AfDB settles with Hitachi following bribery allegations

2 Dec 15

The African Development Bank has reached a settlement with Japanese firm Hitachi after two of its subsidiaries were alleged to have paid bribes to win contracts for work on an AfDB-funded project.


The bank said it had conducted a three-year investigation into allegations the company’s South African subsidiary, Hitachi Power Africa (HPA), and German-based Hitachi Power Europe (HPE), engaged in “sanctionable practices” in order to win the contract to provide the Medupi Power Station in South Africa with boilers.

Hitachi will now be banned from doing business with the AfDB for 12 months, with the potential of early release from debarment.

Anna Bossman, director of the AfDB’s Integrity and Anti-Corruption Department (IACD), said the sanctions “reflect the level of cooperation provided” by the company.

Hitachi Power Africa is alleged to have paid bribes to the South African government via a company called Chancellor House Holdings, an investment arm of the government said to be used as a front for the bribes.

This resulted in billions of dollars of contracts for Hitachi from the state-run utility company Eskom Holdings to build boiler works in two power stations, one of which was backed by the AfDB.

In October 2007 the company was commissioned to design, make and install six coal-fired steam generator units at Medupi. The power station began working this summer, after eight years of construction.

The AfDB said that Hitachi and its affiliates cooperated fully with the IACD throughout its three-year long investigation and seemed determined to maintain good relations and protect the integrity of the Medupi project.

Therefore the sanction of the 12-month debarment will be terminated as soon as the company enhances its integrity compliance programme to AfDB guidelines.

The company has also volunteered to make a “substantial financial contribution” to the AfDB which will be used to fund anti-corruption efforts in Africa and otherwise cooperate with the AfDB.

Bossman said: “Hitachi has shown by its actions that it is committed to doing business in an ethical manner and the IACD believes in giving credit for such dedication.

“The IACD is ever-willing to resolve amicably allegations of sanctionable practices with companies that show a sincere commitment to integrity, who collaborate in the resolution of allegations and who elect to enhance their compliance policies and procedures.”

In a statement, Hitachi said it had cooperated fully with the investigation and was “pleased” to have resolved the matter amicably. The settlement agreed is on a neither admit nor deny basis. 

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