World Bank Investigation Uncovers Fraud in Five Bank-Sponsored Health Projects in India

The World Bank on Friday announced that it has uncovered "serious incidents of fraud and corruption" in five bank-funded health projects worth about $570 million, the Wall Street Journal reports. A detailed internal review, launched in 2006 by the bank's Department of Institutional Integrity, with support from the Indian government, found illegal activity in projects, including those focused on curbing malaria, HIV/AIDS and tuberculosis, which dates as far back as 1997 (Wall Street Journal [1], 1/14). The projects under investigation were the Second National HIV/AIDS Control Project, the Malaria Control Project, the Tuberculosis Control Project, Food and Drug Capacity Building Project and the Orissa Health Systems Development Project, according to the bank (PTI/Hindu, 1/13).

According to the Journal, the review found that some of the HIV test kits for the $194 million HIV/AIDS Control Project "often performed poorly by producing erroneous or invalid results, potentially resulting in the further spread of disease." The report also found "numerous indicators of poor product quality in the bed nets supplied by the firms" in the $114 million Malaria Control Project. In the $125 million Tuberculosis Control Project, the review found "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."

The report also found inadequate facilities and evidence that the bank repeatedly ignored that the corruption was occurring, according to the Journal. 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 review said (Wall Street Journal [2], 1/14).

Reaction
"The probe has revealed unacceptable indicators of fraud and corruption," World Bank President Robert Zoellick said, adding that the government of India and the World Bank "are committed to getting to the bottom of how these problems occurred" (World Bank release, 1/11).

The Indian government in a statement said that the internal review was in the nature of fact-finding and did not expand to a detailed investigation. "Necessary action would be taken against those suspected of wrongdoing and, if found guilty, they will be visited with exemplary punishment," the statement said.

Zoellick added that he "appreciate[s] 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 statement said that the review's findings would result in implementing additional measures for existing projects, adding that there would be increased transparency in the procurement of the projects (Hindu, 1/13).