CRA Blog

World Bank debars fraudulent Vietnamese vendor

September 20, 2021

What happened:

On August 18, 2021, the World Bank announced that it had debarred a third-party vendor, Vietnamese company Newstech Trading and Investment Construction JSC (Newstech), after discovering fraudulent representations made by Newstech and its executives, who misrepresented their prerequisite backgrounds and expertise. The World Bank had previously retained Newstech as a vendor to assist with the Vinh Phuc Flood Risk and Water Management Project in Vietnam. According to the World Bank, Newstech had “misrepresented its prior experience and submitted falsified documents on the qualifications of key experts” in its bid for a contract related to the project. Upon realizing Newtech’s fraudulent claims, it issued a two-and-a-half-year debarment of the company.

RIA’s take:

Basic, preliminary research suggests that Newstech and its executives have little to no background in flood risk management:

  • According to Vietnam’s corporate registry, Newstech was incorporated in November 2012 by Le Ba Huan, its Director and Chairman. An online Vietnamese data aggregator noted that Le Thi Hoa is one of the company’s owners; according to her LinkedIn profile, she is a professor of psychology at the University of Social Science and Humanities in Ho Chi Minh City, Vietnam, with no background or expertise in flood risk management.
  • The Chairman of Newstech, Le Ba Huan, created a profile on website MyOpportunity.com, which stated he was a “sales lead” at Newstech interested in purchasing “aviation and aerospace” equipment on behalf of the company. This also portrays a completely different line of business for both Newstech and Le Ba Huan than that which was represented to the World Bank.
  • Newstech began advertising job openings on its Facebook page for water supply engineers in May 2018, just months before the World Bank announced in August 2018 that phase two of the Vinh Phuc Flood Risk and Water Management Project was underway. Prior to May 2018, Newstech’s posts on Facebook advertised open positions for English translators and featured more general posts pertaining to oncology, with no mention of flood risk management.

Why it matters:

Ensuring that contracts for technical projects are granted to individuals and companies with experience related to the venture’s goals is of utmost importance. Had the World Bank not discovered Newstech’s misrepresentations, costly – if not fatal – mistakes could have occurred during the Vinh Phuc Flood Risk and Water Management Project’s implementation.

Investigative due diligence services, combined with foreign language expertise, can confirm or expose background experiences and credentials relayed to clients by potential third-party vendors. This diligence can become even more crucial when operating in foreign jurisdictions, such as Vietnam, where there is a tendency to over rely on self-reported information from third-party vendors, as a result of the relative low-profile Internet presence many individuals and companies in these countries tend to maintain. Investigative due diligence could have enlightened the World Bank about the true background of Newstech and its executives, thereby preventing companies with no experience in highly technical endeavors from fraudulently garnering millions of dollars in contracts.

Authors