The World Bank and the Government of India have taken measures to tighten the monitoring of Bank-aided health projects in the country after a recent internal review found serious incidents of fraud and corruption

Nearly two years after it suspended aid for a health project in India, the World Bank has again detected serious fraud and corruption in five health projects funded by it across the country. The government has ordered a CBI inquiry into the revelations and promised “exemplary punishment” to those found guilty. The Bank has said that oversight of its entire health portfolio in India would be tightened.

The corruption was detected in projects worth a total of US$ 568 million, the Bank revealed on January 11, 2008.

Serious lapses in auditing, malpractice and corruption were discovered by an internal review conducted by the Bank in projects relating to eradication of tuberculosis, malaria and HIV/AIDS control schemes launched between 1997 and 2003 that were jointly funded by donors, the Indian government and the World Bank.

Bank-aided projects under investigation included the $ 114 million Malaria Control Project, the $ 82.1 million Orissa Health Systems Development Project, the $ 54 million Food and Drug Capacity Building Project, the $ 193.7 million Second National HIV/AIDS Control Project, and the $ 124.8 million Tuberculosis Control Project.

A Detailed Implementation Review (DIR), launched by the World Bank in 2006, with support from the Indian government, monitored implementation of World Bank-funded schemes. “The probe has revealed unacceptable indicators of fraud and corruption,” World Bank Group President Robert B Zoellick said in a statement .

The report found indications of fraudulent and corrupt practices related to procurement, such as collusive behaviour, bid-rigging, bribery and manipulated bid prices. It also found irregularities related to deficient civil works certified as complete, broken or damaged equipment certified as compliant with specifications, and under-delivery of services from contractual obligations.

Four of the five projects have already been completed while the fifth project pertaining to food and drug capacity-building is still on and funds yet to be disbursed. This project, a World Bank statement says, will now be brought under review to incorporate the DIR findings.

The Indian government has reacted to the revelations by saying it will take speedy and tough action against those found guilty. In an official statement, the government clarified that the review was in the nature of a fact-finding report and did not extend to a detailed investigation.

India's Health Secretary Naresh Dayal said four teams of people from the finance and health ministries would be set up to “probe the irregularities”. “Detailed investigations will be done after we study the report,” he told the media.

The finance ministry warned that it would pursue “exemplary punishment” of wrong-doers if ongoing investigations merit it. Dayal added that the health ministry has been working on framing detailed guidelines and modalities to increase and strengthen the procurement capacity of states in order to curb corruption in healthcare projects.

On the Indian government's response, Zoellick 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... I'm determined to fix these problems,” he said.

Zoellick added that the Bank's governance and anti-corruption work from now on would be placed under the scrutiny of independent and external reviewers to ensure that the institution was making tangible progress in its fight against corruption.

Meanwhile, remedial measures already being built into new projects include web publication of proposals and contract awards, social audits, aggressive tightening of procurement controls and faster processing of complaints and subsequent action.

The World Bank is not considering stopping loans to health projects in India as of now, though it has tightened the review of its health projects in the country. “We will do our own investigation. We need to make procurement procedures at all levels foolproof. All projects, funded and otherwise, will now go through more stringent audits and performance reviews to ensure this does not happen again,” said Dayal.

Corruption in the health sector may not be confined to foreign-funded projects -- a recent report by the Comptroller and Auditor General (CAG) that was tabled in Parliament in November 2007 revealed that standard good pharmaceutical practices were largely ignored by the department of health and family welfare and government-run hospitals.

Source: www.forbes.com , January 14, 2008
            Hindustan Times , January 14, 2008          
           The Hindu , January 12, 2008
           AFP, January 12, 2008