Progressive Constructions Ltd (PCL) was founded by Union Textiles Minister and Congress leader K Sambasiva Rao

World Bank has banned Progressive Constructions Ltd (PCL), founded by Union Textiles Minister and Congress leader K Sambasiva Rao, for at least eleven years for engaging in “fraudulent practices” in execution of three contracts for a National Highway project.

During the sanction period, which would extend to all legal entities directly or indirectly controlled by PCL, the company would not be able to work on any World Bank-financed projects, the multilateral lender said in an order.

Calls made to the PCL office in Hyderabad for their comments did not elicit any reply, while phone calls and messages sent to Mr Rao also remained unanswered. However, sources close to the Minister claimed that he has not been involved in operations of the company since 1983 and it is being run by his daughter.

According to the World Bank’s three-page order, passed on November 26 2013, PCL was found to have “engaged in sanctionable practices” in connection with the Lucknow—Muzaffarpur National Highway project.

PCL was charged of having “engaged in fraudulent practices in connection with its execution of three Bank-financed road construction contracts by submitting numerous fraudulent documents misrepresenting” the company’s use of mobilisation and materials advances, the bank said.

While the World Bank has not named any promoters or top officials of the debarred company, PCL’s website shows Mr. Rao, currently Textiles Minister in the Union Cabinet, set up Progressive Engineering Company as a partnership firm in 1966.

With expansion into other areas, this company was transformed into a Private and a Limited Liability entity in 1982, resulting into creation of Progressive Constructions Limited, the website says.

PCL is engaged in infrastructure building for sectors like irrigation, power, rail, transport, housing and industrial establishments and is currently headed by Srivani Mullapudi, its Managing Director.

The World Bank’s Suspension and Debarment Officer had issued a show-cause notice to the company on August 22, 2013, but PCL did not submit any reply, the bank said.

The World Bank further said that its Sanctions Proceedings provide for the recommended sanctions coming immediately into force if the concerned company does not contest the charges and proposed penal action within 90 days.

As per the sanctions imposed on PCL, which came into force on November 26, 2013 and would continue till at least November 25, 2024, it would ineligible to be awarded or otherwise benefit from any World Bank-financed contract, financially or in any other manner.

Besides, PCL and its affiliates cannot be nominated as subcontractor, consultant, manufacturer or supplier, or service provider of an otherwise eligible firm being awarded a World Bank-financed contract.

Other restrictions include their ineligibility to receive proceeds of any World Bank loan, to participate in the preparation or implementation of any project or programme financed or governed by the World Bank.

In a strongly-worded letter, the Bank also said that “an aggravating factor” in the case was the “repeated pattern of misconduct by Progressive, involving numerous fraudulent submissions in connection with three separate contracts over the course of at least four years“.

The order also took into account “the degree of harm to the project, including severe delays in implementing each of the three contracts affected by the misconduct,” the bank said while observing that PCL representatives had agreed to meet with the bank’s anti-corruption unit, but their statements did not amount to acknowledgements that the fraudulent practices had occurred.

The ineligibility will extend across the operations of the World Bank Group including International Finance Corp, MIGA and the guarantee operations of the Bank. Besides, the World Bank would also intimate other multilateral development banks so that they may determine whether to enforce sanctions against PCL as per their own policies and procedures.

According to the World Bank, the company can be released from this ineligibility after the end of eleven years, “only if it has demonstrated to the World Bank Group’s Integrity Compliance Officer that it has complied with” certain conditions.

These conditions include the company having taken appropriate remedial measures to address the sanctionable practice for which it has been sanctioned, it has put in place an effective integrity compliance programme acceptable to the World Bank and has implemented this programme in a manner satisfactory to the Bank.

In the past, the World Bank has blacklisted several Indian companies on similar grounds, while about a dozen of them are still under ineligibility period. Those having faced action in the past include Satyam, Wipro, Videocon and L&T group entities.

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