Monday, June 30, 2014

World Bank health program - $428m of irregularities in 8 years

In the second article in the series, New Age has published a report on financial irregularities in the 2003-2010 donor supported health program. Audit documents show that there were $428 million of irregularities. Below is a copy of the article.

Also see end to access key original audit referred to in this article


$428m of irregularities in 8 years

David Bergman
Annual audits of a ministry of health development programme, funded jointly by international donors and the government of Bangladesh, identified financial irregularities amounting to $428 million between 2003 and 2010.
The $428 million (Tk3,287 crore) represents about one third of the $1.3 billion of expenditure audited by the Comptroller and Auditor General during the eight year period – a total which, according to the audit report comprised $526 million provided by international donors, and $728 million given by the government.
The major financial contributors included the World Bank which loaned $300 million, the European Union which gave $105 million, the British government $110 million and the Swedish government $68 million.
Although the World Bank and other international donors were aware of these irregularities, set out in a total of 435 audit observations, they went on to commit a further $2.13 billion for a new five-year ministry-implemented programme which has just completed its third year.
On Sunday, New Age revealed that the last year of audited accounts of this current donor-supported health programme had identified $70 million of expenditure irregularities, including illegal procurements, unauthorised use of money and unverifiable payments.
The extent of the financial malpractice in the now completed health programme is set out in an audit report relating to its final financial year 2010-11 which New Age obtained under the World Bank’s access to information policy.
The Foreign Aided Project Audit Directorate, a part of the Comptroller and Auditor General, completed the audit for the multilateral agency.
This audit set out that in 2003-4 the financial irregularities amounted to Tk 134 crore ($17.5 million); in 2004-5 it was Tk 8.9 crore ($11.6 million);  in 2005-6 it was Tk 702 crore ($91.5 million); in 2006-7 it was Tk 1,565 crore ($204 million); in 2007-8 it was Tk 562 crore ($73 million); in 2008-9 it was Tk 73 crore ($9.6 million); in 2009-10 it was Tk 53 crore ($7 million); and in 2010-11 the amount was Tk 106 crore ($14 million).
The audit report stated that out of the 392 audit observations identified between 2003-4 to 2009-10 (not including the 43 from the 2011-12 audit itself), only 88 had been ‘settled’, leaving Tk 3,222 crore ($420 million) as outstanding irregularities.
Not all of the $428 million irregularities relate to improper or illegal expenditure, as some of them concern the failure of ministry officials to collect tax from companies or to transfer
money from a programme to a government bank account.
An analysis of the details of the 43 audit observations identified in the year 2010-11, found that only 3.6 million out of the $14 million involved non-expenditure irregularities. Though, in the 2005-6 audit, nearly two thirds of the identified irregularities were not expenditure related.
The World Bank only provided New Age with three out of the eight audit reports covering the period between 2003 and 2010, so a full analysis of the nature of the irregularities has not been possible. The Bank told New Age that the five other reports could not be found.
The 2011-12 audit states that the $428 million of irregularities only involves the government of Bangladesh, not donor money.
Following its own examination, the World Bank concluded that only a small number of the identified irregularities over the eight year period were significant.
In its 2012 ‘Implementation, Completion and Results’ report assessing the success of the programme, the World Bank stated that ‘Between fiscal years 2006 and 2011, the World Bank identified 36 audit observations (worth $68.14 million) as material and substantive from the observations raised by the Foreign Aided Projects Audit Directorate (FAPAD) auditors.’
The World Bank has not been willing to provide New Age with any further information on why it did not consider the remaining 356 audit observations to have been ‘material and substantive’.
In terms of achieving its objectives, the eight-year progamme is considered to have been relatively successful with many of its health indicators having been achieved. ‘It is fair to assume that the HNPSP has contributed significantly to the very positive achievements in the sector,’ the World Bank states in its report.
The Bangladesh government’s IMED report, however, stated (as quoted in the World Bank report) that ‘It is not possible to apportion these improvements to health sector interventions or specifically to HNPSP alone. A number of socio-economic factors seem to have influenced the outcome.’
Iftekharuzzaman, the executive director of Transparency International, Bangladesh criticised the World Bank for acting ‘inconsistent[ly] with the anti-corruption policy it preaches.’
‘If the World Bank can downplay the importance of the reported types of audit observations, a question may be raised if in effect they are also colluding with such practices and benefitting from [them],’ he said.

 Table listing irregularities in Health Sector Development Program

Nos Paras
Financial involvement
(GoB only) – Taka currency
Financial involvement in $*

* Exchange rate $1 = 76.72. This is the exchange rate given in  the 2010/2011 audit report

To see the page from the 2010/2011 audit report which contains this information, click here (please note that the doc does not include 2010/11 observations To download the whole 2010/2011 audit report, click here (big document)

Sunday, June 29, 2014

'World Bank Health Programme: Audit finds $70m spending irregularities'

For those unable to access the New Age article on the website relating to financial irregularities in donor supported health program me, it is set out below.

               (b) Access the Audit report and other documents

[To see second article in the series: World Bank health program - $428m of irregularities in 8 years]



Audit finds $70m spending irregularities

David Bergman
In just one year, health ministry officials have misused at least $70 million of funds provided for a major development programme primarily financed by the World Bank and the governments of Britain, Canada, Sweden and the United States, according to an official audit report.
The audit of the Health Population and Nutrition Sector Development Programme found that between July 2012 and June 2013, $69.8 million (Tk 542.9 crore ) was spent either on irregular procurements, unverifiable expenditure, or on medicine and equipment which was excess of requirement.
The audit, seen by New Age, refers to ‘collusive’ tendering, ‘fictitious’ documents, ‘fraudulent practices,’ ‘misappropriated’ money, ‘useless’ purchases, ‘misuse’ of money, ‘lack of financial propriety’ ‘violation of fundamental accounting practices’ and inability of officials ‘to justify the genuineness of payments’.
The identified financial irregularities represent over 20 per cent of the total $321 million (Tk 2,498 crore) which the programme spent that year but since $102 million (Tk 796 crore) of the expenditure was not scrutinised in the audit, it reflects as much as one third of the amount of expenditure that was audited.
‘The audit is a tip of an iceberg,’ one senior auditor told New Age.
Md Neazuddin Miah, the secretary to the ministry of health and family welfare, accepted that there were many audit observations, but claimed that many ‘are very minor in nature.’
He said that the audit for 2012-2013 was ‘not finalised as we have asked the officers concerned to answer why they have made such irregularities’. He added that the ministry was waiting for a response from the audit office about the explanations ‘before taking necessary action against the line directors’.
According to the audit report, in 2012-2013, the project was financed by $220 million (Tk1,710 crore) from international donors with the remaining $101 million provided by the government of Bangladesh.
The audit was undertaken for the World Bank by the Foreign Aided Project Audit Directorate, which is part of the government-run Office of the Comptroller and Auditor General. The World Bank not only loaned $359 million (Tk 2,791 crore) for the five-year programme but also was given fiduciary oversight of how most of the international donor money given to the programme was spent.
New Age obtained a copy of the audit relating to the programme following a request to the World Bank under its access to information policy. World Bank considers the Comptroller and Auditor General, as the ‘independent auditor for all Bank projects’.
The audit report for the year 2012-2013, which was sent by FAPAD to the World Bank in December 2013, sets out 99 different audit ‘observations’ of which 33 were categorised as particularly serious. It is not stated how much of the $70 million relates to donor as opposed to Bangladesh government money.
An analysis by New Age of the audit observations found that improper procurement of goods, amounting to $29 million (Tk 224 crore), was the biggest contributor to the total amount of financial irregularities.
The audit detailed 25 apparently unlawful procurements involving contracts worth as much as Tk 132 crore ($17 million).  In one contract involving the expenditure of Tk 99 lakh ($129,000), the audit found strong evidence of ‘collusive practice’ between the ministry officials and the supplier.
The audit also identified $18 million (Tk 139 crore) in spending where there were no documents to support the legitimacy of programme payments. One example involves $6 million (Tk 46 crore) which was supposedly spent on training but where there were no ‘basic records or documents’ to support the claim, and another $1.7 million (Tk 13 crore) which was supposed to have been spent on foreign training but which the auditors said was only justified by ‘fictitious’ vouchers.
‘Unauthorised’ expenditure amounted to $12.1 million (Tk 94 crore) , and excess or ‘useless’ spending added up to a further $6.8 million (Tk 52 crore) – with the auditors giving examples of  the purchase of $1.5 million (Tk 13 crore) worth of vitamins, and $924,000 (Tk 72 crore) of hospital equipment which were not required.
In addition, $4.3 million (Tk 3.5 crore) had been spent on goods that were not received or, if they were, did not function properly.
The audit for 2012-2013 was no aberration. The previous year’s audit for 2011-2012, the first year of the programme, identified that $21 million (Tk169 crore) of the spending – just short of 10 per cent of that year’s total expenditure – was irregular.
In that audit, irregularities included $2.4 million (Tk 20 crore) given to suppliers although no goods were received, $1.3 million (Tk11 crore) supposedly spent on training sessions though there was no supporting authorisation or documentation, and $215,000 (Tk2 crore) spent on buying materials without any open tender.
The secretary to the ministry told New Age that in relation to the 2011-2012 audit, three or four ministry officers had given back about Tk 2 crore to government accounts, and that departmental action was being taken against them.
Internal donor documents show that before agreeing in 2011 to commit money to the five- year health programme, the donors recognised that there were significant financial risks involved.
An appraisal document written that year by the World Bank stated that the financial risks were ‘substantial’.
And the UK government also stated that the project’s fiduciary risk was ‘high.’
However, both reports went on to state that they considered sufficient safeguards were in place to minimise the risks.
In a statement to New Age, the World Bank stated, ‘The program is subject to annual audits and any allegations, or suspicions, of fraud and corruption have been shared with the program’s other donors and the Bank’s Integrity Vice Presidency.’
‘With respect to the fiscal year 2013 audit report, the World Bank fiduciary team is currently engaged in the due diligence process with the Ministry regarding observations made in that report.’
In an earlier meeting with New Age, the World Bank played down the significance of the 2012-2013 audit claiming that only 22 out of the 99 audit observations, amounting ‘to about $10 million’, was ‘serious from the World Bank’s perspective’.
The Bank declined to provide any details of which particular audit ‘observations’ the Bank considered were ‘serious’, and the details of why it did not consider the audit’s other 71 observations to be significant.
The $3.1 billion five-year Health Population and Nutrition Sector Development Programme, which started in 2011, is implemented by the ministry of health through 32 separate line directors.
The World Bank and international donors have committed to providing the ministry $2.16 billion over the period, two thirds of the total cost, with the Bangladesh government responsible for the remaining $1.17 billion.
Other than the World Bank, the programme’s main contributors are the United States government which is committed to giving $450 million, the UK government which will provide $191 million, the Canadian government which will give $102 million, the Swiss government is committed to providing $80 million and the German government $31 million.
Most of this donor money is pooled together and the World Bank has been given responsibility for the fiduciary oversight of its use in the programme.
In addition to the pooled money, there are a number of other donors, including the Japanese government, UNICEF, the European Union and other UN bodies, who give money directly to the ministry of health for use in the programme. This direct project aid, which in 2012-2013 amounted to $60 million was not audited by FAPAD, and the World Bank has no fiduciary responsibilities relating to its use.
The World Bank requires that FAPAD completes its annual audit of the programme’s activities within six months of the end of each financial year.
The $70 million of financial irregularities in the 2012-2013 audit do not include a further $3.7 million of irregularities which are ‘non-expenditure’ related – that is to say, involve ministry officials’ failure to collect tax from contractors, or their failure to transfer money from one account to another, as government rules require.
The audit report stated that it had only audited 70 per cent of the total $321 million expenditure, leaving about $100 million unaudited.

Illegal procurement, unsupported expenditure .... and more

The first of a series of articles dealing with corruption and financial irregularities in World Bank and international donor supported Bangladesh government programs is published in Today's New Age. (if you cannot access the article on New Age website, it is republished here)

In relation to today's article, there was no space for a number of other articles providing more details of the irregularities in the program - on procurements, unsupported expenditure, no goods received and unnecessary purchases. So here they are.

Please note if you want to download the original audit document, you can do so from here

1. Illegal procurements comprise 40 percent of financial irregularities
According to the audit undertaken by the government’s Comptroller Auditor General into the joint government/donor aided health programme for the year 2012/13, there were 25 illegal procurements amounting to a total of $29 million (Tk 223 crore) - 40 percent of the total financial irregularities. Here are just a few examples.

Moulvibazaar hospital – Tk 132 crore: The audit committee found that a tender for the supply of medical equipment for the 250 bed hospital in Moulvibazaar, won by M/S Techno Trade at a price of 132 crore ($17 mil), was ‘irregular’. The tender was inappropriately split into 13 different parts, all of which the company won, and payment was partly made to the company without having received the authorization of the Cabinet Committee on Government Purchase.

Dinajpur Medical College – Tk 25 Crore: Without obtaining authorisation from the ministry, the college purchased equipment, books and journals at a total cost of Tk25 crore ($3.2 mil) from Techno Trade, though the college principal only had the authority to sign a cheque upto Tk 4 crore. The college principal did this by signing 15 separate cheques, all of them below the TK 4 crore maximum – with seven of these cheques signed on a single day.

Financial irregularities at World Bank, donor funded health program

The first of a series of articles dealing with corruption and financial irregularities in World Bank and international donor supported Bangladesh government programs is published in Today's New Age.

(If you cannot access the article on New Age website, it is republished here)

This page provides access to the key documents, including the audit documents, which formed the basis of the article.

You can also read more detailed case studies of the illegal procurements, expenditure without supportive documentation, excess payments etc etc on this page of this blog

The first article deals with audits of the first two years of the $3.1 billion five-year Health Population and Nutrition Sector Development Programme in Bangladesh, which started in 2011 and which is implemented by the ministry of health.

Two thirds of the money in the programme is provided by a loan from the World Bank and by international donors.

The article reports that in in just one year, 2012/13, the financial audit identified $70 million of irregular expenditure - this is one fifth of the total $321 million spent on the programme that year. However, since $100 million of the expenditure was not audited, the amount of financial irregularities in fact amounts to one third of the audited expenditure.

The article reports on an analysis of the Audit undertaken by New Age which fount that:
- improper procurement of goods, amounted to $29 million (Tk 224 crore),
- no document to support legitimacy of programe payouts amounted to $18 million (Tk 139 crore) 
- Unauthorised expenditure amounted to $12.1 million (Tk 94 crore) ,
- Excess or ‘useless’ spending added up to a further $6.8 million (Tk 52 crore)

Tuesday, June 24, 2014

The government and the arrest of RAB officers

In a number of recent articles - here and here - I have written about the different way in which Bangladesh's High Court dealt with cases involving extra judicial killings in 2006 and 2009 on the one hand and 2014 on the other - and also the state's different response.

Whilst in the 2006 and 2009, for one reason or the other, the cases basically went nowhere, the situation was different in 2014 - with one court ordering the establishment of an inquiry committee into the Narayanganj killings and another court directing the arrest of three RAB officers who were allegedly involved in the deaths.

One article on the different judicial approaches is set out below - along with links to the four orders. It should be noted of course, that  the risk of the application of Bangladesh's Contempt of Court laws does circumscribe what would otherwise be instructive and useful analysis.

The Government and the RAB arrests
However, another interesting aspect of the 2014 recent High Court orders - and in particular the one relating to the arrest of the RAB officers - was how the prime minister and law minister responded.

Monday, June 2, 2014

RAB, party hypocrisy and impunity

An op-ed article I recently wrote for New Age about Rapid Action Battalion's extra judicial killings (also reproduced below) drew heavily on four reports written by Human Rights Watch - and I would highly recommend anyone interested in Rapid Action Batallion to read them. Local human rights organizations - Ain-o-Salish Kendra and Odhikar - have also done fine work on RAB, and conducted many investigations; but in these four reports HRW has summarised the case against RAB, and summarised their     investigations into an easily accessible form. 

The four reports are:
2006 - Judge, Jury, and Executioner: Torture and Extrajudicial Killings by Bangladesh’s 
           Elite Security
2011 - 'Crossfire': Continued Human Rights Abuses by Bangladesh’s Rapid Action Battalion