AfDB bans Chinese road builder over corruption in Uganda

AfDB bans Chinese road builder over corruption in Uganda
Trucks parked at China Henan International Cooperation Group's yard in Soy, Uasin Gishu County in 2018.

Nairobi, Kenya | By Michael Wandati | The African Development Bank (AfDB) has imposed a 12-month ban on China Henan International Corporation Group (Chico), a Chinese road construction company, citing “fraudulent activity” in a project it is financing in Uganda.

Effective from March 28, Chico will be barred from participating in any new AfDB-funded projects across the continent, including its ongoing project in Kenya.

According to AfDB’s investigation, Chico failed to disclose its use of a commission agent during the bidding process for civil works in the upgrading of the Rukungiri-Kihihi-Ishasha/Kanungu road in Uganda, a key component of the Road Sector Support Project.

The road project, essential for promoting regional integration and cross-border trade with neighboring countries like the Democratic Republic of the Congo and Kenya, spans across the southwestern and eastern regions of Uganda.

Chico has been involved in road projects in Kenya, Tanzania, and Uganda, funded by various entities including the AfDB, World Bank, and local governments, some of which have faced similar issues.

In 2022, Chico halted work on the AfDB-backed Kisii-Isebania road project in southwestern Kenya, demanding payment of outstanding arrears totaling Ksh1.5 billion ($11.3 million).

In 2019, the company faced charges in a Kisii court for allegedly falsifying lease agreements for land parcels and unlawfully acquiring soil worth Ksh3.7 million ($27,907) from a farmer.

Meanwhile, in Tanzania, Chico is currently engaged in the construction of a 57-kilometer road connecting Mkiwa-Itigi and Noranga towns in the Singida region of central Tanzania.

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The AfDB has recently taken action against several companies for their involvement in fraudulent activities within projects it finances. Last year, it banned five firms, including Kenyan company Goldsun Investments, for corrupt practices during the tender process for the dualling of the 84km Kenol-Sagana-Marua highway in Central Kenya.

Following the 12-month ban, Chico and its affiliates, including its leadership and subsidiaries, will be ineligible to participate in any Bank Group-financed activities.

“At the expiry of the debarment period, China Henan International Cooperation Group Company Limited will only be eligible to resume participation in African Development Bank Group-financed activities after it implements an integrity compliance program consistent with the Bank’s guidelines,” the lender said.