World Bank, Indian Government Approve Steps To Eliminate Corruption

Main Category: HIV / AIDS
Also Included In: Public Health
Article Date: 18 Mar 2008 - 7:00 PDT

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The World Bank and the Indian government recently approved plans to eliminate corruption following an investigation that found incidents of fraud and corruption in some of the country's bank-financed health projects, World Bank President Robert Zoellick said on Thursday, Reuters reports (Wroughton, Reuters, 3/13).

The World Bank in January announced that it had uncovered illegal activity in five bank-funded health projects worth about $570 million. 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. 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.

The report also found inadequate facilities and evidence that the bank repeatedly ignored the corruption. 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 (Kaiser Daily HIV/AIDS Report, 1/14).

Bank officials said they plan to partner with the Indian government to:

• Conduct independent procurement audits and performance reviews;
  
  
• Enhance contract bidding guidelines and financial management in the health sector;
  
  
• Expand community oversight; and
  
  
• Strengthen supervision of equipment and pharmaceutical procurement processes.
  

The bank said it has launched nine follow-up investigations related to the health projects since January. It also has referred three new cases to India's criminal bureau for investigation. The Indian government said it plans to take action against those found guilty of corruption (Reuters, 3/13). In addition, Orissa state has launched several investigations following the report (Davis, Wall Street Journal, 3/15).

Comments, Action
"Working with the Indian authorities, we will take action against those found responsible, including debarment and sanctions against firms and individuals from doing business with the bank," Zoellick said (Faiola, Washington Post, 3/15). He added, "We will also apply the lessons learned to our projects around the world. Our focus is on ensuring that the people for whom these projects are designed receive the development benefits they deserve" (Reuters, 3/13).

The World Bank did not release the names of the companies involved in the investigation, but they likely will include those listed in the January report, the Journal reports. According to the report, Germany-based companies BASF and Bayer, as well as some Indian companies, were found to be participating in a "bid-rigging" scheme involving about $33 million in procurements of the pesticide pyrethroid for malaria control efforts. A BASF spokesperson said the company had not been notified "by any governmental authority" of corruption charges, adding that BASF has investigated the situation and "has not found any indication of a violation of law." A Bayer spokesperson said it has opened an internal investigation and "will be cooperative and open with authorities and government agencies." The spokesperson added that Bayer is "committed to the principle of free competition."

In addition, the report had named Aventis Crop-Science, which is now part of Sanofi Aventis, and Zeneca Agrochemicals, now called Syngenta International, as participants in the activities. Both companies declined to comment immediately. According to the Journal, Sanofi Aventis previously said the report's findings concerned a unit that is now part of Bayer. No World Bank staff has been demoted or fired following the investigation, the Journal reports. Such actions will be taken "if warranted" after further investigation, Zoellick said (Wall Street Journal, 3/15).

The World Bank's Board of Directors on Thursday also applauded the Indian government for its "constructive and swift" response to the investigation. "The bank intends to remain engaged in the health sector in India to help strengthen health care systems and meet critical public needs, provided future projects include mechanisms to counter the risks identified" in the probe, the board said. In addition, the bank acknowledged weaknesses within its own systems "that allowed possible indicators of wrongdoing to go unnoticed" (Reuters, 3/13).

According to the Post, the report's findings "lend credence to warnings" from Kunal Saha, an HIV/AIDS specialist contracted by the World Bank to review some of the programs last April, over the reliability of some HIV testing kits in India. However, Kees Kostermans, a medical expert who oversees the bank's South Asia public health operations, on Friday said that he is confident that the test kits were not faulty (Washington Post, 3/15).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.