Wall Street Journal
January 16, 2008

A much-anticipated World Bank review has found “serious incidents of fraud and corruption” in $570 million in bank loans to India’s health sector.

The full forensic report by the bank’s Department of Institutional Integrity, with support from the Indian government, has not yet been released to the public. According to The Wall Street Journal, which managed to secure a copy of the extensive document, “with the exception of Paul Volker’s investigation of the U.N. Oil for Food scandal, we can think of no comparable review of an international organization that has brought such damaging facts to light.”

The report indicates that fraud and corruption put lives at risk, enriching contractors in the process. Worse still, says The Journal, the bank repeatedly looked the other way. In response [PDF] , the bank has promised it will change its ways and plans to join forces with the government of India to “fight fraud and corruption and systematic deficiencies in India’s health sector.”

But no one should hold their breath in anticipation of these two parties getting serious in their new-found common cause to fight corruption.

As The Journal points out, the bank’s chief anti-corruption investigator, Suzanne Rich Folsom, who brought the scandal to light in the first place, went unpraised for doggedly doing so, and is now herself being hounded by fellow staffers intent on covering up evidence of corruption.

“Corruption is an endemic problem in [World Bank] projects, swallowing unknown but significant chunks from its $30 billion-plus annual portfolio. No less a problem has been the bank staff’s ferocious resistance to anything that might stand in the way of its lending ever more money to projects run by the same governments that tolerate this malfeasance,” says The Journal. To read more and view pictures of the projects effected by corruption, see: online.wsj.com.