• EBRD and Özaltın reach settlement regarding fraud in EBRD-financed project
• Sanction consists of 11-month debarment followed by a 24-month conditional non-debarment
• Settlement reduces debarment period due to Özaltın’s cooperation and other remedial actions

The European Bank for Reconstruction and Development (EBRD) has announced a 35-month sanction of the Turkish construction company Özaltın İnşaat Ticaret ve Sanayi Anonim Şirketi (Özaltın) and its 13 subsidiaries, in connection with fraudulent practice relating to the project Corridor VC - Tunnel Prenj in Bosnia and Herzegovina.

The sanction consists of an 11-month debarment followed by a 24-month conditional non-debarment.

Following an investigation by the EBRD Office of the Chief Compliance Officer (OCCO), the debarment makes Özaltın and its 13 subsidiaries ineligible to participate in projects and operations financed by the Bank for the duration of the debarment.

This is part of a settlement agreement under which Özaltın admitted culpability for the underlying prohibited practice and agreed to meet specified corporate compliance conditions in order to be released from the conditional non-debarment.

The project involved the construction of a new section of motorway in central Bosnia and Herzegovina.

According to the findings of the investigation, Özaltın misrepresented its prior work experience by submitting a fraudulent document as part of its bid.

The settlement agreement provides for a reduced period of debarment in light of Özaltın’s cooperation during OCCO’s investigation and other remedial actions.

These include mitigating factors such as admission of wrongdoing, voluntary restraint from bidding, an internal investigation, as well as engaging a consultant for proactive risk assessment and review of the procurement processes.

In response to the findings, Özaltın has proactively started to implement measures to enhance its corporate governance and compliance systems to prevent future misconduct.

Following the debarment period, Özaltın has agreed to further improve and report on its compliance programme for two years as a condition of release from sanctions.

During this time, Özaltın will be eligible to participate in projects and operations financed by the Bank, as long as it complies with its obligations under the settlement agreement, including continued full cooperation with the EBRD.

Otherwise, the conditional non-debarment will convert to a 24-month debarment.

The 11-month debarment does not qualify for cross-debarment by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions that was signed on 9 April 2010.

About OCCO

OCCO has a central role in the EBRD’s commitment to integrity through its mandate to conduct investigations of Prohibited Practices in EBRD-financed projects. More information on OCCO’s broader mandate is available at: https://www.ebrd.com/integrity-and-compliance.html