A global fund organization against three killer diseases says it has run out of money to pay for new grant programs for the next two years. An official with the Global Fund to Fight AIDS, Tuberculosis and Malaria said Thursday that it has been forced to cease giving new grants until 2014 because of global economic woes brought on by debt crises in the U.S. and Europe.
According to an independent panel this September the fund was advised to adopt tougher financial safeguards after it weathered a storm of criticism and doubts among some of its biggest donors. The fund created the panel, chaired by former U.S. Health and Human Services Secretary Michael Leavitt and ex Botswana President Festus Mogae, in March to address concern among donors after Associated Press articles in January about the loss of tens of millions of dollars in grant money because of mismanagement and alleged fraud. Furthermore Germany, the European Commission and Denmark withheld hundreds of millions of euros in funding pending reviews of the fund's internal controls.
This Geneva-based fund was set up in 2002 as a new way to coordinate world efforts against the diseases and to speed up emergency funds from wealthy nations and donors to the places hardest hit. Outside of its donor nations and celebrity backers, the biggest private donor is the Bill & Melinda Gates Foundation that has pledged $1.15 billion and provided it with $650 million so far. Since its origin the fund has disbursed some $15 billion for programs - $2.8 billion this year alone, including to pay for treatment for around half the developing world's AIDS sufferers.
“We're not cutting back - we're not expanding,” the fund's board chairman, Simon Bland, told The Associated Press from Accra, Ghana, where the board has been meeting this week. The fund had to make some “tough decisions to protect some of the gains that have already been delivered,” he added.
Among those decisions were that $800 million to $900 million in grants planned for China, Brazil, Mexico and Russia will now be used for other purposes, fund officials said. “It is deeply worrisome that inadvertently the millions of people fighting with deadly diseases are in danger of paying the price for the global financial crisis,” the fund's executive director, Dr. Michel Kazatchkine, said in a statement.
However, Jerker Edstrom, a researcher at the Institute of Development Studies, said the nature of the Fund's operations included “corruption and mismanagement”. “The Global Fund system involves lots of different sectors which leads to lots of bickering and its planning process means its depends on groups that involve some corruption and mismanagement,” he said.
The fund released 12 reports on its website earlier this month that turned up an additional $20 million of mismanagement, alleged fraud and misspending. Earlier probes had detected about $53 million in losses, according to fund documents.
In Wednesday's statement, the Fund said a new general manager would now be appointed “to work alongside the executive director” and help “take the organization through its transformation phase over the next twelve months.” A spokesman said a decision on this post would be taken “fairly quickly” and the person appointed would be a “tried and tested manager with a background in this sort of work.”
Medicins Sans Frontieres, the medical charity, said yesterday that the Fund was in a “dire” financial situation and that the desperately ill would suffer as a consequence. “Donors are really pulling the rug out from under people living with HIV/AIDS at precisely the time when we need to move full steam ahead,” Tido von Schoen-Angerer, an MSF spokesman, said.
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