Corruption, fraud plague World Bank projects

World Bank has discovered serious cases of fraud and corruption in the five health sector projects dealing with eradication of tuberculosis and malaria and HIV/AIDS control schemes.

The probe into the five health projects has revealed unacceptable indicators of fraud and corruption, World Bank President Robert B Zoellick said in a statement.

These projects include USD 114 million Malaria Control Project, USD 82.1 million Orissa Health Systems Development Project, USD 54 million Food and Drug Capacity Building Project, USD 193.7 million Second National HIV/AIDS Control Project USD and 124.8 million Tuberculosis Control Project, it added.

The Indian government has promised to take "exemplary" action against those found guilty, it added.

The cases of frauds and corruption were discovered during the Detailed Implementation Review (DIR), which was launched by the bank in 2006, with support from Indian government.

The five projects were implemented between 1997 and 2003 with assistance from the Bank and other donors. Four of these projects have already been completed, while the fifth USD 54-million Food and Drug Capacity Building Project is ongoing, but the funds have not been disbursed for it yet.

This project will now be reviewed to incorporate the findings of the DIR, the World Bank statement said.

In an investigation in 2005, the World Bank had found cases of corruption in Reproductive and Child Health project, prompting the multi-lateral agency to withhold aid for the project for sometime. Subsequent to the probe, two pharma companies were also debarred by the Bank. The current DIR was prompted by that investigation, the World Bank said.

Zoellick said, the Government of India and the World Bank are committed to getting to the bottom of how these problems occurred. The review by the World Bank was facilitated by the Union Government.

An official statement issued in New Delhi said the review was in the nature of a fact-finding report and does not extend to detailed investigation. "... based on the inputs of the DIR and other information that may be furnished by the Bank, necessary action under the relevant laws, rules and regulations would be taken against those suspected of wrong-doing and, if found guilty, they will be visited with exemplary punishment," it added.

The World Bank President said: "I appreciate the resolute commitment of the government, which will be in the lead in pursuing criminal wrong doing. On the Bank's side, there were weaknesses in project design, supervision and evaluation. There are also systemic flaws... The Volcker Report points the way towards what has to be done."

World Bank Managing Director Ngozi Okonjo-Iweala, who was recently in Delhi, said: "I have had productive discussions with the Finance Minister and his officers. We have a strong partnership and will work closely together to ensure swift action."

The official statement said the findings of the DIR would lead to taking up of additional measures in the procurement and implementation arrangements of the ongoing as well as the health sector projects in pipeline. The action plan for health sector projects, finalised in 2006, would be revised in consultation with the Bank and the revised action plans would be applied to both on-going and future health sector projects.

According to the statement the government intends to increase transparency in procurement process. Ministry of Health and Family Welfare has already commenced the implementation of a MIS-based Procurement and Logistics Management System.

In the phase I, it is being implemented in the procurement activities of the Ministry and three States -- Orissa, M.P and Maharashtra. Based on the experience of the phase I, it would be rolled out in the entire country, the statement said.

Besides, e-procurement would be done in a two-year timeframe to enhance transparency and accountability for, which pre-bid conference with prospective bidders would become an integral part of the tender process. A pilot project in this regard would be launched this fiscal.

Also, audits would be conducted on all procurements annually, it added. Besides, real-time supervision of inventory management, logistics, procurement and supplies would be introduced at all levels. Sanctity of the bid evaluation committee reports shall be maintained, it added.