Every dollar lost to theft or mismanagement means lives lost in global health—which is why the Global Fund’s model of full transparency and results-driven finance is essential and improving. Yet some—seeking excuses not to invest the resources needed to win the fight against the AIDS, TB, and malaria—are using the Global Fund’s transparency against it. As the Global Fund identifies fraud, roots it out, and recovers money, and puts this all online, it should reassure us that the Fund is a model for doing development differently.

Please take action now to push back against this unfounded attack on the Fund. Click here to write a letter to the editor to your local paper!

Just this week, the U.S. government reported on its efforts to recover $4 billion in medical fraud[1] — showing that corruption exists the world over and the real question is how institutions tackle it. Yet stories this week have falsely implied that a few countries represent the Global Fund and ignored the facts in the cases.

HERE ARE SOME OF THE REALITIES

• VAST MAJORITY OF MONEY IS REACHING PEOPLE, SAVING 6 MILLION LIVES SO FAR: Of the $13 billion dispersed to 145 countries the Fund has uncovered $34 million of fraud in 4 countries—about 0.3%[2].
• THE MOST TRANSPARENT INSTITUTION IN THE WORLD: The Global Fund has been detailing audits, investigations, prosecutions, and recovered money for years—transparency should be lauded not punished! In 2009 the Office of Inspector General publicly detailed its findings of misappropriated funds in Mauritania, Mali, and Zambia and since then reports have come regularly online[3]. Neither the U.S. government nor any global institution matches this level of uncensored, full, public transparency.
• FINANCIAL CONTROLS + STRONG INSPECTOR GENERAL & INVESTIGATIONS ARE A MODEL: Global Fund grants are tracked by an independent agency which is backed up by an independent IG, with a former top U.S. federal prosecutor leading its investigations. By hiring top talent to lead a strong team of investigators, the Global Fund has uprooted misspent money that would, in most other institutions have gone unnoticed, unpunished, and certainly not publicly announced
• OVER HALF THE MONEY ALREADY RECOVERED[4]: The Global Fund has already recovered $19m of the $34m misappropriated. This is a better track record than most and sets a new paradigm for accountability in global development.
• PROSECUTION OF THIEVES: Theft of Global Fund money has been (and is being) prosecuted and high level officials have been jailed. In Uganda, Mali, Mauritania, and Zambia dozens have been arrested and imprisoned for corruption; the President of Mali personally intervened. These rare prosecutions illustrate the Fund’s commitment[5].
• BY COMPARISON: PENTAGON: $13 billion in unsupported payments in Iraq; MEDICAL FRAUD: $4 billion charged to U.S. government. Any system with large finances is likely to face fraud. The Defense Contract Audit Agency uncovered $13 billion in fraud, going on unstopped for years—half from company KBR which continued to get contracts despite findings. Senators Snowe & McCaskill sent a letter to Defense Secretary gates asking him to do more to recover over $100 million in fraud[6].
  Meanwhile, the Justice & HHS Departments announced on January 24th that they had recovered over $4 billion in fraud last year[7]. New regulations actually implement policies in the U.S. that have long been practice for the Global Fund, such as halting disbursements in cases of suspected fraud[8].
• SOME EXAMPLES ARE POOR RECORDS, NOT FRAUD: It is clear that not all cases of improper bookkeeping indicate money was in fact pocketed. In some cases Global Fund experts have suggested that expenditures “without supporting documentation” although wrong, may actually be a case of “inadvertently failing to obtain/retain/provide documentation for an expenditure that genuinely happened and was justified. These weak systems are, in fact, exactly what the Global Fund was designed to help address.”[9]

From Wall Street to the defense department to global health, corruption exists throughout the world. The question is how we deal with it. The Global Fund not only investigates fraud and abuse, but it serves, as a model for recovering financing needed for saving lives. Through early detection, capacity building at the country level, and other efforts the Global Fund seeks to prevent abuse. Indeed many bilateral country programs depend upon the Global Fund to report abuse where they don’t have the staff or capacity to do so. However, the Global Fund is far from perfect—and improving these systems is a stated priority of the board and the Executive Director. As a learning organization the Global Fund is constantly improving its systems—and has done so in response to the findings of the OIG report in December. The imperative to ensure increased financing reaches those in need is shared.

COUNTRY SPECIFICS

The Office of the Inspector General both responds to allegations of misuse of funds and conducts regularly scheduled audits. In a portion of those investigations and audits “red flags” are found which trigger investigations to find whether misappropriation has happened, and where it has action is taken.

In Mali In November 2009, the OIG’s audit of Global Fund grants in Mali found fraudulent and unjustified use of grant funds by staff members at the Department of Administration and Finance (DAF) of the Ministry of Health. Through the examination of about US$ 11 million of grants, the OIG has identified that approximately US$ 4.0 million (or 36percent) in grant funds examined to date have been misappropriated.

The Executive Director of the Global Fund immediately suspended two grants and terminated a third grant. The evidence collected during the audit led the OIG to engage with the authorities in Mali and ultimately to the arrest of the Accountant responsible for the administration of grants at the DAF, along with the Secretary General and the Register for the Ministry.

Mauritania had "pervasive fraud," investigators say, with $4.1 million -- 67 percent of an anti-HIV grant -- lost to faked documents and other fraud. Similarly, 67 percent of $3.5 million in TB and malaria grant money that investigators examined was eaten up by faked invoices and other requests for payment.

Following the recommendations of the OIG investigation, a full criminal investigation has been initiated by the Office of the Mauritanian Inspector General, which has led to the arrest of three senior officials and the issue of an arrest warrant for a fourth staff member. The OIG is continuing to liaise with the Office of the Mauritanian Inspector General regarding the ongoing investigations.

In Djibouti investigators reviewed more than four-fifths of its $20 million in grants, and found about 30 percent of what they examined was lost, unaccounted for or misused. Much of that funding was found to have gone to buy goods either without receipts or without documentation that these goods including cars and motorcycles were used for grant purposes. They also found funding transferred out of the account without explanation. The investigation is ongoing.

In Zambia, following an audit the OIG found unsupported costs of of $4.36m and ineligible costs of $2.34m after examining about half of the country’s disbursements of $280m (4% of that examined was improper).

The Global Fund suspended grant disbursements and required restructuring of financial controls before money could return. 12 Ministry of Health officials were arrested for theft and the permanent secretary, Dr. Simon Miti was suspended.

For more informaion, contact Matthew Kavanagh at matthew@healthgap.org
Last updated 2/2/11

NOTES

1 Jerry Seper, “HHS recovers over $4 billion in probes of fraud,” Washington Times, http://www.washingtontimes.com/news/2011/jan/24/hhs-recovers-over-4-billion-in-probes-of-fraud/?page=2

2 The Global Fund, “Statement On the Abuse of Funds in Some Countries” http://www.theglobalfund.org/en/pressreleases/?pr=pr_110124

3 Office of the Inspector General, Progress Reports Submitted November 2009, February 2010, and December 2010. Online at: http://www.theglobalfund.org/en/oig/reports/?lang=en
4 AFP, “Global Fund pledges 'zero tolerance' in corruption cases,” http://news.yahoo.com/s/afp/20110124/hl_afp/healthaidsfundcorruption

5 Office of the Inspector General, Progress Report for March-October 2010. See also David Garmaise, Mali: Global Fund Terminates Grant, http://allafrica.com/stories/201012230713.html; “Former Mauritania National AIDS Programme boss Mauritania arrested” http://www.afriquejet.com/news/africa-news/former-mauritania-national-aids-programme-boss-mauritania-arrested-2009100435891.html .

6 Ellen Nakashima, KBR Connected to Alleged Fraud, Pentagon Auditor Says http://www.washingtonpost.com/wp-dyn/content/article/2009/05/04/AR2009050403283.html and Politifact, “Halliburton, KBR, and Iraq war contracting: A history so far” http://www.politifact.com/truth-o-meter/statements/2010/jun/09/arianna-huffington/halliburton-kbr-and-iraq-war-contracting-history-s/

7 Jerry Seper, “HHS recovers over $4 billion in probes of fraud,” Washington Times, http://www.washingtontimes.com/news/2011/jan/24/hhs-recovers-over-4-billion-in-probes-of-fraud/?page=2

8 US Department of Health & Human Services, “Health care fraud prevention and enforcement efforts recover record $4 billion; new Affordable Care Act tools will help fight fraud” http://www.hhs.gov/news/press/2011pres/01/20110124a.html

9 AIDSPAN http://www.aidspan.org/index.php?issue=137&article=2&highlights=parsons

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