It is to the credit of the World Bank that it has been able to uncover extensive corruption in five of its large projects in the health sector so quickly after the bank adopted its new strategy to tackle governance and corruption issues. Unfortunately, unlike the Bank, which has no qualms in admitting errors and the occurrence of serious fraud and corruption, the Indian government seems reluctant to acknowledge lapses. It has insisted that the detailed implementation review (DIR) undertaken by the Bank is only a fact-finding report which does not amount to a detailed investigation from which conclusions may be drawn. This runs contrary to the view of the Bank, which has taken pains to point out that the Indian DIR was of unprecedented size and scale, a complex labour-intensive undertaking that involved forensic accounting expertise and techniques in addition to analytical tests. By design, these DIRs, first initiated in 2002, are meant to uncover the extent to which fraud and corruption has affected important Bank-funded projects and also assess its adverse impact on outcomes or the delivery of project output. Though the five projects now being investigated involve only around $565 million by way of health funding in India, a fraction of the $4.4 billion funnelled into some 44 projects since the early 1990s, they are of special importance to the Bank because of the international muck-raking that had begun to mar its reputation as a force for positive change. In fact, the DIR in question, launched in mid-2006 and to be completed this year, was prompted by the finding of an earlier investigation of a health project that spotted evidence of fraud and corruption so widespread that it had left officials more than just a little shaken.
In India, all this raises serious questions about the efficiency of our own system of checks and balances, including the audits done by statutory authorities. It is true that a recent CAG report noted that the ministry of health and family welfare, which spends around one-eighth of its funds on assorted purchases, did not have any proper procurement mechanism in place, lacking its own instruction manual of purchase procedures and letting the job be done instead by terms of office memoranda issued from time to time. But CAG failed to detect anything specific that should have rung the alarm. Why is that?
