World Bank uncovers fraud in India health projects

By Lesley Wroughton

WASHINGTON (Reuters) - The World Bank said on Friday it had uncovered "serious incidents" of fraud and corruption in a review of five health projects in India and Bank President Robert Zoellick pledged he and the government would get to the bottom of it.

Evidence of problems was found in a just-released Detailed Implementation Review launched by the World Bank in 2006, with the support of the Indian government. It looked at the five World Bank-supported projects, some dating back to 1997, for HIV/AIDS, malaria and tuberculosis.

The review's findings are likely to further highlight concerns about corruption in World Bank-financed development projects and increase pressure on Zoellick to tackle shortcomings in the bank's oversight of projects.

"The probe has revealed unacceptable indicators of fraud and corruption," Zoellick said in a statement. "The government of India and the World Bank are committed to getting to the bottom of how these problems occurred," he added.

India's finance ministry said it would pursue criminal charges, if necessary, against anyone found guilty of wrongdoing.

"Necessary action under the relevant laws, rules and regulations would be taken against those suspected of wrongdoing and, if found guilty, they will be visited with exemplary punishment" the ministry said.

Problems in World Bank-financed health projects in India first arose in 2005 but boiled to the surface in late 2006 when former World Bank chief Paul Wolfowitz halted lending to the sector until India had taken steps to fix its procurement methods.

The move sparked tensions between the World Bank, the government and donor country Britain, which argued that freezing the flow of funds would only hurt the poorest people and that the Bank should continue to lend to countries while tackling problems of corruption.