World Bank Sent Funds to Sanctioned Chinese Companies Linked to Military, Human Rights Abuse

Recipients include state-run Xinjiang manufacturer linked to abuses against Uyghurs

Xi Jinping (Feng Li/Getty Images)
May 10, 2023

The World Bank sent $25 million in 2021 to Chinese companies that are on U.S. sanctions lists for military and human rights abuses, according to a federal review of the contracts.

In 2020 and 2021, World Bank borrowers steered contracts to at least five Chinese companies that appear to be on U.S. Treasury Department's Office of Foreign Assets Control sanctions lists, according to the U.S. Government Accountability Office report.

Among the sanctioned recipients of World Bank funds was the Xinjiang Production and Construction Corps, which received $7.1 million in 2021. The company was sanctioned for human rights abuses and is a "state-run paramilitary corporate conglomerate" that is "involved in a pervasive program of egregious rights violations that [affect] the most marginalized people in the Uyghur Region," according to a report by the Helena Kennedy Centre at the United Kingdom's Sheffield Hallam University.

The findings could "raise national security or foreign policy concerns for the U.S.," the report states. They could also raise new questions about the United States' role as the top financial contributor to the World Bank, in light of the bank's increasingly close relationship with China.

The World Bank told the Washington Free Beacon that it "upholds a principle of universal/open eligibility, which guarantees that bidders from all our 189 member countries are eligible to bid for Bank-financed contracts."

"The only exceptions are entities that are subject to sanctions imposed by the United Nations' Security Council," a World Bank spokesman said.

Other companies that received large sums of money from the World Bank in 2021 include the China Communications Construction Company Limited, a company that was sanctioned for its involvement with the Chinese military. The company, which received a $6.8 million contract from a World Bank borrower in 2021, is 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," according to former secretary of state Mike Pompeo.

The GAO said contracts also went to the China National Chemical Corp., Ltd., and China Mobile Communications Group Co., Ltd.—both sanctioned for their connections to the Chinese military—and the China National Electronics Import & Export Corporation, which was sanctioned for attempting to undermine the democratic process in Venezuela.

A subsidiary of Huawei, another blacklisted Chinese company accused of corporate espionage and violating U.S. sanctions on Iran, also received over $9 million in contracts in 2020, according to the report.

In a letter to the GAO that was included in the report, the World Bank said it does screen contractors against U.S. sanctions lists, but only for "practical concerns" related to transfers of money. The bank said it doesn't "permit use of [U.S. sanctions] or other national lists to determine eligibility" for awarding contracts, and borrowers are allowed to find alternative payment routes to work with sanctioned contractors.

The GAO said it took every effort to confirm the companies were the same as the ones on the sanctions lists, but was unable to definitively identify them all because the World Bank doesn't include ownership names, addresses, and other identifying information in its public data.

While the World Bank was created to support developing countries, companies in China—the world's second-largest economy—are the biggest beneficiaries of its contracts. Businesses in China received 29.2 percent of all contract funding from the World Bank between 2013 and 2022, compared with 2.4 percent for U.S. companies and 4.4 percent for French companies, the GAO analysis found.

The World Bank says it is willing to work to increase the share of contracts that go to U.S. companies, but it can't give money to companies that don't put in bids for contracts.

"Businesses in the U.S. enjoy a high rate of success when they bid for Bank-financed contracts, winning over 70 percent of the contracts for which they bid," the World Bank told the GAO. "We assure you of our readiness to work with the U.S. executive director, Department of Commerce, and U.S. agencies to boost participation by U.S. businesses in Bank-financed procurement through our procurement outreach program."