the procurement support agency, Company A, Company A’s
representative, the World Bank, and commercial banks relevant to the issuance of the Bid
Guarantee and Performance Security, and conducted interviews of witnesses relevant to the
investigation.
Findings
INT’s investigation uncovered evidence indicating that Company A’s bid, which was
submitted to the procurement support agency by Company A’s representative, contained a forged
Bid Guarantee. Specifically, Company A’s manager attested in writing that Company A did not
have any banking or financial relations with the purportedly-issuing bank at any time during
2007. Moreover, the bank’s official responsible for the guarantee business of the purportedly-
issuing bank stated to INT investigators that the Bid Guarantee was not, in fact, issued by the
purportedly-issuing bank.
Neither Company A nor Company A’s representative disputed that the Bid Guarantee
was a forgery; instead, each disclaimed all knowledge that the Bid Guarantee was forged, and
indicated the other as the party principally responsible for the preparation of the bid.
INT also found evidence indicating that Company A’s Performance Security supplied to
the procurement support agency by Company A’s representative was forged. Specifically, the
procurement support agency and INT investigators have confirmed that the branch of the bank
that purportedly issued the Performance Security is no longer, if such a branch ever existed.
Moreover, the bank official responsible for the guarantee business of the purportedly-issuing
bank stated to INT investigators that the Performance Security was not, in fact, issued by the
purportedly-issuing bank.
2
As in the case of the Bid Guarantee, both Company A and its representative disclaimed
any knowledge of the fraudulent nature of the submitted Performance Security.
INT has, however, not been able to determine, based on the evidence available, whether
principal responsibility for preparation and submission of the fraudulent Bid Guarantee and
Performance Security lies with Company A or its representative—or, indeed, whether both
parties had actual knowledge of the falsity of the Bid Guarantee and Performance Security
documents at the time they were submitted to the procurement support agency.
3