During the bidding process for a project funded by the World Bank Group (“WBG”), a local employee of a large Chinese state-owned enterprise ("Company" or "Client"), falsified the Company seal and the past experiences inconsistent with the original contracts in the bidding documents, and submitted the bid on behalf of the Company without authorization. As a result, the Integrity Vice presidency (“INT”) of the WBG issued the Show Cause Letter and initiated investigation against the Company, intending to impose a sanction of 15-monthperiod against the Company, which, if imposed, would adversely affect and seriously damage the business and reputation of the Company.
JunHe team, upon engagement, immediately assisted Client to sort out the case materials and collect supporting evidences, and strategized to mitigate or avoid the WBG sanctions. According to such strategy, JunHe team has conducted several rounds of negotiations with the INT, prepared sufficient evidences, drafted a number of response letters to clarify relevant facts and legal issues, and submitted the documents and evidences to the INT. In the meantime, JunHe team also assisted Client to establish 13 sets of integrity compliance rules in consistent with the standards and principles of the WBG, conducted a number of targeted compliance trainings for the senior managers, compliance officers and all employees of the Company, and effectively promote the implementation of the international-standard compliance rules within the Company. Moreover, In response to the WBG’s investigation against the misconduct occurred during the investigation process and with the efforts to avoid the WBG sanction, JunHe, together with a leading US law firm with significant WBG investigation experiences, promptly conducted an independent third party investigation on the misconduct, drafted comprehensive and informative investigation report in English language, and submitted relevant supporting documents and evidences to the INT to prove that the company was not involved in such misconduct of its employees, which eventually played an important role in the avoidance of sanction for the Company.
Early November 2020, Client received a notification from the WBG informing the Company that the WBG will discontinue its investigation in this case. This means the Company will not be held liable for the misconducts committed by its employees and no sanction will be imposed on the Company after one and half year investigation by the INT. Among all investigations initiated against Chinese enterprises by the INT, although there have been cases where sanctions were mitigated, very few ended up being discontinued. The present case, where JunHe helped the Chinese state-owned enterprise to successfully avoid WBG sanctions after the negotiations with the WBG, demonstrates JunHe team's deep knowledge of the WBG sanction policies and significant experiences in handling WBG sanction as well as the multilateral development banks (“MDBs”)’ compliance and investigation matters. The success of this case also shows that, Chinese companies, when confronted with the investigations by MDBs, could successfully avoid the MDBs sanction with the assistance of professional lawyers, and that one of the most effective steps to be taken under the MDB investigation is to promptly establish compliance rules of world standard and to improve company's compliance management system.