World Bank, India approve steps to fight corruption

WASHINGTON, March 13 (Reuters) - The World Bank and Indian government on Thursday agreed on steps to root out corruption after a World Bank probe uncovered "serious incidents" of fraud and corruption in country health projects the bank helped finance.

The World Bank said it would work with the Indian government to conduct independent procurement audits and performance reviews; strengthen bidding procedures and financial management in the health sector; increase community oversight, and improve supervision of equipment and pharmaceutical procurement practices.

"Working with the Indian authorities, we will take action against those found responsible, including debarment and sanctions against firms and individuals from doing business with the bank, and disciplinary action against Bank staff if warranted," World Bank President Robert Zoellick said.

"We will also apply the lessons learned to our projects around the world. Our focus is on ensuring that the people for whom these projects are designed receive the development benefits they deserve."

Since the probe ended in January, the World Bank said it had begun nine follow-up investigations related to the health projects. It had also referred three new cases to India's criminal bureau for investigation.

India has vowed to act against those found guilty of fraud or corruption in the matter

The World Bank board on Thursday praised the Indian government for its "constructive and swift" response to findings in the bank's probe, which looked at five World Bank-supported projects, some dating back to 1997, for HIV/AIDS, malaria and tuberculosis.

The investigation further highlighted concerns about corruption in World Bank-financed development projects and the need to tackle shortcomings in the bank's oversight of its projects.

"The bank intends to remain engaged in the health sector in India, to help strengthen health-care systems and meet critical public needs, provided future projects include mechanisms to counter the risks identified" in the probe," it said.

The bank also acknowledged there were weaknesses within its own systems "that allowed possible indicators of wrongdoing to go unnoticed." (Reporting by Lesley Wroughton; Editing by Jan Paschal)