World Bank bars Alstom units for 'improper payment'

Thu Feb 23, 2012 5:57am GMT
 

WASHINGTON (Reuters) - The World Bank on Wednesday blacklisted two subsidiaries of French engineering company Alstom for the next three years for "improper payment" in a Zambian hydropower project funded by the global development lender.

A settlement between the World Bank and Alstom, which the Bank said had acknowledged the "misconduct," includes a restitution payment of about $9.5 million by Alstom Hydro France and Alstom Network Schweiz (Switzerland).

The World Bank spends billions of dollars annually on development projects in some of the world's poorest countries to eradicate poverty. It has come under pressure from member countries to root out corrupt use of its funds and stepped up efforts to blacklist companies and individuals that abuse its funds.

The World Bank said Alstom made "an improper" payment of 110,000 euros in 2002 to a company controlled by a former senior Zambian government official related to the Zambia power project financed by the Bank.

"Alstom's settlement with the Bank is a wake-up call to global companies that are involved in development business that (they) need to ensure their operations with the World Bank are clean," Leonard McCarthy, the World Bank's anti-corruption chief said.

Alstom initially downplayed the action but later distanced itself from the comment.

"For us it's an allegation which hasn't been proven, on which we've agreed to a settlement with the World Bank and which relates to a deal which is old and limited in scope," the spokesman said.

Later, Alstom's General Counsel Keith Carr said in a statement: "Alstom aligns itself with the World Bank press release. Any comments that were previously made by Alstom are not valid."

The World Bank said the debarment could be reduced to 21 months if the companies comply with all conditions of the agreement, which includes continuing to improve their internal compliance programs.

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