Background
The African Development Bank Group announced its decision to debar four Nigerian companies duly registered for 24months as a result of fraudulent practices. This shocking revelation was made by AfDB’s Communications and External Relations Department on Thursday in Abuja. It revealed that the companies were Sangtech International Services Limited, Sangar & Associates (Nigeria) Limited, Mashad Integrated and Investment Co. Limited, and Medniza Global Merchants Limited.
This decision was implemented following an investigation that was conducted by AfDB’s Office of Integrity and Anti-corruption to the effect that the affected companies were found to have been engaging in fraudulent and collusive practices. It was discovered that these fraudulent practices occurred when there was a tender for supply of water meter, automatic meters as well as house connection materials which were to be used under the Zaria Water Supply Expansion and Sanitation Project in Nigeria which apparently were co-financed by the African Development Fund which is an entity of the African Development Bank Group.
READ: AfDB bans 4 Nigerian companies for engaging in fraudulent and deceitful practices
Current situation
Right now, Sangtech International Services Limited, Sangar & Associates (Nigeria) Limited, Mashad Integrated and Investment Co. Limited and Medniza Global Merchants Limited have been sanctioned by AfDB to the effect that they will not be qualified for any bank-financed projects during the duration of the debarment. This debarment is to last for twenty-four (24)months during which other development banks that are under the Agreement for Mutual Recognition of Debarment Decisions can also cross debarr; banks which include the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank as well as the World Bank Group.
READ: World Bank’s statement on Africa’s debt status is inaccurate, misleading, AfDB replies
Grounds for legality
On this, the African Development Bank Group explicitly frowns on corruption, fraud and other sanctionable conduct or practices and views them as deterrents in achieving its mandate. AfDB’s focus on putting a stop to these questionable practices has resulted in adopting proactive approaches which include setting up the Integrity and Anti-Corruption Department( IACD) whose responsibilities involve risk assessments, sensitization programmes tasked with trying to prevent fraudulent activities that may arise in operations and procurement incidents within the African Development Bank Group.
The IACD has an overriding mandate to independently embark on investigations of allegations of corruption, fraud and other sanctionable practices that have occurred during the Bank Group’s Financed Operations. Surveillance measures are also encouraged during the investigations.
READ: S&P Global affirms AfDB’s AAA rating, projects stable outlook
Consequences
The effects of this sanction are far-reaching, either long term or short term, the end result is the same. The African Development Bank Group and  IACD have not stated in very clear terms what constitutes the fraud. And this was not explicitly stated during the announcement of the debarment. However, this does not mitigate the sanction one bit, as the effects extend beyond the duration of 24 months.
The four affected Nigerian companies affected will undergo difficulties in operations and getting awarded contracts. This is so as the credibility of the companies have been called into question. Furthermore, the companies have no way of defending themselves or their actions before a court of law or legally constituted hearing. A public apology by the companies in question will do more harm to the integrity of the companies and is not an option to consider, in which case, the companies have been blacklisted and there is an unspoken word out not to conduct business with the companies. This, the companies will continue to suffer for many months to come even after the sanction is over and extend to years. Whether other development banks act on this remains to be seen but this incident will constitute a major roadblock in the affected companies getting the chance of working in financed operations, irrespective of the bank in question.
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Conclusion
This is why companies are advised to carefully acquaint themselves with the Bank Group’s guidelines and adhere strictly to avoid getting involved in fraudulent and corrupt practices and facing sanctions that damage the company’s integrity.
