PCL slapped with 11-year World Bank ban

Written by PTI | New Delhi | Updated: Nov 29 2013, 10:38am hrs
World Bank has banned Progressive Constructions (PCL), founded by Union textiles minister and Congress leader K Sambasiva Rao, for at least 11 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 project, the lender said in an order.

Calls made to PCL office in Hyderabad for their comments did not elicit any response and Rao remained unreachable. Sources close to the minister said he is not involved in operations of the company since 1983 and it is being run by his daughter.

According to the banks three-page order, passed on November 26, 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 World Bank-financed road construction contracts by submitting numerous fraudulent documents misrepresenting the companys use of mobilisation and materials advances, it said.

While the World Bank has not named any promoters or officials of the debarred company, PCLs website shows Rao set up Progressive Engineering as a partnership firm in 1966. This company was transformed into a private and a limited liability entity in 1982, resulting into creation of PCL. It is engaged in infrastructure building for sectors like irrigation, power, rail, housing and industrial establishments and is headed by Srivani Mullapudi, its MD

The World Banks 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 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 would continue till November 25, 2024, it would ineligible to be awarded or otherwise benefit from any World Bank-financed contract.

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.