Abid Aslam
WASHINGTON, Jan 13 2008 (IPS) – Indian health projects are under the microscope following revelations of fraud and corruption in five ventures backed and overseen by the World Bank.
Under scrutiny in the unfolding scandal, which broke in 2005, are bank and government staff, private companies, and non-governmental organisations (NGOs).
Evidence of financial and procurement mischief has been uncovered by a detailed implementation review, or DIR, launched by the multilateral lender in 2006 with Indian government support. The bank released the review s findings late Friday.
The probe has revealed unacceptable indicators of fraud and corruption, said Robert Zoellick, the bank s president. The government of India and the World Bank are committed to getting to the bottom of how these problems occurred.
The bank review of five projects launched between 1997 and 2003 found evidence of bid rigging and other forms of procurement fraud as well as corruption and shoddy auditing.
Projects at issue include the 114-million-dollar Malaria Control Project, the 82.1-million-dollar Orissa Health Systems Development Project, the 193.7-million-dollar Second National HIV/AIDS Control Project, the 124.8-million-dollar Tuberculosis Control Project, and the 54-million-dollar Food and Drug Capacity Building Project. The first four projects have ended and the food and drug project remains ongoing.
Related IPS Articles
The Indian government said it would pursue exemplary punishment of wrongdoers if ongoing investigations merit.
Necessary action under the relevant laws, rules, and regulations would be taken against those suspected of wrongdoing and, if found guilty, they will be visited with exemplary punishment, the finance ministry said in a statement.
Firms reportedly involved in malpractices have been debarred and disciplinary proceedings have been initiated against individuals, it added.
Oversight of the bank s entire health portfolio, currently nine projects, would be tightened, the bank said. All new health sector projects will include anti-graft measures such as comprehensive audits and performance reviews by independent agents.
The bank will also examine its supervision methods and strengthen those to address the vulnerabilities identified in the DIR, the lender said in a statement.
Problems highlighted in the bank s review were flagged in 2005 but rose to a boil in 2006, when Paul Wolfowitz, then the bank s president, ceased lending to the health sector pending action by Indian authorities to clean up procurement and financial irregularities.
The move strained relations between the lender and New Delhi, one of its largest clients, as well as Britain, a major bilateral financier of projects in its former colony. At the time, British officials said poor people would bear the brunt of disrupted aid disbursements.
By contrast, Zoellick appears to have decided to keep the bank s loans flowing even as it tries to fix the problems confronting its portfolio.
In addition to ratcheting up loan supervision, Zoellick told the bank s Department of Institutional Integrity, or in-house ethics enforcer, to make it a priority to investigate the findings of the implementation review to pursue the evidence for legal action.
The bank said this may lead to further sanctions such as debarment of companies and appropriate action under the rules against any bank staff if found negligent.
In 2007, the lender barred two Indian pharmaceutical companies from doing business with it, alleging they had engaged in collusive practices in a bank-financed reproductive and child health project.
The Indian finance ministry said it aimed to conduct all procurement electronically within two years and to deploy software designed to sniff out suspect bids. Meanwhile, feedback in the form of so-called social audits is being sought from communities involved in the projects.
Additionally, oversight and recruitment of non-governmental organisations is being tightened to exclude fraudulent groups. According to the bank, India s National AIDS Control Organisation has terminated 163 NGO contracts out of 952.
The World Bank long has found itself the focus of concern over corruption. Last year, a panel led by former U.S. Federal Reserve Chairman Paul Volcker issued a report finding the institution largely ineffective in, and urging an overhaul of, its efforts to fight graft.
As NGOs have gained in international prominence and importance, they have had to grapple with how to improve their own legitimacy and accountability.
An NGO report discussed by a small group of insiders at the World Social Forum in 2003 said the self-selecting, privately financed groups had done no better than corporations and intergovernmental organisations like the World Bank, which they criticise as opaque in disclosing information about their governance and funding.
Even so, an opinion poll released at the World Economic Forum that year showed NGOs enjoyed greater public trust than corporations, governments, and parliaments.
Of particular concern to well-established groups that have worked hard for this trust are so-called MONGOs , or My Own NGOs made up of individuals or families who set up bogus groups for no purpose beyond collecting money from donors. At least one such group has been given away as dowry at a wedding in India, charity staffers said.
