Health schemes caught between government & World Bank

[Guest guest]

Health schemes caught between government & World Bank

SUMANA NARAYANAN

INDIA is set to make another round of changes in procurement norms

for health schemes funded by World Bank loans. This follows the

bank's review of Indian projects running on its loans, highlighting

corrupt practices in procurement of drugs and other items by the

government and drug companies. While such practices are well known—

the bank's own reviews have repeatedly mentioned them—the timing of

the latest review has raised eyebrows.

Public health researchers doubt the bank's motive: the review is more

about wresting control than removing corruption. There are

suggestions that it's about getting the bank's favourite firms on

board. How this will arrest corruption is not clear.

In 2006, Pricewater-houses had appraised the bank's review

system, finding it inadequate.

Re-re…review

The review detailed the nexus between government bodies and pharma

firms. This leads to corruption at several levels (see box: News you

can't use). The centre accepted the report and announced a series of

changes in procurement norms. The schemes at stake deal with critical

health concerns: tuberculosis, HIV/AIDS, malaria, and reproductive

and child health. Procurement—of drugs, testing kits, bandages and

equipment—is a major part of these programmes.

The schemes had recently completed five-year cycles, and were up for

renewal. In fact, the bank has already sanctioned the next lot of

funds, but hasn't released them. This is where the questions arise.

When the bank knew of corruption all along, why did it continue

funding projects for years? The bank reviews projects every six

months. What's the point if they don't help check corruption?

The striking aspect of these reviews—conducted by consultants at the

bank's high rates—is that they are paid for out of loans. Independent

reviews show that up to 20 per cent of loans is spent on consultants.

Musical chairs

In 2005, the bank had released some findings of its review of the

first phase of the reproductive and child health project. It

had `found' inconsistencies in the purchase of vitamins. The bank

suggested funds go directly to states, instead of being routed

through the centre. It recommended Tamil Nadu's methods, which cut

corruption and delays: the state was buying drugs directly from

suppliers, instead of dealing with procurement agencies. It didn't

take long to realize that all states did not have this capacity. A

year ago, the bank came up with an alternative to government agencies

buying through their flawed tendering process: the UN Office for

Project Services (UNOPS) was called in to handle procurement for

projects running on the bank's loans. The assumption being a UN

agency wouldn't be corrupt.

Around that time, the Union Ministry of Health and Family Welfare

realized it was time for another government agency, and decided to

call it the Empowered Procurement Wing. A British consultant, Crown

Agent, was en-gaged to streamline procurement. All solutions featured

foreign agencies. Little attention has gone into a investigation and

punishment.

If the bank wanted to clean up health schemes, it would have tried to

bring the guilty to the book. But it provides nothing for criminal

proceedings and is not usable as evidence in a court. Nor does it

identify corrupt officials and suppliers. After the bank released the

long-term review, health secretary Naresh Dayal has announced a probe.

Look who's talking

What really weakens the bank's position is recent events in its own

house. Suzanne Rich-Folsom, director of the bank's Department of

Institutional Integrity that published the review of Indian health

schemes, resigned on January 18. There is talk of corruption. Her

credibility suffered further because she was also a counsellor to the

previous World Bank president, Wolfowitz, who resigned under a

cloud.

Which is why when the bank talks about corruption in the Indian

government, it doesn't sound convincing.

News you can't use

The World Bank's assessed five projects: one each on HIV/AIDS,

malaria and tuberculosis; the Food and Drug Capacity Building

Project; and the Orissa Health Systems Development Project. These use

bank loans of US $569 million. The review showed the following

problems were common:

Some bidders were favoured in violation of bank's bidding norms

Fraudulent bids

Uninstalled and improperly installed equipment; substandard material

Ministry set up panel to oversee bids. It often overruled project's

bid evaluation committee's decisions.

Bank had okayed contracts in spite of finding shortcomings

lack of financial record-keeping

Fictitious NGOs awarded contracts

Lack of controls to monitor funds

Bribing of health ministry officials

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