In its rejoinder, which is printed in full below (an edited version was published in New Age along with the paper's response), the World Bank claimed that there were a number of errors in the article - the main one being that the 2012/13 audit of the health program did not find $70 million of irregularities but instead $25.6 million.
$25.6 million is of course a large number, but nowhere near as large as $70 million, and if the World Bank was correct, would indicate that the article had made a serious error.
However, the World Bank was not correct.
Below is a table setting out each of the observations (dealing with expenditure) which is set out in the audit along with the amount of Bangladeshi taka involved and then in US dollars. The taka/dollar exchange rate used was Tk77.75 = $1, which is the exchange rate used in the audit itself.
As you will see the total amount of these financial irregularities is Tk 533.02 crore which is equivalent to $69.44 million.
It should be noted that this figure does not in fact contain all kinds of financial irregularities. It only deals with those irregularities relating to expenditure. It does not cover irregularities dealing with, for example, failure to collect tax from sub-contractors, or in failing to move money from one account to another.
So the total number of irregularities is about an additional $3 million - but this was not counted within teh $70 million.
How did the World Bank make such an assertion that there were only $25.6 million in irregularities. It appears that the bank only counted the financial irregularities set out in a table at the beginning of the audit which is far from comprehensive (see pages 5 to 11 of the audit). As a result the World Bank's calculation did not include the financial figures which are set out in the colour red below.
In order to find out the full list of financial irregularities, as set out in the table below, one needs to look at pages 34 to 136 of the full audit.
List
of Audit observations involving expenditure (see pages 34 to 136 of the Audit
report)
Observation
No
|
Amount
of Financial Irregularity involved (Taka)
|
Amount
of Financial Irregularity involve (Dollar: $1=Tk77.75)
|
1
|
75,996,700
|
977,450
|
1
|
48,876,200
|
628,633
|
3
|
179,900,000
|
2,313,826
|
3
|
117,700,000
|
1,513,826
|
5
|
27,640,000
|
355,498
|
6
|
9,798,740
|
126,029
|
7
|
1,323,342,000
|
17,020,476
|
8
|
26,344,500
|
338,836
|
8
|
3,730,000
|
47,974
|
9
|
25,818,544
|
332,071
|
10
|
11,470,637
|
147,532
|
11
|
357,063,500
|
4,592,457
|
11
|
226,119,700
|
2,908,292
|
11
|
87,860,486
|
1,130,038
|
13
|
298,000
|
3,833
|
14
|
237,514
|
3,055
|
15
|
5,760,000
|
74,084
|
17
|
71,665,519
|
921,743
|
19
|
19,250,000
|
247,588
|
20
|
30,000,000
|
385,852
|
21
|
250,000,000
|
3,215,434
|
23
|
10,020,600
|
128,882
|
24
|
1,264,200
|
16,260
|
25
|
2,240,000
|
28,810
|
26
|
9,487,000
|
122,019
|
27
|
131,470,000
|
1,690,932
|
29
|
3,910,000
|
50,289
|
30
|
130,255,000
|
1,675,305
|
31
|
460,787,000
|
5,926,521
|
32
|
9,504,977
|
122,251
|
33
|
351,360
|
4,519
|
35
|
171,300,000
|
2,203,215
|
36
|
6,291,874
|
80,924
|
38
|
88,458,000
|
1,137,735
|
39
|
2,993,000
|
38,495
|
40
|
744,950
|
9,581
|
41
|
133,200
|
1,713
|
43
|
65,000
|
836
|
45
|
109,997,000
|
1,414,752
|
46
|
67,775,700
|
871,713
|
47
|
66,352,000
|
853,402
|
48
|
6,657,000
|
85,621
|
49
|
23,202,520
|
298,425
|
50
|
7,691,600
|
989,273
|
51
|
148,180
|
1,906
|
52
|
35,994,861
|
462,956
|
53
|
5,118,144
|
65,828
|
54
|
111,000
|
1,428
|
55
|
455,477,900
|
5,858,237
|
56
|
989,000
|
12,720
|
58
|
54,635,000
|
702,701
|
59
|
29,700,486
|
380,395
|
60
|
4,468,431
|
57,472
|
61
|
284,000
|
3,653
|
62
|
4,550,529
|
58,528
|
65
|
5,990,400
|
77,047
|
66
|
986,400
|
12,687
|
67
|
1,746,440
|
22,462
|
68
|
35,577,719
|
457,591
|
70
|
662,392
|
8,520
|
71
|
120,699,000
|
1,552,399
|
72
|
113,169,000
|
1,455,550
|
73
|
123,819,978
|
1,592,540
|
74
|
2,499,440
|
32,147
|
76
|
8,705,430
|
111,967
|
77
|
91,200
|
1,173
|
78
|
223,757
|
2,878
|
80
|
9,999,860
|
128,616
|
81
|
101,533,000
|
1,305,891
|
82
|
64,570
|
830
|
84
|
184,000
|
2,367
|
85
|
250,000
|
3,215
|
86
|
748,960
|
9,633
|
87
|
85,000
|
1,093
|
92
|
406,500
|
5,228
|
94
|
113,737
|
1,463
|
97
|
1,328,191
|
17,083
|
5330,186,526
|
69,444,206
|
Full text of rejoinder from Christine E Kimes, Acting Head of the Bangladesh World Bank Country Office (click here to see original).
Your esteemed newspaper published a story: “WB Supported Health Programme: Audit finds $70m spending irregularities” on Sunday June 29 2014. The story says that “the World Bank played down the significance of the 2012-2013 audit”. This statement is incorrect and there are also more factual errors in the rest of the story.New Age response
The World Bank has zero tolerance for corruption in its projects and where we discover it we refer cases to national authorities to prosecute. The Bank maintains due diligence to ensure that every dollar in our projects is spent for the purpose intended.
The Health Sector Development Program (HSDP) aims to provide essential health services to 150 million mainly rural and poor Bangladeshis. Like all other projects financed by the World Bank, HSDP is subject to annual audit and any allegations or suspicions of fraud and corruption are shared with the program’s other donor and the World Bank’s Integrity Vice Presidency. Material audit observations from the previous health sector program were resolved before the ongoing HSDP was approved.
The article says that Health Ministry officials have misused at least $70 million of funds. Please note that the dollar amount of audit issues raised by the Foreign Aided Project Audit Directorate (FAPAD) report for fiscal year (FY) 2012-13 came to $25.6 million, not $70 million. In addition, audit issues or queries do not necessarily equate to misuse, but rather denote expenditures requiring additional information or explanation. In addition to Britain, Canada and the United State being donors Australia, Germany and UNFPA also co-finance HSDP.
The report mentions that the audit was undertaken for the World Bank which is also not true. FAPAD audits all Government projects that include donor financing. The FAPAD audit is not done for the World Bank, but for HDSP.
The Government’s Health Population and Nutrition Sector Development program is not worth $3.1 billion as the story states. It amounts to $7.3 billion (at the current exchange rate). The donors, including the World Bank have committed a total of $1.74 billion in the program and not the $2.16 billion as mentioned in the story. Donor financing accounts for only a quarter of the national program, not two-thirds as stated in the story. Please also note that the FY12-13 FAPAD report identified 97 observations and not 99 as stated in the story.
The World Bank has a robust system in place to detect any financial irregularities. The Bank carries out detailed review of every audit observation identified in the FAPAD report and communicates material observations to the line ministry for further clarification. Based on the clarifications received along with the supporting document, the World Bank decided whether to deem the explanation acceptable or to initiate a Special Financial Management review for further scrutiny. When the World Bank finds credible evidence of fraud and corruption in its projects, it may lead to a range of possible outcomes ranging from debarment, referrals, declaration of ineligible expenditure, disbursement being withheld and/or reimbursement of funds by the member government. In the case of refunds, actual payment documentations are reviewed to determine whether the source of funding come from the Government or the Development Partners’ account.
The World Bank has been a committed development partner of Bangladesh since its independence. We would ask you to publish this above information to avoid confusion among your reader. We hold great respect for New Age. For future stories, we would be delighted to help you with accurate information.
The World Bank’s claim that the audit ‘observations’ amounted to $25.6 million and not $70 million is not correct and is based on only a partial counting of the financial irregularities set out in the audit report. The WB claim appears to be based on figures set out in a table at the beginning of the audit report which does not contain financial irregularities relating to eleven observations, the details of which are set out later in the audit.
It is notable that the World Bank did not dispute the $70 million figure either at its meeting with New Age on 23 April 2014, nor in its written response to the paper.
It should be noted that in rechecking the figure, New Age found a small mistake, and the audit irregularities dealing with expenditure amount to $69.4 million rather than $69.8 million.
It was correct for the article to describe the World Bank’s attitude as one in which it ‘played down’ the significance of the audit report as its officials stated that they were only concerned with 22 observations amounting to $10 million out of 97 audit observations involving $70 million worth of expenditure irregularities.
The figures used in the New Age article about the size of the programme come directly from the May 2011, World Bank Project appraisal document (Report No: 59979–BD) which states at paragraphs 27 and 63 that: ‘The estimated development budget is about US$3,334 million of which the GOB will provide about US$1,167 million and the remaining amount of US$2,167 million will be provided by the DPs (development partners)’.
The figure of $7 billion includes the government’s non-development budget (i.e normal health service running costs) which is not audited in this report and therefore would have been a misleading figure to have used in the article. Donor financing therefore does account for two thirds of the audited programme.
New Age considers the word ‘misuse’ as an appropriate generic work to describe the different types of alleged irregularities which are described in detail in the article. It seems semantic for the World Bank to claim that the audit report was not done for the bank, since its contract with the government requires the production of such an audit each year, that it was sent a copy of the audit in a letter dated 31.12.2013 and that it examines the audit on behalf of all donors.
The article did make one mistake, as noted by the World Bank. There were 97 audit observations not 99 – a typographical error.
New Age therefore firmly stands by the accuracy of this article.
No comments:
Post a Comment