Corruption is such an everyday fact of life in India that its exposure, even in the most rampant forms, often fails to shock. The disclosure last week that a World Bank investigation had uncovered “serious incidents of fraud and corruption” in five of its Indian health care projects, financed by $568 million (Rs2,232 crore) in loans, elicited little surprise.
A couple of national newspapers put it on the front page. Elsewhere, it was not headline news that “unacceptable” levels of graft had been uncovered in flagship programmes against AIDS, tuberculosis and malaria.
But if the mere existence of corruption no longer moves newspaper readers, the detailed breakdown of its consequences and the careful detailing of how it happened, contained in the 597-page report (stamped strictly confidential but made public last Friday), make for astonishing reading.
During the two-year inquiry, investigators found that because the credentials of suppliers were not properly checked, faulty “neonatal equipment that lacked adequate electrical grounding, potentially exposing babies and their medical staff to electrical shocks” was supplied to hospitals in Orissa, along with badly manufactured surgical equipment that was liable to explode. They found that in the national HIV/AIDS prevention programme, corruption in the procurement process meant that “poorly performing test kits” had been supplied, “producing erroneous or invalid results, potentially resulting in the further spread of disease.” This is a significant blow to the health ministry as it struggles to contain an AIDS epidemic that has already infected 2.5 million.
The 75-member team involved in the inquiry, unprecedented in scale, also found that fictitious private organizations had got contracts to provide services that were never supplied and “submitted falsified documents to support the work they were purportedly doing.” Bona fide organizations reported that officials had “demanded and received bribes to award contracts.”
In a survey of 55 hospitals financed by a bank project in Orissa, investigators “observed problems in 93% of them, like uninitiated or incomplete work, severely leaking roofs, crumbling ceilings, moulding walls and nonfunctional waste, sewage and/or electrical systems.” “Four hospitals were locked shut and entirely unused,” it was found. The officials charged with supervising the work had reported that the work on the majority of the hospitals had been satisfactorily completed.
Elsewhere, investigators noted collusion and bid rigging by contractors, hoping to make a profit by supplying low-quality equipment. In several cases, rival bidders listed identical phone numbers and addresses on tender forms.
The bank spun its announcement of these devastating findings shrewdly, hiding the details beneath a triumphant launch of a new anti-corruption drive with the Indian government. “The government of India and the World Bank group have joined forces to fight fraud and corruption and systemic deficiencies in India’s health sector, announcing immediate steps to investigate indicators of wrongdoing and implement further safeguards,” a news release stated.
The relatively upbeat tone reflects how in the two years since the review began, the climate at the bank has changed profoundly. When corruption in its Indian health care projects was first exposed in 2005, the bank froze lending to the programme, straining ties with India. The decision by Paul Wolfowitz to fight corruption when he was the bank president from 2005-07 was viewed critically by finance minister P. Chidambaram, who warned that breaking loans because of fraud was “bound to hurt the development process in countries that need bank assistance the most.” Since Wolfowitz’s departure, the anti-corruption agenda has changed. Under the new president, Robert Zoellick, the style of tackling corruption is said to be less about grand inquisitions into what has gone wrong and more about developing strategies for prevention. Suzanne Rich Folsom, head of the bank’s anti-corruption unit, who was appointed by Wolfowitz, resigned on Wednesday to rejoin the private sector.
The investigation was started to highlight corruption in India, but its conclusions contain sharp criticism of the bank for failing to ensure that the large loans were properly spent. “On the bank side, there were weaknesses in project design, supervision and evaluation,” Zoellick said in a statement.
S.K. Agarwal, vice-chairman of Transparency International India, said the bank should bear much of the blame. “The donor is encouraging such corruption because they don’t monitor to make sure the money is being used for the correct purposes.”
Joginder Singh, former head of India’s Central Bureau of Investigation, agreed. “If the World Bank is serious about stopping corruption, it should earmark money to create an in-built system for auditing its loans.”
India is the bank’s largest borrower, with 75 projects worth $15.2 billion. The bank said no more money would be lent for health care programmes in India until anti-corruption measures were put in place, but for now there is no prospect of a wider review. “Our focus is on taking action to mitigate any such risk across the portfolio,” John Roone, director of operations, South Asia, said by email in response to questions.
The bank announced a slew of new measures. The Indian government said anyone found guilty would be “visited with exemplary punishment.” But there was little optimism in New Delhi that those involved would face prosecution. “We should punish those people implicated,” Singh said. “Unfortunately the legal system in this country is such that this is not going to happen and they will merrily keep the money.”
© 2008/INTERNATIONAL HERALD TRIBUNE
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