The World Bank debarred Sydney, Australia-based GHD Pty Ltd. and two Indonesia subsidiaries last month from bank-financed projects for one year after a review found the local units and a sub-consultant had overbilled on a now-completed consulting contract for post-tsunami reconstruction.
The bank's June 10 sanction does not apply to projects financed by other multi-lateral funding institutions under a "cross-debarment agreement," says a bank spokeswoman. GHD says the actions were isolated and confined to managers in Indonesia, a new market for the firm at the time.
The firm had been temporarily suspended from bank-financed work since 2011. It also withdrew from seven projects and an additional 18 bids, says a published report in Australia.
GHD ranks at No. 41 on ENR's list of the Top 150 Global Design Firms, with $1 billion in total revenue in 2012, and at No. 53 on ENR's list of the Top 200 International Design Firms, with $246 million in non-Australian revenue. About 27% of its total revenue was in transportation and 23% in water supply.
A probe by the bank's new "integrity" unit found that GHD, which was new to the Indonesia market, did not adequately disclose "certain fees paid to the sub-consultant," which supplied technical and professional staff, and submitted inflated and questionable cost-reimbursement claims.
According to the bank's sanction decision, the overstated claims totaled about $400,000 on GHD's $18-million contract for reconstruction engineering in Sumatra following the 2004 tsunami. The contract was awarded in 2007 and completed in 2010.
The decision also cited as sanction factors actions by GHD and its units to continue the overbilling and to "interfere" with bank probers.
The decision acknowledges, however, that the firm "erred in interpreting the disclosure and reimbursement requirements" under the contract "and deserves mitigating credit for voluntary corrective actions and cooperation."
The named local units have since been closed, says the bank. The company says a senior staff member, whose actions were cited by the bank, is no longer employed by GHD.
Leonard McCarthy, the bank's integrity vice president, noted that the bank's "commitment to detecting and investigating fraud in bank-financed projects remains a top priority."
In an emailed statement, GHD's CEO, Ian Shepherd, says the World Bank decision "relates to an incident isolated to this project, over a limited time frame (2007-2008) and does not impact on any other projects undertaken by the companies."
Adds Shepherd, "GHD has mandatory training and guidelines for our people regarding the reporting of improper business practices as part of our integrity management policy and system. Our systems are constantly reviewed and upgraded in line with best practice."
He further says the firm is "genuinely committed to maintaining our significant investment in training to ensure that our people feel confident to manage responsible business practices, no matter where they are in the world."
The World Bank says, so far, it has debarred 72 companies across the business spectrum in fiscal 2013. These firms include Montreal-based engineer SNC Lavalin, more than 100 of SNC Lavalin's affiliates and India-based engineer Larsen and Toubro Ltd.
There have been a total of 252 "jointly recognized" debarments among the funding entities that have signed the cross-debarment pact.
