The African Development Bank (AfDB) has imposed a ban on the China Henan International Corporation Group (CHICO), a Chinese road construction company, for engaging in fraudulent activities in a project funded by the bank in Uganda. The ban, effective March 28, will last for 12 months, during which CHICO will be unable to participate in any new AfDB-funded projects across the continent, including ongoing projects in countries like Kenya.
An investigation conducted by the AfDB revealed that CHICO had failed to disclose the use of a commission agent while submitting a bid for a tender related to the procurement of civil works for the upgrading of the Rukungiri-Kihihi-Ishasha/Kanungu road to bituminous standard, a crucial component of the Road Sector Support Project in Uganda. This fraudulent activity led to the imposition of the ban on CHICO by the AfDB.
The road project, which spans the southwestern and eastern parts of Uganda, holds significant importance in promoting regional integration and cross-border trade with neighboring countries like the Democratic Republic of the Congo and Kenya. CHICO, based in Henan, China, has been involved in road construction projects across East Africa, including Kenya, Tanzania, and Uganda, with funding from various sources such as the AfDB, World Bank, and local governments.
However, CHICO’s projects have been marred by controversies and legal issues in the past. In 2022, the company abandoned the AfDB-funded Kisii-Isebania road project in Kenya after demanding payment of arrears amounting to $11.3 million. Additionally, in Tanzania, CHICO faced legal charges in 2019 for forging lease agreements and fraudulently obtaining soil from a farmer.
The AfDB’s decision to ban CHICO is part of its ongoing efforts to crack down on fraudulent activities in projects it funds. In recent years, the bank has debarred several companies found to be involved in corruption and misconduct. For instance, last year, five companies were prohibited from participating in AfDB-funded projects, including Kenyan company Goldsun Investments, which was implicated in corruption during a tender process for a highway project in Central Kenya.
Following the one-year ban, CHICO and its affiliates will only be eligible to resume participation in AfDB-financed activities after implementing an integrity compliance program consistent with the bank’s guidelines. This measure underscores the AfDB’s commitment to promoting transparency, accountability, and integrity in development projects across Africa.
