WASHINGTON — The World Bank said on Wednesday it has sanctioned a Chinese state electric engineering group and its subsidiary over fraudulent practices in a power project in Zambia, setting out new conditions for them to participate in bank-financed projects.

The action bars China Electric Design and Research Institute Co. Ltd. (CEDRI) from participating in World Bank projects for up to 18 months, with the ability to meet new compliance conditions and end the ban. The firm’s parent company, China National Electric Engineering Co. Ltd. (CNEEC), was allowed to continue to participate in projects under a settlement agreement, but could be banned if it fails to meet agreed conditions, the bank said.

The sanctioned firms are contractors on the $210 million Lusaka Transmission and Distribution Rehabilitation Project, which aims to reinforce and upgrade the power transmission and distribution network in Zambia’s capital.

“CEDRI engaged in fraudulent practices by failing to disclose a conflict of interest and by presenting false documents with CNEEC’s company name in order to meet the requirements of a contract under the project,” the World Bank said in a statement. “CNEEC, as a controlling affiliate of CEDRI, failed to oversee CEDRI’s misconduct.”

The debarment of CEDRI also disqualifies the firm from participating in projects of other multilateral development banks, the World Bank said.

The settlement agreements allow for the sanctions period to be reduced from 18 months if both companies cooperate and adhere to the World Bank’s integrity compliance guidelines. — Reuters