Sunday, June 29, 2014

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)

The previous year’s audit for 2011-2012, the first year of the programme, identified $21 million (Tk169 crore) of the spending – just short of 10 per cent of that year’s total expenditure – was irregular.

The Audit report, 2012/13

The audit report can be downloaded here. (Please note it is quite a big document)

Pase note this is the audit of the second year of the program.

- To see list of the 97 observations, see pages 5 to 11. To see details of the observations, see from p34 onwards

- To see how how much money was spent in 2012/3, see page 15 (look at columns 'year to date'). The column titled 'pooled funds' refer to the World Bank money and international donor money (from UK, Canada, Sweden and US) which is managed by the World Bank. This, along with the government money (see 'GOB column) is the main money that was audited. The money in the 'Non-pooled' column refers to donor money given by what is known as Direct Project Aid which is not part of this audit.

- To see how the money is used in the 32 different sub-programmes, see page 17. Very annoyingly, this does not set out how much money was used for each sub-programme that year. For this you will need to subtract from the column titled 'cumulative' the figures for expenditure in 2011/12 (see below)

- the management letter is very informative and can be found on pages 29 to 32. Note on page 30 where it states that 30 percent of the expenditure is not audited.

The Audit report 2011/12
This is the audit of the first year of the program

The audit report can be downloaded here

World Bank and DFID Risk assessments.
The World Bank appraisal document, dated May 2011 stated that 'the overall financial management risk for this financing is assessed as "Substantial"'. See para 44 of this document

The DFID 'Business case', dated November 2011, stated that the fiduciary risk is high. See para 46 of this document (please note that this document currently downloads from the DfID website in this format with many of its paragraphs missing)

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