World Bank and India combine to fight corruption news
14 March 2008

World BankThe World Bank has welcomed the Indian government's resolve to weed out corruption in healthcare projects that the bank was funding in the country.

Last year The World Bank had launched investigations in the healthcare projects it was funding that revealed corrupt and fraudulent transactions in the country's health projects. According to a report yesterday, the World Bank has agreed to collaborate with the Indian government to help root out corruption.

World Bank building at WashingtonThe World Bank said it would work in conjunction with the Indian government and conduct independent procurement audits and performance reviews. The institution believes that there is also a need for a stronger bidding process and a robust financial management in the health sector as also for better supervision of equipment and pharmaceutical procurement practices.

World Bank president, Robert Zoellick said, the bank would work with the Indian government and debar firms and individuals from doing business with the bank. He also vowed to initiate disciplinary action against bank staff, if warranted.

He also said the bank would apply the lessons learned to projects around the world as its focus was on ensuring that the project beneficiaries receive the development benefits.

The bank's 'institutional integrity' unit ignited this controversy with a report in 2005, which detailed the pharmaceutical drug procurement as part of the RCH I (Reproductive and Child Health I) Project.

Though the report was not made public, The Wall Street Journal reportedly accessed a copy and published an executive report. The WSJ report said the World Bank audit said:

Evidences suggest that the RCH I was subject to systemic fraud and corruption through:

  • Bribery of Procurement Support Agencies (PSA) and government officials
  • Falsification of performance certificates
  • Connivance among bidders
  • Coercion of companies by cartel members and PSA officials.

The report also detailed that drugs and syringes that did not meet quality standards cost more than those approved by the World Bank. The report disclosed that many witnesses admitted to having bribed government officials, including ministers, to secure the contracts for projects that, ironically, were supposed to help the poor.

The WSJ also cites the report as saying that the losses to the bank amounted to more than hundreds of millions of dollars. Further, it also provided evidence of corrupt practices at other health care projects in India, which receive approximately $2 billion in World Bank funding.

The inquiry report said that the findings were adequately severe to warrant sanctions against specific individuals and companies.

The World Bank has begun nine follow up investigations related to its funding of health projects. It had also referred three new cases for criminal investigations.

The Indian government said it would take strict action against those found guilty after having earlier claimed that the findings of the report had caused irreparable damage to the credibility of health programmes in India that would make future fund raising and implementation difficult.

The World Bank board lauded the Indian government yesterday for its positive and swift response to the report's findings. The report looked at five World Bank-supported projects, some dating back to 1997, for HIV / AIDS, malaria and tuberculosis control.

The investigation also threw light on concerns over corruption in other development projects financed by the World Bank and the need to minimise errors in the bank's oversight of its projects.

The bank also admitted failings within its own systems that allowed potential threat signs to be overlooked.

The good news from India's perspective is that the bank intends to invest in the health sector to help strengthen healthcare systems and meet vital public needs, but with a caveat that future projects include mechanisms to counter the risks identified.

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World Bank and India combine to fight corruption