The World Bank said yesterday it found evidence of bid-rigging in a Philippine road project involving several Chinese and local construction companies and has barred them from future contracts.
The bank’s investigation uncovered a “major cartel involving local and international firms bidding on contracts” to improve Philippine roads, it said in a statement.
“This is one of our most important and far-reaching cases and it highlights the effectiveness of the World Bank’s investigative and sanctions process,” said Leonard McCarthy, the World Bank executive who led the investigation.
When suspicions of collusion in the bidding process were first raised between 2003 and 2006, the bank said it immediately stopped an estimated US$33 million from being awarded to the companies to build or resurface about 1,400km of roads.
Those barred from bidding on future World Bank-financed contracts include E.C. de Luna Construction Corp, one of three from the Philippines, as well as five Chinese companies.
Two of them, including E.C. de Luna, were barred permanently, the strongest sanction possible.
Rhoda Marigsa, vice president for human resources at E.C. de Luna, denied the allegations and said all the company’s projects were above board.
“There is no evidence to support the allegations. We’re still waiting for the official decision,” she said.
She said the company had completed road projects “ahead of time” and was paid by the Philippine government and foreign partners, whom she did not name.
She said they did not include any Chinese companies.
Corruption is pervasive in the Philippines and business leaders often complain that the culture of bribing officials and arranging kickbacks in exchange for approving deals is turning away investors.
Last year’s survey of 1,400 business people by Hong Kong-based Political and Economic Risk Consultancy Ltd found that the Philippines was seen as most corrupt among 13 Asian economies.
In one high-profile case in 2007, Philippine President Gloria Macapagal Arroyo scrapped a US$330 million broadband contract with China’s ZTE Corp (中興通訊) after a Senate hearing implicated a former elections chief as a broker in the allegedly overpriced deal, as well as Arroyo’s husband. Both men have denied wrongdoing.
Partly owing to corruption and poor infrastructure, including roads, the Philippines has one of the lowest investment rates in the region at about 15 percent of GDP.
Comparable economies were attracting 20 percent or higher.