LTA awards $210m contract for 2 MRT stations to Chinese firm debarred by World Bank

Source :ChannelNews Asia.

It was reported in the media today (10 Dec) that LTA has awarded a $210 million contract to build two stations on the Jurong Region Line (JRL) to China Railway 11 Bureau Group (‘Chinese firm wins $210m contract for 2 MRT stations‘).

The China Railway 11 Bureau Group is expected to start work on the stations next year and complete the projects in 2026. JRL is set to open in three stages from 2026.

The LTA said the contract covers the design and construction of both the stations and 1.15km of viaducts. It also praised the China Railway 11 Bureau Group saying that the Chinese firm has an established track record of infrastructure projects.

According to the website from the Singapore branch of the company, the China Railway 11 Bureau Group Corporation (CR11G) is said to be the “backbone subsidiary” of China Railway Construction Corporation (CRCC). And according to Bloomberg, CR11G (中铁十一局集团有限公司) is headquartered at 277 Zhongshan Road, Wuchang District, Wuhan, China. Its parent CRCC, in turn, is a Chinese state-owned construction enterprise based in Beijing. CRCC was the second largest construction and engineering company in the world by revenue in 2014.

Scandals involving CRCC and affiliates

The Nikkei Asian Review described CRCC as a state-owned company with businesses “susceptible to Communist Party policies”.

“Its overseas strategy is basically the same as Beijing’s foreign policy. While CRCC can benefit from the government’s infrastructure export policy, many developed countries argue it has problems in ensuring transparency in management and safety,” reported Nikkei Asian Review.

In Jun this year, the World Bank debarred CRCC and 2 of its subsidiaries, China Railway 23 Bureau Group (CR23G) and China Railway Construction Corporation International Limited (CRCC International), as well as 730 of its controlled affiliates from all projects financed by World Bank in connection with their misconduct under the East-West Highway Corridor Improvement Project in the Republic of Georgia.

World Bank debarred CRCC and its affiliates for 9 months as part of a settlement agreement related to misconduct during the procurement process for the Georgia’s highway construction contract.

According to the facts of the settlement, during the pre-qualification and bidding process for the highway construction contract, the CRCC companies prepared and submitted information that misrepresented the personnel and equipment and the experience of other entities in its group as CRCC’s. These actions are considered fraudulent practices as defined by World Bank Procurement Guidelines.

Following their nine-month debarment, CRCC companies will be conditionally non-debarred for 24 months. World Bank said, “During this period, they will again be eligible to participate in World Bank-financed projects as long as they comply with their obligations under the settlement agreement. If they do not, the conditional non-debarment will convert to debarment with conditional release.”

The settlement provides for a reduced period of debarment due to CRCC’s acknowledgement of responsibility, their voluntary remedial and corrective actions, their cooperation and other mitigating factors, World Bank said.

China Railway 11 Bureau Group in World Bank’s debarred list

Interestingly, among the CRCC companies debarred by World Bank due to fraudulent procurement practices is CR11G (中铁十一局集团有限公司):

World Bank listed CR11G as being debarred for contravening its Procurement Guidelines, 1.16(a)(ii). The debarment started from 4 Jun 2019 and is slated to be conditionally “non-debarred” for 24 months on 3 Mar 2020 next year. During the next 2 years after it would be removed from the list, World Bank will be watching them and other CRCC companies closely to see if they would comply with their obligations under the settlement agreement.

Of course, Singapore being a “rich country” would probably not need any financing from World Bank, and would be able to finance the JRL construction itself. In this case, it doesn’t really matter if CR11G is debarred by World Bank or any other international bodies or financial institutions.

In any case, CR11G has been blacklisted by the Manpower Ministry before for 3 months. It accumulated some 25 demerit points for contravening MOM regulations last year:

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