Medupi: Hitachi to make “substantial payment” to AfDB anti-corruption unit

From the African Development Bank

Abidjan, Côte d’lvoire, December 2, 2015 – The African Development Bank Group (“AfDB”) announces that on November 30, 2015, it concluded a Settlement Agreement with Hitachi, Ltd. (“Hitachi”) of Tokyo, Japan.

The Settlement Agreement follows a three-year investigation by the AfDB’s Integrity and AntiCorruption Department (the “IACD”) into allegations of sanctionable practices by certain Hitachi subsidiaries on the AfDB-financed Medupi Power Station Boiler Works Contract in the Republic of South Africa. The IACD alleged that at the material time Hitachi Power Europe GmbH (“HPE”), based in Germany, and its South African subsidiary, Hitachi Power Africa (Pty) Ltd. (“HPA”), engaged in sanctionable practices in order to be awarded the boiler works contract.

Medupi_Eskom

The AfDB acknowledges that Hitachi and its affiliates co-operated fully and openly with the IACD investigation, and that Hitachi was determined throughout to maintain its good relations with the AfDB and to protect the integrity of the Medupi project.

Despite their differences, both parties shared a desire to resolve the current difficulties by way of settlement. Due in part to the high level of assistance provided to the IACD by Hitachi, the AfDB has agreed to impose the sanction of debarment for twelve months with conditional release upon HPE and HPA, the two companies at the centre of the IACD investigation.

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Debarment will be terminated as soon as Hitachi enhances its integrity compliance programme to the standard set by the AfDB’s Integrity Compliance Guidelines. Moreover, Hitachi has voluntarily agreed (1) to make a substantial financial contribution to the AfDB, which will be used to fund worthy anti-corruption causes on the African continent; and (2) to co-operate with the IACD on a variety of matters, including enhancing where necessary its existing integrity compliance programme referenced above.

“The sanctions imposed under the settlement agreement reflect the level of cooperation provided by Hitachi, Ltd. in the investigation of the Medupi matter, for which the IACD is grateful,” said Anna Bossman, Director of the IACD. “Hitachi has shown by its actions that it is committed to doing business in an ethical manner and the IACD believes in giving credit for such dedication.

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As I have said before, the IACD is ever willing to resolve amicably allegations of sanctionable practices with companies that show a sincere commitment to integrity, who collaborate in the resolution of allegations and who elect to enhance their compliance policies and procedures.”

On October 30, 2007, Eskom awarded the AfDB-financed Medupi Power Station Boiler Works Contract for the design, manufacture, supply, erection and commissioning of six coal-fired steam generator units at its Medupi plant at Lephalale in the Limpopo Province of South Africa to the consortium of HPE and HPA. Johann Benöhr led the IACD investigation with support from Funmilayo Akinosi and Simeon Obidairo. Lee Marler, Neil Macaulay and Alex Haines of Bretton Woods Law, London, represented the IACD.

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