The recent case of a Chinese company being banned by the African Development Bank (AfDB) for resorting to tender fraud has pointed up to the frequent involvement of Chinese companies in corrupt conduct in Africa. Three years ago, another Chinese company named Weihai Construction Group was blacklisted by the AfBD in relations to a project fraud.
Many Chinese companies have been subjected to blacklisting, bans, rejections in the recent past, especially, since the Belt Road Initiative was launched. Chinese construction giant CCCC, which received the highest number of projects under the BRI, has been banned, blacklisted, or scrutinised in dozens of countries. Its name has popped up in similar fraud cases in African nations.
AfDB blacklisted China Henan International Corporation Group (CHICO) in March this year after the bank’s anti-corruption wing found it involved in a fraudulent practice. The said Chinese road construction company failed to disclose the use of a commission agent while submitting a bid for civil works in Uganda. Now it has been suspended for 12 months.
CHICO can now get involved in AfDB’s projects only after implementing an integrity compliance program consistent with the bank’s guidelines. This means the Chinese company remain under the 12-month ban, leaving it ineligible for participation in AfBD-led activities.
In 2022, CHICO abandoned the Kisii-Isebania road project in southwestern Kenya over payment issues. The company was charged in a Kisi court over the charges of forging ease agreements to acquire land, and fraudulently obtaining soil worth USD 27,907 from a farmer.
The recent development is likely to affect CHICO’s operations and ongoing projects in Africa, which include the construction of a 57-kilometer road in
Tanzania. CHICO is working with governments in Africa and the World Bank as well. The blacklisting is set to prove detrimental to reputation of the CHICO and other Chinese companies working in Africa. Chinese companies have been under constant scrutiny for corruption and fraud for years.
In 2019, China Communications Construction Company (CCCC) was stuck in a controversy after it received the contract to build oil terminal project in Kenya’s Mombasa despite being blacklisted by the World Bank. Kenya’s government opened an investigation after it was found that the project cost was inflated by over 160 percent and company manipulated conditions.
The investigation report read “The tender was irregularly awarded by KPA to China Communication Construction Company (CCCC) despite the company not fulfilling the conditions set in the bid document.” The Chinese company CCCC was blacklisted by the World Bank for eight years for engaging in collusive policies in the Philippines.
World Bank also had in 2019 debarred another Chinese company named Dongfang Electronics for fraudulent bidding in Liberia. Chinese companies are fraudulent and they no longer practice hygienic business, said African socio-political commentator Kenya West. Not only companies like CCCC be blacklisted but its directors be arrested, he demanded.
Notably, the CCCC is the biggest builder in the BRI. In 2018, it had over 700 projects spanning 100 countries. It was found involved in corruption in Malaysia, Sri Lanka, Canada, Bangladesh and Australia. In 2014, Kenya saw a parliamentary probe into awarding a contract to build a
railway line to the blacklisted company China Roads and Bridge Corporation (CRBC).
The tender fraud by the CCCC led to a huge uproar in Kenya as people demanded investigations. “We can’t allow foreign companies like CCCC with a tainted portfolio to have a free space in Kenya where we have rules and laws,” West said. In 2009, the CRBC had faced a 10-year ban in Tanzania after the World Bank had blacklisted it and other two Chinese firms over a procurement scandal.
Several African countries are concerned over other issues regarding Chinese firms, such as substandard construction, unfair labour practices, and unsustainable debt burdens. Kenya, Zambia, and Nigeria have started banning Chinese companies working in multiple sectors ranging from construction to telecommunications to energy.
Zambia has expressed worries over environmental degradations and human rights violations by Chinese firms. Foreign policy columnist Nosmot Gbadamosi said Chinese firms were behind severe labour and environmental abuses, which disproportionately harmed poor, rural, and otherwise vulnerable communities.