Business - World Bank bars seven firms, 3 from RP

WASHINGTON - The World Bank said on Wednesday it had uncovered a major cartel involving local and international firms bidding on a Philippines roads project and it had barred seven companies following an investigation.

The World Bank's corruption-fighting unit said the firms, including four state-owned Chinese firms, were blacklisted for "engaging in collusive practices" during the bidding of the project financed by the Washington global development lender.

"As a result of swift action when suspicions of collusion in the bidding process were raised by the project team, the World Bank stopped an estimated $33 million from being awarded," the World Bank said in a statement. It said no funds were disbursed to any of the firms.

It listed the companies as:

* Philippine-based E.C. de Luna Construction Corp. and its owner Eduardo de Luna, were barred permanently, the strongest possible sanction and the first since 2004.

* China Road and Bridge Corp. was barred for eight years.

* China State Construction Corp. and China Wu Yi Co. Ltd. were each barred for six years.

* China Geo-Engineering Corp. was barred for five years.

* Philippines? Cavite Ideal International Construction and Development Corp. and CM Pancho Construction, Inc. were each barred for four years.

Korean firm Dongsung Construction Co. Ltd. was separately sanctioned in August 2008 for four years for fraud and corruption related to the Philippines National Roads Improvement and Management Program.

The sanctioning of the firms by the World Bank comes three days after the institution said it would publish the names of all companies involved in wrongdoing, including those that have direct contracts with the Bank.

The decision by World Bank President Robert Zoellick follows revelations that Indian IT firm Satyam Computer Services Ltd., which the Bank sanctioned in September but did not name publicly, was involved in a $1 billion corporate fraud scandal, which hit Indian stocks and the rupee currency.

On Sunday, the Bank named three companies, including Satyam, it had barred from qualifying for direct contracts with the Bank. The other firms included Wipro Technologies, India's third largest software company, and India's Megasoft Consultants.

"As the World Bank Group continues to ramp up its anti-corruption work, INT will remain vigilant in investigating allegations and holding wrongdoers accountable," said World Bank Integrity Vice President Leonard McCarthy, referring to the Philippines road project.

He said the World Bank was in the process of conducting a global review of the Bank's activities in the road sector in developing countries.