World Bank finds massive fraud in five Indian projects

By Khalid Hasan

WASHINGTON: An internal World Bank investigation has uncovered a multi-million dollar scandal involving five health-related projects in India.
According to the Wall Street Journal, in the $54 million “Food and Drug Capacity Building Project,” for which money is still being disbursed, the investigation 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.” In other words nearly $9 of every $10 in aid funds was misspent.
For the $194 million “Second National AIDS Control Project,” the inquiry 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 Bank 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.”
The Wall Street Journal commented, “The report goes on in this vein for hundreds of pages. With the exception of Paul Volcker’s investigation of the UN Oil for Food scandal, we can think of no comparable review of an international organisation that has brought such damaging facts to light, certainly not one that was internally conducted.”
The Bank detailed implementation review (DIR) said, “The India DIR found significant indicators of fraud and corruption in all five projects. These indicators appear to have affected, to varying extents, the projects’ implementation and outputs. The DIR found indicators of fraudulent and corrupt practices related to procurement, such as collusive behaviours, bid rigging, bribery, and manipulated bid prices. It also found indicators of fraudulent and corrupt practices related to project implementation, including deficient civil works certified as complete, broken or damaged equipment certified as compliant with specifications and under-delivery of services from contractual obligations. Moreover, the DIR observed inadequate project financial, audit and internal control systems. These findings will result in a number of Bank investigations into specific cased of possible fraud and corruption.”

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