Multilateral Development Bank Issues Debarment Notice for Collusive and Obstructive Practices in Connection with the China Yunnan Highway Asset Management Project

The Yunnan Highway Asset Management Project (the “Project”) was a c.$224 million infrastructure project intended to improve Yunnan’s trunk highway asset management capacity and provide a better level of service to trunk highway users. The Project was funded in part via a loan of c.$150 million by the International Bank for Reconstruction and Development, the lending arm of the World Bank.

On 12 November 2024, the World Bank’s Suspension and Debarment Officer (“SDO”) issued a Notice of Sanctions Proceedings which alleged that, in connection with the Project, Yunnan Anry Machinery Equipment Technology Development Co., Ltd (“Yunnan”) had engaged in: (i) a collusive practice by participating in an arrangement to receive and utilise early access to confidential information; and (ii) an obstructive practice by refusing to respond to the World Bank’s communications and requests for document production, in order to materially impede the exercise of the World Bank’s audit rights. Yunnan did not respond to the Notice within the prescribed period of 90 days, and the allegations were therefore deemed uncontested.

On 22 April 2025, the SDO issued a Notice of Uncontested Sanctions Proceedings confirming that Yunnan, together with its affiliates, has been debarred from World Bank-financed contracts or loans for a minimum of three years (the "Uncontested Proceedings Notice”). Pursuant to the Agreement for Mutual Enforcement of Debarment Decisions, the African Development Bank has issued a cross-debarment notice to mutually enforce the World Bank’s period of debarment, and we expect the remainder of the Multilateral Development Bank (“MDB”) community signatory to the Agreement for Mutual Enforcement of Debarment Decisions to issue their own cross-debarment notices shortly.

The effect of the Agreement for Mutual Enforcement of Debarment Decisions is that Yunnan and its affiliates will not be able to participate in any project that receives funding from an MDB signatory to the Agreement during the debarment period, unless or until the conditions of the Uncontested Proceedings Notice have been met. The severe sanction imposed on Yunnan is a timely reminder of the importance of compliance and cooperation on MDB projects.

Alex Haines of 4 Pump Court, a leading junior in this area and author of the MDB Debarment Frameworks chapter in Lissack and Horlick on Bribery and Corruption, commented that this case, “demonstrates how failure to cooperate and/or refusal to respond to the investigatory and anticorruption offices of MDBs such as the World Bank’s Integrity Vice Presidency is rarely a successful strategy.” Alex is a barrister called to the Bars of England & Wales and Ireland; he is also admitted as an attorney to the Bars of New York and Washington, D.C.

If you are engaged in MDB projects, have become involved in an MDB investigation and/or sanctions and debarment process, or would like to discuss compliance with MDB requirements, Orrick’s team in London and Washington are well-equipped to assist. Please email: Joseph Walker (Washington, D.C.) (joseph.walker@orrick.com), or William George (London) (wgeorge@orrick.com).