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Global disease fund must “change or wither”, says panel.

In a hard-hitting 152-page report released today, a high-level panel charged with reviewing the financial management of the multibillion dollar Global Fund to fight against Aids, Tuberculosis and Malaria, has called for profound reform of the fund.

The panel, co-chaired by Festus Mogae, former president of Botswana, and Michael Leavitt, a former US Health Secretary, was commissioned by the Global Fund in March amid concern over recent prominent cases of corruption and fraudulent diversion of its grants in recipient countries (see Nature Editorial: ‘Tough on truth’ and our blog posts at the time: ‘Corruption in global disease fund’ and ‘Corruption at the Global Fund: part 2’).

The fund raises and disburses billions of dollars in drugs and measures such as bednets to control insects’ spread of disease. The report gave the fund high marks for the huge impact it has had in curtailing disease, saving millions of lives since its creation in 2002. It also notes that the fund has made major improvements in oversight over the years, but says that these are insufficient, and that a major overhaul is needed, not just at the fund headquarters, but also of the way funds are controlled at the country level. The report includes pages of detailed recommendations for improved auditing and management of funds, and how the fund does business with its country partners.

The fund also comes under fire for what the report describes as a culture of measuring its success by inputs, such as how much it spends, and not by its health impact — a common problem at other aid agencies. It says the fund needs to invest — and cooperate with other health agencies — in generating higher-quality data on the incidence and prevalence of diseases in countries, and the impact of interventions. Country partners, it adds, must be held accountable to measured health impact outcomes based on milestones in previously agreed-upon long-term roadmaps for each disease.

The report pulls few punches. It questions the fund’s structure, modelled on the private sector: lean and relatively fast-moving, as stipulated by the founding member states that were desperate for an alternative to the lumbering bureaucracies typical of United Nations’ and other international aid agencies. But keeping staff levels slim and getting funds out of the door quickly, with a focus on country-led mechanisms of financing, has come at a price. The fund has had reduced oversight of its grants, particularly in its early years when it was still developing mechanisms within countries to disburse funds, says the report.

The fund was born at a time of emergency, when the global spread of HIV/AIDS meant that getting funds out the door quickly seemed paramount. But that has now changed. “The Global Fund is now more mature, and its culture must shift from emergency response to sustainability and heightened fiduciary responsibility,” says the report. “The Global Fund’s board, donors and recipients must recognize a mutual culpability, born of noble intent: since they chose to focus on rapid programming and scale-up rather than governance or oversight during the early years, the Global Fund had inadequate accountability mechanisms, standards and expectations — a situation that is no longer acceptable today.”

The economic crisis makes that shift all the more essential, the report adds, with the fund’s donations under pressure, and the fund’s era of continued expansion over (see ‘Global disease fund hit by cash crisis’). “Austerity among the donors makes the Global Fund more vulnerable now than at any time in its history,” says the report, adding that the fund must “change or wither”.

The Global Fund has been more active than many other foreign aid agencies in tracking down corruption, and far more open about publicly reporting problems. The shortcoming in the Global Fund’s operation that are identified in the new report suggest that similar investigations of other aid agencies could be an eye opener.

The report lists a string of financial and other management weaknesses at the fund, including overspending, poor accounting, excessive use of cash payments, non-grant-related spending, and lack of documentation justifying expenditures. “Almost every grant has had at least one financial-management problem,” it says. The report notes that many of the countries that the fund operates in are “intrinsically risky environments” when it comes to fraud, and that “unlike banks or other financial institutions, the Global Fund cannot avoid risks by simply denying funding; lives are at risk, and the very purpose of the organization is to save them.”

But it could better mitigate such risks, says the report, noting that although the fund has a zero-tolerance policy for fraud, it has “a reluctance to classify recipients by risk or define an overall ‘risk appetite’ for the grant portfolio.” Projects and places at potential risk of corruption could be better targeted for vigilance and control, says the report. The fund should make risk assessment of countries and projects, based on general levels of corruption, good governance, and how much money a project involves, for example.

The report also suggests that while all suspected fraud should be investigated, and that there should be no amnesty, the fund should also have a ‘Turning of the Page’ reconciliation strategy, and should “look to the future”, focusing on oversight of grants from 2007 onwards (which are also larger than those in the past).

The Global Fund has put a brave face on the report’s findings. “The panel’s report provides a great opportunity to sharpen the focus of the Global Fund and make it fit for the future,” said Simon Bland, Chair of the Global Fund’s Board. “We commissioned the panel to give us an honest, hard look at the institution from the outside and that is exactly what we have got." The board will convene a special meeting on 26 September in Geneva, Switzerland to discuss the report, and to engage a new reform process.


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