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13/03/2008 | World Bank Confidential

WSJ Staff

In January, we reported on a $569 million corruption scandal involving five World Bank health projects in India. Bank President Robert Zoellick called the corruption "unacceptable" and said "the Government of India and the World Bank are committed to getting to the bottom of this." We're now getting a clearer picture of whether the bank is serious, and the early evidence isn't encouraging.


Tomorrow, the bank's governing board will be briefed on the bank's "action plan" to redress the problems. As in past corruption cases, the plan contains promises of better oversight, strengthened safeguards, "smart project design," seminars on fighting corruption and so on. (Read the World Bank report and accompanying Powerpoint presentation.)

All of this might do some good. But as is often the case with the World Bank, the remedial efforts focus on improving systems rather than insisting on accountability. Though the bank promises a "corporate review," none of the bank officials directly responsible for supervising the five corrupted projects has been fired or had his career adversely affected.

Some have gone on to bigger things at the bank. For example, the bank's anticorruption unit (INT) found "a high percentage of procurements showing indicators of collusion, fraud or corruption" in a $125 million "Tuberculosis Control Project." Yet the team leader who oversaw that project is now responsible for the bank's more ambitious $360 million "Reproductive and Child Health II" project.

Most remarkable, Praful Patel, since 2003 the bank's vice president for operations in South Asia, is now the point man organizing the bank's response to the corruption that happened on his watch. This is akin to sending Michael Brown, the FEMA head during Hurricane Katrina, to supervise emergency management reforms.

Meanwhile, the bank says it has "joined forces" with the Indian government to "stamp out corruption." One problem, however, is that the Indian government categorically denies many of the findings in its official response to the INT report. In a conclusion on page four of its response, India even attacks the bank's corruption fighters for "erroneously creating an impression that the health sector delivery system in India is beset with fraud and corruption."

This suggests that whatever mechanisms the bank puts in place to address corruption could founder on India's resistance. On that point, an email from an assistant to Mr. Zoellick says that the bank chief privately agrees with Indian assertions that unspecified "mistakes had been made" in the INT report. To his credit, the email adds that Mr. Zoellick does not want those "mistakes" to divert from the "serious problems" that were exposed.

A World Bank spokesman declined comment on the documents but added that the bank is "committed to addressing its own shortcomings and will take disciplinary action against any staff members found responsible for wrongdoing." Yet so far in the wake of the India report, the only relevant people to leave the bank have been INT Director Suzanne Rich Folsom and her two senior deputies, who had been relentlessly hounded by the bank's bureaucracy.

We're happy to see Paul Volcker's name on the search committee to find a replacement for Ms. Folsom, but otherwise the committee is stacked with bureaucrats who represent the bank status quo. They include Jeff Gutman, who oversaw the Cambodia portfolio while some of its projects were exposed as corrupt; Makhtar Diop, who did the same in Kenya; and Alison Cave, a former bank staff association chair who led the staff coup against former President Paul Wolfowitz.

Mr. Zoellick has faced a difficult management task trying to mend fences after the uproar over Mr. Wolfowitz. But as president of an institution that depends on U.S. tax dollars, he has a larger obligation to ensure that corruption findings have real consequences. We hope the bank's directors demand more accountability tomorrow.

Wall Street Journal (Estados Unidos)


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