China Eximbank provides RMB 1.118 billion government concessional loan for 171.9 km Mbala-Nakonde (D1) Highway Upgrading Project

China Eximbank provides RMB 1.118 billion government concessional loan for 171.9 km Mbala-Nakonde (D1) Highway Upgrading Project On April 11, 2013, China Eximbank and the Government of Zambia signed an RMB 1,118,000,000 ($196 million) government concessional loan (GCL) agreement for the 171.9 km Mbala-Nakonde (D1) Highway Upgrading Project.

The proceeds were used to finance a commercial contract between Zambia’s Ministry of Works and Supply and China CAMC Engineering Co. Limited, which was signed on April 15, 2011. As of December 31, 2017, China Eximbank had disbursed $179.22 million in support of this project.

This project involved the upgrading of a 171.9 km two-way dual lane (D1) road between Mbala and Nakonde to bituminous standard standard class 1C over a 36-month work period. Construction began in late 2012 and the originally expected project completion date was April 14, 2014. However, the expected project completion date was later extended to June 19, 2016.

The project was ultimately completed and handed over to the local authorities on June 20, 2017. A corruption scandal plagued the 171.9 km Mbala-Nakonde (D1) Highway Upgrading Project.

In October 2012, Hu Wei, a former Vice General Manager at China CAMC Engineering Co., Ltd (CAMCE), signed an agreement with Zhenghe International (a middleman company).

Under the terms of the agreement, Zhenghe International agreed to help CAMCE secure a China Eximbank loan for the 171.9 km Mbala-Nakonde (D1) Highway Upgrading Project.

In return, CAMCE agreed to pay Zhenghe International an ‘agency fee’ worth 1.5% of the total cost of the underlying commercial (EPC) contract financed with the China Eximbank loan. It also agreed to pay a bribe to Hu Wei worth one-third of the agency fee.

After securing project financing approval from China Eximbank in April 2014, Zhenghe International received a $2,663,742.63 payment for its services and Hu Wei received a $887,914.21 bribe.

Then, in 2020, the Huanggang Intermediate People’s Court of Hubei Province sentenced Hu Wei to ten years in prison for bribery.

Hu Wei also admitted in court that the corruption extended to bribes paid by CAMCE to officials at China’s Ministry of Commerce (MOFCOM) via middlemen to facilitate loan approval decisions at China Eximbank.