World Bank starts fresh probe into health care fraud - Livemint.com 20 May 2008

The probe, conducted jointly with the Centre, could lead to possible criminal action and sanctions Mumbai: The World Bank has initiated a fresh investigation into a possible fraud in healthcare projects in India funded by it, after primary findings in a 2006-07 review indicated several instances of corruption in its Rs216 crore food and drug capacity building project.
The investigation, conducted jointly with the Union government, could lead to possible criminal action and sanctions, World Bank’s South Asia vice-president Praful Patel said. “A second review on the project is in progress now and necessary actions are expected soon.”
The food and drug capacity building project, started in October 2003 and scheduled to conclude on 30 June, is a nationwide project aimed at improving the quality and safety of food and drugs in the country by strengthening the regulatory framework.
The project was meant to enhance the capacity of testing laboratories across the country through infrastructure strengthening and training. It included setting up management information systems and electronic linkages between government offices and laboratories to improve monitoring and data collection.
The World Bank’s 2006-07 review had found discrepancies in equipment procurement and service contract bids awarded to individual vendors and corporate suppliers. The review also found mismatches in the quality of work and material used.
A summary of the review, published in January, mentioned several indications of possible corruption such as inconsistent treatment of bidders, submission of fraudulent documentation and inappropriate rejection of bidders.
It mentioned “widespread deficiencies in the implementation of equipment and civil works, such as payment for incomplete works and uninstalled equipment.”
Names of several government officials who were in charge of deciding the bid approvals were also named in the World Bank report.
“We take these indicators of fraud and corruption extremely seriously,” said World Bank Group president Robert Zoellick in a March statement when the joint action was proposed.
“Working with Indian authorities we will take action against those found responsible, including debarment and sanctions against firms and individuals from doing business with the bank, and disciplinary action against the bank’s staff if warranted,” he had said.
“The IT linkage between the states and central drug regulatory departments were not completed because of controversies on the hardware procurement and enormous delay in the software and system installation,” said a person who was formerly heading the country’s Central Drugs Standard Organisation, who didn’t want to be identified.
Devashish Panda, joint secretary at the department of health, who is in charge of the project, was not available for comment despite attempts to reach him over the phone. Another senior official from the department only said the project would be completed on schedule.
The bank had in 2007 barred some Indian firms from participating in its projects following findings of fraud and corruption.
The bank had funded a $114 million malaria control project, a $82 million Orissa health systems development project, $194 million national AIDS control programme and a $125 million TB control project.
C.H. Unnikrishnan