Tales of Corruption in WB aided Health Projects in India
Center contemporary studies & research
90% of World Bank Aid Money Consumed By Corruption
Posted on January 16, 2008 by funstuffkenny
Credit Robert Zoellick for knowing how to put the best face on a profound embarrassment. On Friday, the World Bank president announced in a press release that the bank had "joined forces" with the government of India to "fight fraud and corruption" in that country's health sector. This is happening at the same time that Mr. Zoellick's colleagues are hounding bank anticorruption chief Suzanne Rich Folsom, the person primarily responsible for bringing the scandals to light.
Corruption is an endemic problem in bank projects, swallowing unknown but significant chunks from its $30 billion-plus annual portfolio. No less a problem has been the bank staff's ferocious resistance to anything that might stand in the way of its lending ever more money to projects run by the same governments that tolerate this malfeasance.
Yet nothing we've seen so far can compare to what has now been uncovered about five health projects in India, involving $569 million in loans. The projects were the subject of a "Detailed Implementation Review," a lengthy forensic examination undertaken by Ms. Folsom's Department of Institutional Integrity, known within the bank as INT. As of this writing the bank has not publicly released the review, though it's been shared with the bank's board. But we've seen a copy and are posting its executive summary on wsj.com/opinion and OpinionJournal.com (click here to see it). We are also posting photographs that show the real price that corruption in bank projects exacts on the poor. Here are some of the lowlights:
In the $54 million "Food and Drug Capacity Building Project," for which money is still being disbursed, the INT found "questionable procurement practices, some of which indicate fraud and corruption, in contracts representing 87 percent of the number of pieces and 88 percent of the total value of equipment procured." That is nearly $9 of every $10 in aid funds.
For the $194 million "Second National AIDS Control Project," the INT discovered that "some of the test kits supplied by particular companies often performed poorly by producing erroneous or invalid results, potentially resulting in the further spread of disease."
In the $114 million "Malaria Control Project," the review found "numerous indicators of poor product quality in the bed nets supplied by the firms." And in the $125 million "Tuberculosis Control Project," the INT discovered "bidders sharing the same address and telephone numbers, unit prices showing a common formula, and indicators of intent to split contract awards among several bidders."
After visiting 55 hospitals connected to the bank's $82 million "Orissa Health Systems Development Project" (Orissa is one of India's poorest states), INT investigators found "uninitiated and uncompleted work, severely leaking roofs, crumbling ceilings, molding walls, and non-functional water, sewage, and/or electrical systems." It also found "neonatal equipment that lacked adequate electrical grounding, potentially exposing babies and their medical staff to electrical shocks."
All this would be bad enough if Indian companies or officials were making off with ill-gotten gains behind the backs of World Bank staff. Instead, the INT found evidence of the bank repeatedly looking the other way. In the case of Orissa's 55 "hospitals," the INT found that the "construction management consultants (CMCs) who supervised the work certified that 38 of these hospitals to be complete to project specifications." In the AIDS Control Project, "the bank appeared to pay scant attention to the performance and quality of the goods supplied to the blood banks and testing centers, instead focusing on the number of such facilities being erected."
The report goes on in this vein for hundreds of pages. With the exception of Paul Volcker's investigation of the U.N. Oil for Food scandal, we can think of no comparable review of an international organization that has brought such damaging facts to light, certainly not one that was internally conducted.
Yet not only does Mr. Zoellick's press release fail to praise INT's dogged achievement, it ignores Ms. Folsom altogether. It does, however, give pride of place to bank managing director Ngozi Okonjo-Iweala, who was recently hired by Mr. Zoellick and is quoted as saying she is encouraged by the Indian government's "strong resolve" to deal with corruption.
We'll believe that resolve when we see it. Such promises would be more credible if Mr. Zoellick took meaningful steps to hold accountable those in the bank who acquiesce in this corruption. Former President Paul Wolfowitz showed real spine when he stopped lending to a related Indian health project after a previous INT investigation uncovered fraud. Yet lending to Indian health projects resumed the moment he departed last year.
We wonder, for example, what this now-documented Indian corruption means for the career of Praful Patel, who has been running the bank's South Asia operations since 2003, and for Managing Director Graeme Wheeler, who until recently oversaw Mr. Patel's work. Instead of accountability for these supervisors, the bank offers up the Orwellian contrivance by which Ms. Folsom has been whited-out from this story, like the proverbial vanishing commissar.
The foreign aid lobby sometimes says that corruption is the inevitable price of "doing good" in the developing world. Our online readers should look at the photographs of hazardous laboratories and sewage overflowing in hospitals, and wonder how anyone can make that case with a clear conscience.
Source:
http://busnews.wordpress.com/2008/01/16/90-of-world-bank-aid-money-consumed-by-corruption/
Corruption plagues World Bank aided health projects in India
12 Jan 2008, 1239 hrs IST PTI
NEW DELHI: 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 the 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.
World Bank anti-fraud chief quits after she blew Indian whistle
Sonu Jain
Posted online: Saturday, January 19, 2008 at 0040 hrs
NEW DELHI, JANUARY 18: Days after the controversial investigation into fraud and corruption in the World Bank-funded health sector projects, the chief of the anti-fraud unit of the Bank, Suzanne Rich Folsom, has resigned.
The India report was her most no-holds barred look at corruption, kickbacks and bribes involved in implementing five major health projects.
It not only brought to light corruption within the Indian government but pointed to glaring loopholes holes in the Bank's own system of checks and balances.
Did Suzanne Folsom's resignation have anything to do with the severity of findings in the India report? "She had been considering private sector opportunities for a while and wanted to stay on till the DIR was delivered before she left," said an official response from the World Bank to this query.
Folsom was Counselor to the President as well as Director of the Bank's Integrity Department. She had been appointed to this sensitive post by the previous president Paul Wolfowitz who had made the battle against corruption his top priority.
He was ousted as Bank president last year after the disclosure over his role in the pay increase and promotion for his companion, a bank employee.
Folsom was often accused of seeing Bank officials as potential suspects in the fight against corruption.
Source: http://www.indianexpress.com/story/263187.html
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