AfDB Debars Chinese Firm for Fraud in Zambia Hydropower Project Tender

The African Development Bank Group (AfDB) has announced the 36-month debarment of Hangzhou Fuchuan Electric Equipment Co., Ltd., a China-based construction and engineering company, for engaging in fraudulent practices during the tender process for a major infrastructure project in Zambia. The company's reinstatement after the debarment period will be conditional upon the successful completion of an integrity compliance program consistent with the Bank's anti-corruption standards.

Fraudulent Practices in a Key Energy Project

According to an investigation by the Office of Integrity and Anti-Corruption (PIAC) of the African Development Bank, Hangzhou Fuchuan Electric Equipment Co., Ltd. falsified manufacturers' authorizations in its bid submission for the Itezhi-Tezhi Hydropower and Transmission Line Project in Zambia.

The project — a flagship energy development initiative — involves the construction, operation, and maintenance of a hydropower plant at the Itezhi-Tezhi Dam on the Kafue River, along with transmission infrastructure designed to deliver power to Zambia's main grid through interconnected substations.

The Bank's investigation concluded that the company's actions constituted a fraudulent practice as defined under the AfDB's procurement rules. Specifically, the falsified documents were intended to misrepresent the company's technical qualifications and relationships with equipment manufacturers in order to gain an unfair advantage during the tender process.

Accountability and Integrity Measures

The debarment, effective immediately, means that Hangzhou Fuchuan Electric Equipment Co., Ltd. and all its affiliated entities are ineligible to participate in any AfDB-financed projects for a period of three years. This includes projects across all sectors and regions where the Bank operates.

The decision underscores the AfDB's zero-tolerance policy for fraud and corruption in projects it finances. The Bank's Office of Integrity and Anti-Corruption routinely investigates allegations of prohibited practices — including fraud, corruption, collusion, coercion, and obstruction — to safeguard the integrity of development financing and ensure fair competition among contractors.

At the end of the 36-month period, the company will only be reinstated if it completes an integrity compliance program that aligns with the AfDB's Integrity Compliance Guidelines. This program requires companies to adopt strong internal controls, ethics policies, anti-fraud mechanisms, and staff training to prevent future misconduct.

The Itezhi-Tezhi Project: A Vital Infrastructure Initiative

The Itezhi-Tezhi Hydropower and Transmission Line Project is a strategic energy infrastructure investment aimed at enhancing Zambia's power generation capacity and regional electricity connectivity. The hydropower plant at the Itezhi-Tezhi dam, located in Zambia's Southern Province, harnesses the Kafue River's flow to generate renewable energy for both domestic and industrial use.

The transmission line component — which the tender in question pertained to — was designed to transport electricity from the hydropower plant to national grid substations, improving energy reliability and supporting Zambia's long-term economic growth.

By ensuring projects like Itezhi-Tezhi are implemented transparently and efficiently, the AfDB seeks to strengthen Africa's energy security while promoting ethical business practices among international contractors.

A Broader Commitment to Ethical Procurement

The African Development Bank Group operates under a strict Integrity and Anti-Corruption Policy, which mandates all participants in AfDB-financed contracts to adhere to ethical standards and provide truthful, verifiable information during procurement processes.

The debarment of Hangzhou Fuchuan Electric Equipment Co., Ltd. follows a growing trend of the AfDB taking decisive actions to safeguard the credibility of its procurement systems. In recent years, the Bank has intensified its enforcement actions and cooperation with other multilateral development banks through the Mutual Enforcement Agreement, which allows debarred entities to face cross-sanctions from other major lenders such as the World Bank, Asian Development Bank, European Bank for Reconstruction and Development (EBRD), and Inter-American Development Bank (IDB).

This collaboration aims to create a unified front against corruption in international development projects, reinforcing transparency and trust among global partners.

Promoting Corporate Reform and Compliance

While the debarment is punitive, it is also corrective in nature. The AfDB's conditional release mechanism encourages sanctioned companies to undertake internal reforms, thereby enabling future eligibility once compliance benchmarks are met.

By requiring Hangzhou Fuchuan Electric Equipment Co., Ltd. to implement a comprehensive integrity compliance program, the Bank seeks to foster corporate accountability and ethical transformation. This includes measures such as independent audits, whistleblower protections, management oversight, and the adoption of anti-bribery policies.

Upon successful completion of the compliance program and verification by the AfDB, the company may regain eligibility to participate in Bank-financed tenders, ensuring that lessons learned translate into lasting improvements.

Strengthening Governance Across Africa

The AfDB continues to play a leading role in promoting transparency, good governance, and anti-corruption practices in Africa's infrastructure and energy sectors. The Bank's integrity framework not only protects public resources but also ensures that development outcomes reach intended beneficiaries without distortion or delay.

As the continent undertakes ambitious projects in renewable energy, transport, and urban development, maintaining trust and accountability in procurement processes is crucial to sustaining investor confidence and public support.

A Clear Message on Integrity

The debarment of Hangzhou Fuchuan Electric Equipment Co., Ltd. serves as a clear message from the African Development Bank: fraud and corruption have no place in Africa's development agenda. By enforcing rigorous compliance and transparency standards, the Bank reaffirms its mission to finance projects that promote sustainable growth, fairness, and integrity across the continent.