British book publisher Macmillan is normally in the news thanks to its bestselling authors or skirmishes with retailers like Amazon (AMZN). But now it has entered the crosshairs of the World Bank, which has banned the publisher from receiving any of its contracts between now and 2016, as a result of bribes Macmillan paid to secure a textbook deal in South Sudan.
Reuters reports that the six-year ban stems from Macmillan's admission that it made "corrupt payments" between 2008 and 2009 in a bidding process for an education rehabilitation project supported by a World Bank-managed fund. The Multi Donor Trust Fund (MDTF) funnels millions of dollars in redevelopment money to the war-torn region. The ban may be reduced to three years as long as Macmillan continues to cooperate with the World Bank and implement its own compliance monitoring program. In fact, the publisher's early cooperation already knocked two years off the ban, which was supposed to last eight years.
"This agreement is an acknowledgment of past wrongdoing by Macmillan and demonstrates the World Bank's unwavering commitment to ensuring all those who participate in World Bank-financed projects, including those who do not actually get contracts, are held to the highest levels of integrity, while also encouraging companies to come forward and join our fight against corruption," said Leonard McCarthy, Integrity Vice President at the World Bank Group, in a statement.
Macmillan countered with its own statement to Reuters, claiming "there is no suggestion that these concerns have affected any of Macmillan's other principal businesses, and it is the case that they are confined to a limited part of our education business."
Ironically, Macmillan never even won the prized textbook contract, despite its illicit payments. But this development likely means greater enforcement of the company's anti-bribery policy -- updated just two months ago -- which emphasizes zero-tolerance.
Finding Stock Ideas
Learn to do your research and find investments.View Course »