In February 2023, a tribunal constituted under the auspices of the Permanent Court of Arbitration issued an award in Unicon’s favour. The case concerned the World Bank-financed Sheberghan to Mazar-i-Sharif gas pipeline (the “SMPL Contract”) and confirmed that Afghan officials had unlawfully withheld payments in retaliation for Unicon’s refusal to pay bribes. The Tribunal ordered the immediate release of funds to Unicon.
As set out in the dedicated report, corrupt Afghan officials demanded bribes, and those demands were audio-recorded. When Unicon refused, they imposed a fictitious 20% tax to inflict a loss greater than the bribe demanded. In 2019, the World Bank intervened and assured Unicon that it would be compensated if the penalty was not reversed by the state. The Bank promised to hold Unicon harmless in any event, in exchange for its work product. Unicon trusted the Bank. Once Unicon delivered, the World Bank reversed course and sided with the corrupt.
The World Bank’s exposure deepened when DLA Piper – international counsel to the Afghan Government – advised Afghanistan in January 2020 that the funds had been withheld unlawfully and had to be released to Unicon. That advice was later confirmed by DLA Piper at the World Bank’s Sanctions Board hearing in 2025:
DLA Piper appeared as counsel to the Ministry of Energy and Water of Afghanistan, adverse to UNICON, from January to August 2020, and withdrew before any substantive submissions were made. […] This Board notes [Unicon’s] argument that the Ministry’s actions in that case were a part of the practice of mistreatment.
DLA Piper’s analysis … supported [Unicon’s] position, such that although Mr Ostrove’s firm [DLA Piper] was opposing counsel, they believed UNICON was correct in its tax claims.
We also note that the arbitrator in the case ultimately agreed with UNICON.
– Judge Maria Vicien Milburn and Judge Michael Ostrove
World Bank’s Sanctions Board
The World Bank knew this in real time. In a recorded call on 23 February 2020, the World Bank’s Task Team Leader, Carlos Lopez, told Unicon:
DLA Piper reviewed the case after you filed for Arbitration […] and they gave internal professional opinion that the [Ministry] will likely lose in case arbitration commences […] You won. Congratulations, man! It has now become clear to those who did not believe you that UNICON was always right from the beginning. I am sorry you had to suffer to prove this.
– Carlos Lopez, World Bank
Washington, D.C.
Mr Lopez was speaking privately, in circumstances in which the World Bank did not expect his remarks to come to light. On 9 March 2020, DLA Piper conveyed the Government’s acknowledgement of wrongdoing to Unicon in writing, and on 12 March 2020 Unicon forwarded it to the Bank for the record:
This comes as a sign of relief after 12‐month long struggle in which UNICON was subject to unfair defamation, harassment, and was forced to incur financial losses – all the troubles that should not have happened in the first place. […] Rare company would have been able to withhold the pressure placed upon UNICON.
By then, the World Bank had already validated and supported the Government’s unlawful conduct. Relying solely on the fictitious tax claim – and disregarding its prior promises to protect Unicon – it revoked Unicon’s contract in January 2020 and backed retaliatory measures against Unicon. DLA Piper’s conclusion – that Unicon was innocent and correct on this matter from the outset – placed the World Bank in a difficult position, as it had now become clear that the Bank was not only breaching its own promises to Unicon but also endorsing breaches of law under Bank-financed contracts in Afghanistan.
Although the Afghan Government was willing to release the funds to Unicon following DLA Piper’s advice – seeking to avoid an arbitration it had no chance of winning, according to its own counsel – the prospect of settlement effectively vanished once the World Bank became aware of it. Had Afghanistan settled with Unicon and acknowledged that it had acted unlawfully, it would also have meant acknowledging that the World Bank had validated the Government’s unlawful conduct. That was not in the Bank’s interest.
On 10 March 2021, the Government wrote to Unicon, copying the World Bank, announcing that it would no longer be able to pay Unicon and would instead leave all of Unicon’s funds with the World Bank, for the Bank to decide what to do next:
We inform you that since final deadline of grace period for the World Bank Grant #TF0A5630 is coming, there will NOT be any possibility for payment under this contract after April 10, 2021.
Two years later, on 17 February 2023, the PCA Tribunal ruled in Unicon’s favour. The World Bank has refused to release the money. The funds diverted by the Afghan Government still sit with the Bank. As in the CASA-1000 case, the Bank has retained those funds for its own benefit – funds that always belonged to Unicon and ended up in the Bank’s hands solely because Unicon refused to participate in corruption. The World Bank became the final beneficiary of the corrupt scheme.
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Documents:
- Tribunal’s Decision – PCA Case No. 2020-33
- Schematic of High-Level Corruption in Afghanistan Exposed by Unicon
- World Bank Benefiting from Corruption
Media:
- Publication in Jus Mundi
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For further information, contact Rustam Davletkhan
