Global Fund announces measures to increase fraud detection, prevention

Feb 5 2011

The Global Fund To Fight AIDS, Tuberculosis and Malaria on Thursday announced "it is to launch a wide-ranging review of its procedures following concern over mismanagement of funds by countries receiving its money," the Financial Times reports. The U.N.-backed organization "which channels $3bn [billion] a year in donor funds to developing countries, will restructure its auditing procedures and appoint outside officials to review its systems," according to the news service (Jack, 2/3).

The announcement comes after media reports in late January that raised the profile of an internal Global Fund investigation released last year that revealed "as much as two-thirds of grants" to several countries were being lost to corruption, FoxNews.com reports (Russell, 2/2). The Financial Times reports that as part of the Global Fund's review, "John Parsons, the fund's inspector-general, identified particular problems in Mauritania, Mali and Djibouti, where high proportions of grants for training and 'per diem' allowances were misspent. He found 'rampant' forged signatures in Mali on expense claims, and only a small proportion of money spent on medicines. In Mauritania, the government refused to co-operate even after fraud was identified" (2/3).

In response, the Global Fund last week released a statement defending its commitment to transparency and "zero tolerance for corruption" and highlighting the swift action taken in response to the findings "to recover misappropriated funds and to prevent future misuse of grant money" (1/24).

On Thursday, the Global Fund repeated its commitment to transparency and weeding out corruption, while unveiling additional measures to strengthen financial oversight of grants, according to a Global Fund press release. Such measures include: "Expanding the mandate of firms that monitor expenditure in countries in order to enhance fraud prevention and detection; Strengthening the role of country coordinating bodies in grant oversight; Additional scrutiny of activities considered at higher risk of fraud, such as training; Redirecting a proportion of all grants to assess and strengthen financial controls at country level; Increasing the number of the Fund's staff responsible for financial management; and doubling the budget of the Fund's independent Inspector General," the release states.

The implementation of several of the measures announced yesterday is already underway and expected to be complete by June, according to Global Fund Executive Director Michel Kazatchkine.

In addition, the Global Fund announced it would be "establishing an independent, panel of highly-respected international experts to review its financial control and oversight procedures, evaluate that they are of the highest standard and, if necessary, suggest further improvements," the press release states. The group's findings, to be made public, will be presented to the Global Fund board in May, according to the release (2/4).

"The overhaul comes amid growing frustration that the fund's own board of directors has failed to act more effectively in response to long-standing concerns over management, including those highlighted in an ex­ternal evaluation two years ago, which criticised weak procurement practices," the Financial Times reports.

The newspaper describes a review it conducted that revealed previous findings made by Parsons "had not been picked up either by staff in the fund's headquarters or by the 'local fund agents', the external staff in each country - often from leading auditing firms - who monitor spending."

The piece also describes the growing focus on the role of the U.N. Development Program (UNDP) - the "principal recipient" in charge of spending fund money in 26 "fragile states" - that "has consistently refused either to permit the inspector-general to audit its operations or to share its own audit reports" (2/3).

BMJ News Examines Sweden, Germany's Suspension Of Contributions To Global Fund

BMJ News reports on the countries that have withheld commitments or suspended contributions in response to the findings made by the Global Fund inspector General. "Since early October Sweden has suspended its contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria" and "[l]ast week Germany also suspended contributions to the fund after news reports concerning fraud in the awarding of grants last year."

The article features comments from Sweden's Minster for Development Cooperation Gunilla Carlsson, who describes the country's reasoning for not yet making a pledge for 2011-13, but also says the hold out does not represent a broken relationship with the organization. Carlsson "said that Sweden would donate again but 'under the precondition: we see that the house is in order. [Kazatchkine is] working hard on that, that's my assessment." Still, Carlsson "indicated that it could take a while," BMJ News writes.

Global Fund spokesman Andrew Hurst is also quoted in the article, where he addresses Germany's withdrawal of funding: "Germany's concerns are understandable given the misleading media reports over the past few days." Hurst "also said that Denmark 'has shown some signs of wavering but has not formally announced anything,'" according to the news service (Zarocostas, 2/2).