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)

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