The World Bank Group has imposed a 21-month debarment on three PricewaterhouseCoopers subsidiaries in Africa after the three firms admitted culpability for collusive and fraudulent practices in connection with a major cross-border electricity project linking Ethiopia and Kenya. The sanctions, announced on Wednesday, bar PwC Associates Africa Ltd. in Mauritius, PwC Kenya, and PwC Rwanda from participating in World Bank Group-financed projects and operations.
EASTERN ELECTRICITY HIGHWAY PROBE
The sanctions stem from misconduct uncovered during the Eastern Electricity Highway Project, a World Bank-financed initiative to construct high-voltage transmission lines enabling cross-border electricity trade between the two East African nations. It falls under the first phase of the Eastern Africa Power Integration Program and was designed to increase the volume and reduce the cost of electricity supply in Kenya while providing Ethiopia with export revenues.
World Bank investigators found that the three PwC firms obtained confidential procurement information from project officials to improperly influence the award of a 2019 consultancy contract to implement International Financial Reporting Standards at Ethiopian Electric Power Corporation, and also sought to influence the award of a second contract to PwC Associates. The probe also revealed that during the selection and execution of a fixed asset inventory and revaluation contract for the Ethiopian Electric Utility, PwC Associates misrepresented the availability, qualifications, and employment status of key experts and failed to fully disclose all subcontracting arrangements.
SETTLEMENT AND ADMISSION OF GUILT
The debarment is the result of a negotiated settlement under which all three PwC entities formally admitted culpability for sanctionable practices. All three firms were found culpable of collusive practices, defined by the World Bank as arrangements between parties designed to achieve an improper purpose, including unfairly influencing the actions of another party. PwC Associates Africa was also found culpable of fraudulent practices, defined as the deliberate omission or misrepresentation of facts intended to mislead.
The settlement credits the firms for remedial steps already taken, including an internal investigation, action against responsible parties, ceasing business with the subconsultants involved, staff training and voluntarily refraining from bidding during the negotiations. As a condition of release, they must develop and implement an integrity compliance programme consistent with World Bank Group guidelines and continue to cooperate fully with the Bank's Integrity Vice Presidency. The reduced length of the ban reflects the firms' admission of misconduct, cooperation and remedial actions.
CROSS-DEBARMENT MULTIPLIES IMPACT
The sanctions extend well beyond World Bank projects through the Agreement for Mutual Enforcement of Debarment Decisions, signed by major multilateral lenders in 2010. Under this arrangement, the debarment qualifies for cross-debarment by the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank Group.
GOVERNANCE QUESTIONS FOR REGIONAL PROJECTS
PricewaterhouseCoopers Africa Limited, which coordinates and oversees PwC network firms in Africa, signed the settlement as a non-sanctioned party because it has oversight of its members' compliance.