World Bank poured millions into sanctioned Chinese government-linked companies
Gabe Kaminsky
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The World Bank gave over $25 million in 2021 to Chinese government– and military-linked companies on sanction lists in the United States, according to a federal watchdog.
At least five Chinese companies that have appeared on sanction lists from the Treasury Department’s Office of Foreign Assets and Control were steered contracts from World Bank borrowers from 2020 to 2021, the U.S. Government Accountability Office said in a Wednesday report, which found that Chinese entities scored $21 billion from 2013 to 2022.
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“Businesses in the U.S. enjoy a high rate of success when they bid for Bank-financed contracts, winning over 70% of the contracts for which they bid,” David Theis, a spokesman for the World Bank, told the Washington Examiner. “We have assured the GAO of our readiness to work with the U.S. Executive Director and U.S. agencies to boost participation by U.S. businesses in Bank-financed procurement through our procurement outreach program.”
The GAO report comes on the heels of World Bank President David Malpass, who was undersecretary of the Treasury for International Affairs at the Treasury Department under former President Donald Trump, announcing in February that he would step down in June after roughly four years. Malpass had come under fire last year from climate activists for saying “I’m not a scientist” in response to a question about global warming during a September interview.
Ajay Banga, vice chairman of the private equity firm General Atlantic and former Mastercard CEO, will be the World Bank’s next president.
The Xinjiang Production and Construction Corps is one sanctioned Chinese entity that pocketed World Bank cash, according to the report. The state-owned paramilitary group, which received $7.1 million in 2021, is “involved in a pervasive program of egregious rights violations that [affect] the most marginalized people in the Uyghur Region,” the Helena Kennedy Centre at the United Kingdom’s Sheffield Hallam University said in 2022 report.
In sanctioning the paramilitary group in 2020, the Treasury Department said it had been linked to “serious human rights abuse against ethnic minorities in Xinjiang, which reportedly include mass arbitrary detention and severe physical abuse, among other serious abuses targeting Uyghurs, a Turkic Muslim population indigenous to Xinjiang, and other ethnic minorities in the region.”
Revelations of World Bank money flowing to sanctioned Chinese companies may “raise national security or foreign policy concerns for the U.S.,” according to the GAO report. Moreover, the findings could lead lawmakers to question whether the U.S. should continue to be the top contributor to the bank.
The China Communications Construction Company Limited, which is an engineering and construction company that is majority-state owned by China’s government, pocketed $6.8 million in 2021 from a World Bank borrower, according to the GAO report. In announcing sanctions against the company in 2020 over its military ties, then-Secretary of State Mike Pompeo called it one of the “leading contractors used by Beijing in its global ‘One Belt One Road’ strategy, engaged in corruption, predatory financing, environmental destruction, and other abuses across the world.”
Contracts were also steered to the China National Chemical Corp., Ltd., a state-owned chemical company, and China Mobile Communications Group Co., Ltd., another state-owned company, according to the report. Both were sanctioned over their affiliations with China’s military.
In 2020, a subsidiary of Huawei, a Chinese military-backed telecommunications firm banned from selling or importing new products in the U.S. over national security concerns, pocketed more than $9 million in contracts, the watchdog said.
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The World Bank said in a letter to the GAO included in the report that it only screens contractors to see if they are on sanctioned lists for “practical reasons” in connection to money transfers. It does not allow U.S. sanctions “to determine eligibility” of entities in securing contracts, the letter said.
Chinese companies received 29.2% of all World Bank contracts from 2013 to 2022, whereas U.S. companies took a share of 2.4%, according to the GAO.