Washington, Apr 19: The World Bank`s independent
evaluation group has warned of significant risks of fraud and
corruption in the bank`s lending programme which provides
loans and grants to 78 countries, including India.
The report relates to the review of the World Bank`s
International Development Association (IDA) programme carried
out by the bank`s Independent Evaluation Group (IEG).
The IEG said a "material weakness" exists in controls
over fraud and corruption (F&C) related to IDA.
Further, the report pointed out that risk of F&C by
stakeholders including local beneficiaries and contractors
could result in diversion of IDA funds.
"Evidence emerged during the review that suggested that
there are significant risks of fraud and corruption (F&C)
impinging on IDA’s lending operations,not fully matched by
appropriate controls," the report said.
IDA is part of the World Bank Group that provides
interest free loans and grants to 78 poorest countries
including India, which is one of the biggest borrowers from
the programme.
The IDA is aimed at boosting economic growth, reducing
inequalities and improving people`s living conditions.
"Since the risk of fraud and corruption by local beneficiaries, contractors, and other stakeholders can result in diversion of funds that, in the worst case, can impair IDA’s mission, IEG considers this weakness to be a material weakness," IEG asserted.
According to the report, the material weakness is reinforced by "significant deficiencies found in other related controls: in risk management, project financial management and procurement".
The report titled `Review of IDA Internal Controls An Evaluation of Management`s Assessment and the IAD Review` pointed out there has been progress in building the bank`s global anti-F&C agenda.
India was among the biggest borrowers from the IDA in financial year 2008, borrowing USD 837 million and was only next to Vietnam (USD 1,193 million), official data shows.
Going by the IDA website, some countries like India, Indonesia and Pakistan, are IDA-eligible based on per capita income levels.
IDA was established in 1960 and according to the website, since its inception, IDA credits and grants have totalled USD 193 billion, averaging USD 10 billion a year in recent years.
The IDA complements the World Bank`s other lending arm -- the International Bank for Reconstruction and Development (IBRD) -- which serves middle-income countries with capital investment and advisory services.
Bureau Report
