Corrupt World Bank consultant has sparked slew of European criminal probes

A former World Bank consultant convicted yesterday of receiving corrupt payments from medical companies around the world is at the center of at least five other criminal probes across Europe, MLex has learned.

The World Bank has also slapped sanctions on at least eight companies that allegedly paid 64-year-old Wassim Tappuni, an Iraqi-born UK national, to fix the corrupt contracts.

Tappuni, a medical-equipment expert, was convicted yesterday at London's Southwark Crown Court of 13 counts of conspiring to accept 1.7 million pounds ($2.2 million) in corrupt payments from various medical companies.

He was a man consumed by greed, Mukul Chawla, prosecuting barrister, told jurors at the start of his trial in May. He will be sentenced in September.

Tappuni worked as a short-term consultant for the World Bank on 16 bank-financed projects involving 13 countries from August 2007 until Dutch investigators uncovered irregularities in September 2011.

UK investigators traced 65 corrupt payments for multiple procurements amounting to 43 million pounds involving projects in Albania, Romania, Uzbekistan, Iraq, Bulgaria and other countries. They say he also operated a similar scheme on procurements carried out by the UN Development Program.

Tappuni used his inside position at the World Bank to negotiate clandestine agreements with medical suppliers where he would provide drafts of tender bids, change specifications to suit particular suppliers and assist with making complaints aimed at sinking rival bids, UK prosecutors said.

He is also accused of using a German consultant, Anton Schlenger, a former employee of medical-equipment manufacturer Philips Healthcare, to contact potential bidders and work out the details of the illicit arrangements.

Some payments bound for Tappuni also went through Schlenger, prosecutors say, while bribes were also paid directly to Swiss bank accounts belonging to Tappuni-controlled companies.

UK authorities failed to extradite Schlenger to stand trial in the UK, but he is under investigation by German authorities, who are conducting their own probe.

Probes in six countries

In addition to the UK and Germany, MLex has now confirmed that criminal investigations are under way in Austria, the Netherlands, Romania and Switzerland.

- The Netherlands is looking into payments to Tappuni by Dutch medical-services company DRC. It is this investigation that eventually led to Tappuni's trial in the UK.

- Romania is investigating Dick Van Halewijn, a Dutch executive of medical products company Dutchmed.

- Switzerland, where Tappuni funneled some funds, is probing an unnamed individual for money laundering.

- Austria is investigating Vienna-based medical-equipment maker Odelga Med and three individuals.

World Bank sanctions

Following Tappuni's conviction, it can be revealed that the World Bank's sanctions board has punished at least eight companies linked to his activities.

Dutchmed was debarred for 14 years after it declined to cooperate with the World Bank investigation.

German endoscope producer Karl Storz was debarred for two years, after being given credit for cooperating and adopting a compliance program.

French medical-equipment supplier Ideal Medical Products Engineering was debarred for just one year after the sanctions board said "coercion" by Tappuni was a mitigating factor.

Nihon Kohden Europe, a unit of a Japanese company, was debarred for three years after negotiating a settlement with the World Bank. It paid restitution of $400,000. The parent company wasn't debarred.

Two Dutch sister companies were debarred in relation to a healthcare project in Iraq: DRV International for four years and Development and Relief Corporation for three years.

Dutch company Simed International was debarred for five years for paying commissions on projects in both Bulgaria and Romania. It didn't contest World Bank decision.

Kazahk company TOO Distrilab was debarred for four years for paying commissions on an Uzbekistan health-sector project.

Bid-fixing

The World Bank sanctions board's decision on Karl Storz indicated Tappuni's aggressive role in tipping the scales for preferred bidders.

It involved a Romanian tender for maternity and neo-natal care equipment, in which the consultant intervened to ensure that a lower bid was discarded on technical issues to favor the German company. He told World Bank staff that the low bidder, which complained, was a "bad loser."

Tappuni negotiated a 5 percent commission with Karl Storz, memorialized in a written agreement in which he used an alias, with payments made through an intermediary to a Swiss bank account, the World Bank reported.

Prosecution possibilities

The World Bank has declined to say what action it took against Tappuni.

But the companies involved in the sanctions face the prospect of criminal prosecution, as the World Bank typically makes referrals to national law-enforcement authorities when it believes that it has relevant evidence.

"When evidence of misconduct is substantiated in any World Bank-financed projects, our focus is to ensure that those responsible are held accountable," a spokesman told MLex, declining further comment.