Republic of Albania

Power Sector Rehabilitation and Restructuring Project &
   Power Sector Generation and Restructuring Project

                                   Redacted Report




                                               March 2018
                            Statement of Use and Limitations

This Report was prepared by the World Bank Group (the WBG) Integrity Vice Presidency
(INT). It provides the findings of an INT administrative inquiry (the Investigation) into
allegations of corrupt, fraudulent, collusive, and/or coercive practices, as defined by the
WBG for purposes of its own policies, rules and procedures (the WBG’s Framework
regarding Anti-corruption), in relation to the WBG-supported activities. The purpose of
the Investigation was to allow the WBG to determine if the WBG’s Framework regarding
Anti-corruption has been violated.

This Report is being shared to ensure that its recipients are aware of the results of the INT
Investigation. However, in view of the specific and limited purpose of the Investigation
underlying this Report, this Report should not be used as the sole basis for initiating any
administrative, criminal, or civil proceedings. Moreover, this Report should not be cited
or otherwise referred to in the course of any investigation, in any investigation reports, or
in any administrative, civil, or criminal proceedings.

This Report is provided without prejudice to the privileges and immunities conferred on
the institutions comprising the WBG and their officers and employees by their respective
constituent documents and any other applicable sources of law. The WBG reserves the
right to invoke its privileges and immunities, including at any time during the course of an
investigation or a subsequent judicial, administrative or other proceeding pursued in
connection with this matter. The WBG’s privileges and immunities cannot be waived
without the prior express written authorization of the WBG.




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Background

The Power Sector Rehabilitation and Restructuring Project (the PSRRP) aimed to achieve
a significant improvement in the operational effectiveness of the power sector in Albania
through, among other things, the: (i) implementation of electricity-loss-reduction
measures; (ii) enforcement of billing, collection and disconnection policies; and (iii)
introduction of electricity price rationalization measures. The PSRRP was financed by an
International Development Association (IDA)1 credit and by the Government of Albania.
The PSRRP became effective in October 2002 and closed in December 2006.

The Power Sector Generation and Restructuring Project (the PSGRP) in Albania aimed to
achieve significant improvement in power system performance through: (i) priority
investments to increase domestic thermal generation; and (ii) measures to implement sector
reforms and institutional strengthening. The PSGRP was financed by, inter alia, an IDA
credit and funds from an Albanian corporation, Implementing Agency A. The PSGRP
became effective in January 2005 and closed in December 2011.

In response to Implementing Agency A’s advertised Invitation for Bids, Company A
submitted a bid for a contract under the PSRRP (the PSRRP Contract). The bidding
documents for the PSRRP Contract required that each bidder disclose whether any
commissions or gratuities paid, or to be paid, to agents relating to the bid and/or to the
contract execution. Company A’s bid included a declaration that no agents had been, or
were to be, paid commissions or gratuities in connection with its bid. Following the
evaluation process, Implementing Agency A awarded the PSRRP Contract to Company A,
and entered into the PSRRP Contract with Company A.

Implementing Agency A also issued an Invitation for Prequalification for a contract under
the PSGRP (the PSGRP Contract). Company A submitted an application for
prequalification. Company A’s application included a declaration that no commissions,
gratuities or fees were paid or to be paid to any agents regarding the PSGRP Contract
prequalification process, bidding process, or contract execution. After prequalifying,
Company A submitted its bid, which again included the same declaration. Company A
subsequently withdrew its bid for unrelated reasons.

Methodology

INT’s investigation consisted of a review of Project documents, as well as documents and
statements obtained from Company A and its parent company. INT also interviewed
several current and former Company A employees.




1
  IDA is one of the five institutions comprising the World Bank Group. IDA and International Bank for
Reconstruction and Development (IBRD) constitute the World Bank. Therefore, IDA and the World Bank
are used interchangeably throughout this Report.


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Findings

       Evidence indicates that Company A failed to disclose its contractual
       arrangement with Company B when competing for the PSRRP and PSGRP
       Contracts.

Evidence indicates that, in connection with its PSRRP and PSGRP bids, Company A
entered into contractual agreements with Company B before the issuance of the Invitation
for Bids for the PSRRP Contract and the Invitation for Prequalification for the PSGRP
Contract. According to the agreements between Company A and Company B, Company
B was to provide Company A with consultancy services related to the relevant tenders,
spanning from bid preparation to contract implementation. The services were to include
the provision of local knowledge, intelligence on the Albanian market, advice on the bid
proposals, and building and managing relations with the client. Company B was to be paid
on a success fee basis, subject to the successful award of the two contracts to Company A.

Specifically, evidence suggests that, regarding the PSRRP Contract, Company A agreed to
pay Company B a certain percentage depending on the amount of the contract. Evidence
suggests that Company B was paid a certain amount in connection with the PSRRP Contract.
Regarding the PSGRP Contract, evidence indicates that Company B was paid only service
expenses, and did not receive any success fee payments because the Company A – Company
B consortium withdrew its bid.

Evidence indicates that Company A failed to disclose these arrangements with Company
B, and instead made tender declarations that the arrangements did not exist.

During INT’s investigation, two former Company A employees informed INT that Company
A used agents in order to secure the award of contracts and that Company A’s policy was to
not disclose its use of those agents. During an initial interview with INT, current Company A
employees, including senior officials, denied having used, or even knowing of, Company B.

Subsequently, INT sent letters to both Company A and its parent company (the Parent
Company) regarding INT’s findings above. In response, both companies conducted
internal investigations. At the conclusion of those investigations, both companies
acknowledged that Company A had retained Company B as an agent for the PSRRP and
PSGRP Contracts, and had failed to disclose those agency arrangements. The Parent
Company acknowledged that Company A’s non-disclosure of Company B as an agent was
improper and inconsistent with the Parent Company’s governing policies. As a result of
its internal investigation, the Parent Company terminated several senior officials of
Company A.

Follow Up Action by the World Bank

The World Bank imposed sanctions on Company A.




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