K&M was contracted to assist WEB to perform a background check of five companies (“Tenderers”) that will be invited to submit proposals for a turnkey contract for the construction of the 18,000 m3/day seawater reverse osmosis (SWRO) 3 plant in Aruba. The background check will cover the Tenderer’s activities in their country of origin (location of their headquarters) and their subsidiaries in countries where they are active. The background check will aim to identify red flags that WEB could consider when deciding if any of the five Tenderers should not be invited to submit a proposal. To this end, the background check will include a review of the legal, reputational, and financial background of each Tenderer.
K&M will first determine the country where the Tenderer has its headquarters. K&M will then review FATF publications, including the latest Consolidated Assessment Ratings and High-Risk Jurisdictions-Subject to a Call for Action to determine if the Tenderer country of origin has any strategic ANL-CFT deficiencies. K&M will identify the Tenderers, if any, whose country of origin is listed as a High-Risk Jurisdiction or rated as “Low Level of Effectiveness”, and/or has strategic technical areas rated as “Non-compliant”.
K&M will assess if any of the five Tenderers is included in the list of ineligible firms published by the World Bank, EBRD, IDB, and other multilateral financial institutions. Ineligibility is determined when a firm has used corrupt, fraudulent, coercive, or other undesirable practices. K&M will also search online for the name of the firm in combination with words such a “corruption”, “corrupt, “fraud”, “fraudulent” and “coercive” to find any news articles, publications, reports, etc., that mention the firm as an entity engaged in undesirable practices.
K&M will review the Dun & Bradstreet Comprehensive Credit Reports to determine if any of the five Tenders or their subsidiaries and branches located in the countries listed in the project description have ongoing legal disputes. If any of the Tenderers has ongoing legal disputes, K&M will search online for information available about the dispute, the risk that this dispute could present to the Tenderer, and the Tenderer’s ability to implement the SWRO project.
K&M will perform the track record assessment by searching online for the Tenderer’s name along with words such as “project failed”, “project terminated”, “project delayed”, “project over budget”, “did not meet performance guarantees”, etc. K&M will also search the DesalData database for information on projects implemented by any of the Tenderers, and that failed to meet design specifications or failed for any other reasons.
K&M will calculate financial ratios that provide an indication of the Tenderers’ financial strength relative to the size of the SRWO 3 turnkey contract and performance guarantee. These ratios include net worth / SWRO 3 capex; average 3-year gross revenue / SWRO 3 capex; net worth / value of performance guarantee; etc. K&M will obtain the information to calculate these ratios from the financial statements included in the Tenderer’s latest annual reports. K&M will also use Dun & Bradstreet credit reports obtained to perform the check of legal disputes to obtain additional information on the financial strength of the Tenderers and their subsidiaries.
Finally, K&M will prepare a PowerPoint presentation with the findings of the background check for each company and with any recommendations that result from this analysis.