Scam in World Bank project casts shadow over Naveen govt

Written by Dilip Bisoi | Bhubaneswar | Updated: Jan 28 2008, 05:58am hrs
The scam in the World Bank-aided Rs 415 crore ($90 million) Orissa Health System Development Project (OHSDP) is rocking the Naveen Patnaik government. With the World Bank report indicating that a minister in Orissa received speed money for awarding contracts, the Opposition parties have found the right weapon to attack the ruling parties, the Biju Janata Dal (BJD) and the Bharatiya Janata Party (BJP).

The chief minister, in a bid to control the damage, first ordered a high-level official inquiry into the findings of the World Bank. As things started getting worse, he ordered a vigilance investigations into the case. But the Opposition is not satisfied, it is demanding a probe by the Central Bureau of Investigation (CBI) pointing out that the chief minister himself was in-charge of the health portfolio for about a year when the project was implemented.

The Bank report found incidences of fraudulent and corrupt practices related to procurement, such as collusive behaviour, bid-rigging, bribery and manipulated bid prices. 'Our probe has revealed unacceptable indicators of fraud and corruption,' World Bank group president, Robert B Zoellick, said recently. The report also found that deficient civil works had been certified as complete and broken or damaged equipment had been certified as compliant.

The detailed implementation review (DIR) report of the Bank, published recently, says medical equipment that was operational by the closure of the project amounted to 40% of the total equipment cost. And 15% of the major equipment, that is 4.4% of the project cost, was found to be below the quality level.

After an investigation in 2005, the World Bank had also found cases of corruption in the reproductive and child health project, prompting the multi-lateral agency to withhold more than $5 lakh in aid for the project in April 2006.

The rut in the implementation of the World Bank aided health project was first exposed by the Comptroller and Auditor General in its audit report for 2004-05. The report indicted the state government for procurement of sub-standard and outdated medical equipment, poor construction works, excess payment of professional fees and deviation from the project implementation plan (PIP).

The project, launched in September 18, 1998, was estimated to cost $90 (Rs 415 crore), was scheduled to be implemented over five years. While financial assistance from the International Development Association (IDA) was Rs 348.75 crore, the balance was the state's share. However. low expenditure by the state government led to curtailment of the project cost by Rs 110 crore and the project could be completed by March 31, 2006 after three extensions.