After receiving a declination with disgorgement last week from the Fraud Section of the Justice Department’s Criminal Division, CDM Smith has been sanctioned by the World Bank for failing to disclose a sub-consulting agreement for a project in Vietnam.
The World Bank said it “conditionally non-debarred” CDM Smith and its affiliates for one and a half years. Under the terms of the Negotiated Resolution Agreement (NRA), “this duration may be reduced to 15 months if, by then, CDM Smith has met its conditions for release,” the World Bank stated.
When conditionally non-debarred, a firm remains eligible to participate in Bank-financed projects—but only if it fully meets certain conditions to step up its compliance program and cooperate with the World Bank Integrity Vice Presidency. If any of these conditions are not met, the firm will be automatically debarred.
“When executing a consulting contract financed by the Da Nang Priority Infrastructure Investment Project in the Socialist Republic of Vietnam, CDM Smith failed to disclose a sub-consulting agreement with a local Vietnamese company and did not seek a contractually-required written approval of the agreement from the Project implementing agency,” the World Bank said.
CDM Smith subsequently “fully and voluntarily” disclosed this misconduct to the World Bank and “fully cooperated.” Under the terms of its settlement, CDM Smith must adopt a corporate compliance program consistent with the World Bank Group Integrity Compliance Guidelines, and fully cooperate with the World Bank in advancing its anti-corruption work.
In a letter agreement, dated June 21, the Fraud Section of the Justice Department’s Criminal Division said, “consistent with the FCPA Pilot Program,” that it was closing its investigation into CDM Smith concerning alleged violations of the Foreign Corrupt Practices Act. The Department said it would not be bringing any enforcement action, but did require the company to disgorge $4 million in illegal profits.