World Bank bans two consultancy companies and an individual for "fraudulent practices".

News Desk

Pakistan-based consultancy companies Solutions for Development Support (Pvt.) Ltd. and Community Resilience Initiative, as well as Mr. Malik Nasir Hussain Tanoli, a Pakistani national have been banned from World Bank contracts as a result of a failure to disclose material facts in relation to the Sindh Resilience Project in Pakistan. But from a KYC point of view, all is not as it first seems.

The debarment makes the companies, Hussain and any of their controlled affiliates ineligible to participate in World Bank Group-financed projects and operations until at least October 20, 2027. It is part of a settlement agreement under which the companies and Hussain acknowledge responsibility for the underlying improper practices and agree to meet specified integrity compliance conditions as a condition for release from debarment.

The World Bank says Solutions for Development Support (Pvt.) Ltd., Community Resilience Initiative, and Mr. Hussain failed to disclose their close affiliation in tenders financed under the project, while Mr. Hussain was acting as the procurement and contract management specialist for the Provincial Disaster Management Authority, Sindh, which implemented the project. These failures constitute fraudulent practices under the World Bank’s Consultant Guidelines.

The settlement agreement provides for a reduced period of debarment in light of the companies’ and Mr. Hussain’s cooperation and acceptance of responsibility. As a condition for release from sanction, Solutions for Development Support (Pvt.) Ltd., Community Resilience Initiative, and any affiliate that Mr. Hussain or the companies currently control or comes to control directly or indirectly, during the period of World Bank sanction, will be required to develop and implement integrity compliance measures consistent with the principles set out in the World Bank’s Integrity Compliance Guidelines. In addition, Mr. Hussain commits to undertake corporate ethics training. Mr. Hussain and the companies also commit to continue to fully cooperate with the World Bank Integrity Vice Presidency.

What is clear is that the World Bank alleges fraud in process i.e. a failure to disclose material facts. It has not alleged a financial fraud.

The case highlights the risks of relying on headlines without considering the facts. In essence, this is a compliance failure not criminal activity which should be treated differently for financial crime risk purposes.