World Bank bars Indian pharmaceutical firms

WASHINGTON, July 16 (Reuters) - The World Bank on Monday said it had barred India-based Nestor Pharmaceuticals Ltd. and Pure Pharma Ltd. from doing business with the bank for "collusive practices" involving a reproductive and child health project in the country.

The bank's sanctions committee ruled that New Delhi-based Nestor and Mumbai-headquartered Pure Pharma had "engaged in collusive practices in connection" with the Reproductive and Child Health Project, known as RCH I, in India. It barred Nestor, which also has a manufacturing unit in Britain, from doing business with the World Bank for three years and Pharma for one year.

The companies were not immediately available for comment.

"The sanctions board's decisions were based on evidence from an investigation by the World Bank's Department of Institutional Integrity (INT) into allegations of impropriety in the procurement of pharmaceuticals under the RCH I project," the sanctions committee said in a statement. The case prompted former bank President Paul Wolfowitz to halt loans to India's health sector in 2006 until improvements were made to the country's procurement methods.

Wolfowitz's actions sparked tensions with the Indian government and a wider feud between him and bank shareholders over the poverty-fighting institution's role in tackling corruption.

Britain and other shareholder nations argued that by halting the loans the bank was hurting the poor. Instead, they argued, the bank should keep the loans flowing while working with countries to fix the problem.

Praful Patel, the bank's vice president for South Asia, said the project was designed by the Indian government to help deliver much-needed medical services to some of the country's most vulnerable citizens.

"The actions of both companies harmed the very people this project was meant to help," Praful added.

The World Bank has blacklisted more than 330 firms and individuals for fraud, bribery and corruption since it set up a formal mechanism to investigate corruption in development projects it funds in poor countries.

(Reporting by Lesley Wroughton)

((Editing by Steve Orlofsky; e-mail: lesley.wroughton@reuters.com; Tel: 202-898-8317)) Keywords: WORLDBANK HEALTH/FRAUD

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