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Corruption in global disease fund

The Global Fund to Fight AIDS, Tuberculosis and Malaria says it is confident that it will not lose money from donors after this weekend’s media reports of corruption eating up millions of dollars of its grants. The reports refer to “well-known incidents”, contain “no new revelations”, and have already been acted on, the fund said in a press release today. Its donor countries and board are satisfied with how it is tackling the issue, says fund spokesperson Jon Liden.

Though press agency AFP originally reported local Swedish media stating that Sweden was holding back a reported €167 million 2011-2013 funding pledge because of concerns about this corruption, Liden says he expects the country will shortly announce its full contribution to the cause, with a potential increase in funds. The fund’s executive director, Michel Kazatchkine, was equally positive to AFP today, as the agency swiftly acted to correct any misapprehensions.

25 January UPDATE: Sweden’s development minister, Gunilla Carlsson, has confirmed that Sweden – while still officially with-holding its money – is happy with the way the Global Fund is dealing with the problem. If the Fund provided evidence that corruption crackdowns were being implemented on the ground, then “my ambition is that we should be ready to send out a first tranche this spring,” she told Nature.

On Sunday, the Associated Press reported that the international fund – which distributes billions of dollars to fight AIDS, tuberculosis and malaria – saw as much as two-thirds of some grants eaten up by corruption. The report lists $4 million misappropriated in Mali, $4.1 million lost in Mauritania, similar problems in Djibouti and Zambia, free malaria drugs sent to Africa being stolen and resold, and blocked investigations of programmes in some of the most corruption-prone nations.


Though the AP said it “had learned” about the corruption – a phrase that usually denotes an exclusive journalistic investigation – it explained that the frauds were uncovered by investigators at the Global Fund’s Office of the Inspector General. They have been publicly released online piecemeal in country-by-country audits over the past year. Two weeks ago the OIG’s full report (delivered to a board meeting in Sofia on 13-15 December 2010) was posted online, together with a response from the fund.

A joint statement by the inspector-general John Parsons and executive director Michel Kazatchkine, has also been released, detailing how the fund hopes to crack down on the abuse, by demanding money be returned, suspending grants, beefing up security on drug shipments and strengthening oversight. “In total, the Global Fund is demanding the recovery of US$34 million unaccounted for … out of a total disbursement of US$13 billion,” the agency added today, responding to the AP report.

“We would contend that we do not have any corruption problems that are significantly different in scale or nature to any other international financing institution,” Liden told AP at the weekend.

The AP originally reported that some donors were “outraged” at what the investigators had found. AFP reported the Swedish daily Svenska Dagbladet as saying that Sweden was withholding its contribution until more was done to ensure the cash is not siphoned off. The newspaper, said AFP, had quoted development minister Gunilla Carlsson as asking for ‘practical measures’ to be put in place before the country commits itself to aid. Talks were held in Stockholm on Friday last week.

This is all somewhat puzzling, says Liden, as discussions on the topic had been originally held with Sweden in October 2010, at a fundraising meeting in New York City (see Nature 467, 767; 2010) . At that time, Sweden’s new government wanted assurances of actions, but the country has since indicated that it is satisfied with the Global Fund’s response [25 Jan: and see update above].. And as Kazatchkine told AFP today, “I came back Friday evening from Stockholm with the statement that Sweden would contribute and would increase its constributions to the Fund.”

A little obfuscation has clearly taken place. The official line in October was that the United Kingdom, the Netherlands and Sweden were unable to officially pledge at the meeting because of the timing of national budgets. (Liden says the UK and the Netherlands – who have not yet pledged donations – haven’t referred to corruption issues in their delay). But in general, it’s to the Global Fund’s credit that it is transparent about these problems – whether or not it can solve them – and donors do not seem put off. As inspector-general Parsons states in the agency’s press release today: “The distinguishing feature of the Global Fund is that it is very open when it uncovers corruption.” The same point is made by a New York Times article that notes that other aid agencies may be in worse shape, not even looking for corruption for fear it may turn away donors.

Comments

  1. Report this comment

    Maruxa said:

    This nevers stops astonishing me:

    “it is transparent about its corruption problems – whether or not it can solve them”

    “they do not have any corruption problems that are significantly different in scale or nature to any other international financing institution”

    AND

    “other aid agencies may be in worse shape”

    SO, that makes it all right, does it?

    I am not saying donors should stop funding it, I think they do a good job, but perhaps it’s time we are a bit more hard-handed with corruption (in general, this is only one example) and demanding with what happens with public money… US$34 million unaccounted for, for God’s sake!!!

  2. Report this comment

    The Global Fund said:

    In reference to your article, The Global Fund would like to make the following statement:

    How the Global Fund protects its grant money

    Two articles published by the Associated Press in recent days and picked up by a large number of media outlets have seriously misrepresented the extent of fraud discovered in grants financed by the Global Fund.

    Media reports alleging that “billions of dollars have been misappropriated from the Global Fund” or that the extent of fraud uncovered is “massive” are irresponsible, false and misleading.

    To date, the Global Fund’s Office of the Inspector General has undertaken audits or investigations in 33 of the 145 countries where the Global Fund has grants. As a result of this, the total amount of misappropriated or unsubstantiated funds that the Global Fund is demanding to be returned at present is $34 million. While all fraud is unacceptable and the Global Fund is taking strong and firm action to recover such losses, one should keep in mind that this amount represents 0.3 per cent of the total amount of $13 billion disbursed to countries by the Global Fund so far.

    In short, the vast majority of Global Fund resources are delivering tremendous progress in the fight against AIDS, TB and malaria and saving millions of lives through the hard work of thousands of hard-working, honest health workers around the world.

    Some media reports have also stated that the controls in place to monitor flows of Global Fund financing to countries are non-existent or inadequate. These reports are false and misleading.

    Global Fund grants are subject to a rigorous system of financial controls. All grant spending is verified by an independent agency which is required to report at least annually (and in many cases quarterly) on grant progress. All grant progress reports are posted online.

    In addition to these controls, the Global Fund’s Office of the Inspector General provides an additional independent layer of oversight and scrutiny to uncover wrong-doing.

    The Global Fund is committed to the highest standards of transparency and accountability and has acted upon each instance of misuse of its resources by taking strong and swift action, by suspending grants, freezing cash disbursements and by demanding a return of misused funds.

    In addition, its Board of Directors has put in place a long-term plan to ensure that the Global Fund remains fully capable of detecting and preventing fraud and corruption.

    Communications Team –

    The Global Fund to Fight AIDS, Tuberculosis and Malaria

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