The African Development Bank (AfDB) has sanctioned China Henan International Corporation Group (CHICO), a Chinese road construction company, for involvement in fraudulent activities within a project financed by the bank in Uganda.
CHICO has been barred from participating in any new AfDB-funded projects across the continent, including ongoing projects in Kenya, for a period of 12 months starting from March 28.
An investigation conducted by AfDB revealed that CHICO failed to disclose the utilization of a commission agent during the bidding process for civil works related to the upgrading of the Rukungiri-Kihihi-Ishasha/Kanungu road project in Uganda, which is part of the Road Sector Support Project.
The road project in Uganda, spanning the southwestern and eastern regions, is deemed crucial for enhancing regional integration and facilitating cross-border trade with neighboring countries like the Democratic Republic of the Congo and Kenya.
CHICO, known for its involvement in road projects across Kenya, Tanzania, and Uganda, has faced controversies in the past. In 2022, the company abandoned the AfDB-funded Kisii-Isebania road project in Kenya due to payment disputes. Additionally, it has been embroiled in legal issues, including accusations of forging lease agreements and fraudulent acquisition of soil in Kenya.
In Tanzania, CHICO is currently involved in the construction of a 57-kilometer road linking Mkiwa-Itigi and Noranga towns in the Singida region.
AfDB has been increasingly stringent in penalizing companies involved in fraudulent activities in its funded projects. Last year, it imposed sanctions on several firms, including Kenyan company Goldsun Investments, for corruption related to a highway project in Central Kenya.
Following the 12-month ban, CHICO and its affiliates will need to implement an integrity compliance program consistent with AfDB’s guidelines to be eligible for participation in Bank Group-financed activities again.
