A Korean firm selected as consultant for the Kathmandu-Tarai expressway has been blacklisted by the World Bank Group, compelling Nepal Army, which is building the largest ongoing infrastructure project in the country, to study its legal implications in Nepal.

The Army on May 15 selected the Yooshin Engineering Corporation as the design and construction supervision consultant for the expressway. But a month later, on June 29, the World Bank blacklisted it, imposing a 13-month debarment to participate in any project where the bank has made an investment.

The company was found to be involved in fraudulent practices as part of the Aviation Investment Project in Vanuatu.

The World Bank said Yooshin failed to disclose in writing the unavailability of two key experts in that project for the supervision of three islands in the Pacific Ocean island country, despite having offered to do so in the proposal. Yooshin Engineering signed the contract without disclosing the experts’ unavailability or seeking their replacement, which is a fraud, said the World Bank in a statement issued on July 1.

Brigadier General Santosh Ballave Poudyal, spokesperson for the Nepal Army, said they had selected the company over a month before the World Bank decision.

“We are studying the implications it can have here,” Poudyal told the Post. “As we selected the company before the World Bank decision, I don’t think there could be much of a problem.”

According to him, the national defence force has sought the opinion of the Public Procurement Review Office on the matter.

Yooshin Engineering has the main role in the construction of the 72.5-kilometre road in approving the design for bridges, tunnels and other structures. The army will call a global bidding for construction of bridges and tunnels only after the design is prepared by the Korean company.

“The debarment makes Yooshin ineligible to participate in projects and operations financed by institutions of the World Bank Group,” reads a statement issued by the World Bank.

Army officials, including a source from the engineering department who did not wish to be named given the departmental protocol, say that since the expressway is being built solely with Nepal government funds, the World Bank decision should not affect its construction.

The mega project with an estimated cost of up to Rs 213 billion (including contingency costs) will reduce the travel time between Kathmandu and Nijgadh in Bara district to an hour from the several hours it takes now.

An email inquiry to Yooshin Engineering for its response on the matter was unanswered on Friday.

The selection of Korean firm as the consultant had not been free of controversy. The SMEC Australia Pvt Ltd, and Spain-based Eptisa Company—the other two companies in contention for the contract along with Yooshin—that lost the bidding to Yooshin Engineering had filed a complaint at the Public Procurement Monitoring Office alleging that the army unduly favoured the Korean company in the selection process.

They had claimed that the provisions of the Public Procurement Act had been breached while awarding the contract. The companies maintained that financial proposal papers Yooshin filed bore the company’s seal only on the first page, though the seal is needed on every page, as per the Public Procurement Act.

“Omission of the company seal raises concern over the completeness and authenticity of the financial proposal, which has been neglected during the evaluation,” read one of the complaints.

The case was forwarded to the Public Procurement Review Office in Nepal, which after hearings cleared the way for the army to appoint Yooshin as the consultant.

In another controversy, in December last year, the army had to scrap its decision to select six international expressway designing consulting firms after a probe showed the evaluation criteria for the selection of construction and design supervision consultant was leaked to probable bidders before the bids were called.

Based on the findings of a Nepal Army court of inquiry, the decision to select five Chinese and a Turkish companies had been cancelled. However, no action was taken against any one involved in the process since it had been an “unintentional” technical error.

The government handed over the project to Nepal Army in August 2017 with a completion deadline of August 2021. But the deadline was later extended to May 2024. In the three years since construction began, hardly 10 percent of the work has been completed.