Financial Crime World

Financial Sanctions Enforced in Madagascar: Construction Company Debarred for Collusive and Fraudulent Practices

The World Bank Group has announced the debarment of Colas Madagascar S.A., a construction company based in Madagascar, for two years due to collusive and fraudulent practices related to the Airports Madagascar Project. This enforcement action is part of the institution’s efforts to promote high integrity standards in International Finance Corporation (IFC)-financed projects.

Investigation Findings

According to the World Bank Group’s Integrity Vice Presidency, Colas Madagascar S.A. engaged in collusive practices by arranging improper meetings with government officials between February 4, 2015 and May 4, 2015, during the tender for a 28-year contract to run the country’s main airports. The company also failed to disclose these meetings to the IFC, committing a fraudulent practice.

Settlement Agreement

The settlement agreement was negotiated with multiple companies involved and includes a reduced period of debarment in light of the company’s cooperation and voluntary remedial actions. As part of the agreement:

  • Colas Madagascar S.A.’s parent company, Colas S.A., has committed to adapt its group-wide corporate integrity compliance program to reflect the principles set out in the World Bank Group Integrity Compliance Guidelines.
  • The companies have agreed to implement and maintain this program as part of their business operations going forward, including at CMBI SNC, a subsidiary of Colas Madagascar S.A.
  • The company has also committed to continue fully cooperating with the World Bank Group Integrity Vice Presidency.

Cross-Debarment

The debarment of Colas Madagascar S.A. qualifies for cross-debarment by other multilateral development banks (MDBs) under an agreement signed on April 9, 2010. This means that the company will be ineligible to participate in projects and operations financed by institutions of the World Bank Group for a period of two years.

Airports Madagascar Project

The Airports Madagascar Project is supported by IFC and provides partial financing for the design and development of expansion and renovation works at the country’s main airports, Ivato International Airport and Fascene Airport. The settlement demonstrates how sanctions can be used to promote better business practices in private sector development projects.

Conclusion

The debarment of Colas Madagascar S.A. is a significant step towards promoting high integrity standards in IFC-financed projects. It sets an example for companies operating in the region and reinforces the importance of ethical business practices.