Australian firm suspended for fraud by World Bank

The aftermath of tsunami and earthquake that hit the northwestern coast of Sumatra on December 26, 2004. The World Bank has suspended an Australian consultancy firm for evidence of fraud in a post-tsunami recovery project in Indonesia. Photo by: Australian Civil-Military Center / CC BY

The World Bank has suspended Australian consultancy firm GHD for a year after finding evidence of fraud in an $18-million post-tsunami recovery project in Indonesia.

GHD is barred from bidding or being awarded any contract for any bank-financed or bank-executed projects until June 10, 2014, but it is still unclear if the sanction will extend to other major multilateral banks under the 2010 cross-debarment agreement.

The announcement was made by the World Bank on Thursday after an inquiry by the bank found evidence of illicit activity by GHD Pty Ltd., its Indonesian arm GHD Indonesian Operating Center and PT Global Hutama Desain in a rehabilitation and reconstruction project financed by the bank in Aceh and North Sumatra in the wake of the killer Indian Ocean tsunami that killed over 130,000 people in Indonesia in 2004.

The investigation revealed that between 2007-2008, GHD requested false housing reimbursements and transportation allowances amounting to $210,000 and $150,000, respectively. The firm also allegedly failed to disclose a $43,000 “marketing fee” paid to a sub-consultant and the lease of vehicles from a company owned by a relation of another sub-consultant.

GHD, which so far has not denied the allegations, did not reply to several requests for comment from Devex.

“This case demonstrates that our commitment to detecting and investigating fraud in Bank-financed projects remains a top priority to ensure development funds reach their intended beneficiaries,” Leonard McCarthy, World Bank Integrity Vice President, said in a statement.

The firm joins the ranks of 72 entities sanctioned by the World Bank this fiscal year. Some, like Canada’s Altalink Investment Management Ltd. and U.S. firm Aqua Data Inc., were debarred for ten years.

GHD Chief Executive Officer Ian Shepherd told the Australian media on Thursday that the events in Indonesia were isolated and will not impact the company’s relationship with its clients that he said was forged “over a long period of time.”

According to the mission statement posted on the firm’s website, GHD has supplied since 1968 project management and technical services in over 800 projects to development heavyweights working in Asia-Pacific including AusAID, the Asian Development Bank, the United Nations and the Canadian International Development Agency.

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About the author

  • Johannamorden profile

    Johanna Morden

    Johanna Morden is a community development worker by training and a global development journalist by profession. As a Devex staff writer based in Manila, she covers the Asian Development Bank as well as Asia-Pacific's aid community at large. Johanna has written for a variety of international publications, covering social issues, disasters, government, ICT, business and the law.

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