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International News

AP Reports on Global Fund Grant Money Lost to Corruption, Global Fund Responds

January 25, 2011

The Global Fund to Fight AIDS, Tuberculosis and Malaria, a "$21.7 billion health fund championed by the rich and famous has come under harsh scrutiny amid revelations it's bleeding money to corruption," the Associated Press reports. The piece examines the organization's response to an article published by the AP on Sunday that highlighted the findings of an internal investigation led by "Robert Appleton, a veteran former U.S. federal prosecutor whom [the fund's inspector general John] Parsons hired last fall to root out corruption," the AP writes (Heilprin, 1/24).

According to Sunday's report by the AP, internal Global Fund investigations found "as much as two-thirds of some grants" are lost to corruption. In these cases, "[m]uch of the money is accounted for with forged documents or improper bookkeeping, indicating it was pocketed, investigators for the Global Fund to Fight AIDS, Tuberculosis and Malaria say," the news service writes, adding that some drugs donated by the Global Fund "wind up being sold on the black market."

The "fund's newly reinforced inspector general's office, which uncovered the corruption, can't give an overall accounting because it has examined only a tiny fraction of the $10 billion that the fund has spent since its creation in 2002," the news service writes. However, the program "is pulling or suspending grants from nations where corruption is found, and demanding recipients return millions of dollars of misspent money." The article details the misuse of Global Fund grants in several countries, including Djibouti, Mali, Mauritania and Zambia (1/23).

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In response to the AP article, the Global Fund issued a statement on Monday defending its record and commitment to transparency: "The Global Fund has zero tolerance for corruption and actively seeks to uncover any evidence of misuse of its funds. It deploys some of the most rigorous procedures to detect fraud and fight corruption of any organization financing development. ... The news report that has caused concerns refers to well-known incidents that have been reported by the Global Fund and acted on last year. There are no new revelations in [Sunday's] media reports."

The statement continues, "In its report last year, the Global Fund's Inspector General listed grave misuse of funds in four of the 145 countries which receive grants from the Global Fund. As a result immediate steps were taken in Djibouti, Mali, Mauritania and Zambia, to recover misappropriated funds and to prevent future misuse of grant money. ... In total, the Global Fund is demanding the recovery of US $34 million unaccounted for in these and other countries out of a total disbursement of US $13 billion."

"The distinguishing feature of the Global Fund is that it is very open when it uncovers corruption. That is its comparative advantage," said Global Fund Inspector General John Parsons, according to the Global Fund release, which lists recent efforts by the Global Fund to strengthen its ability to prevent fraud (1/24).

Fund Aggressively Targets Corruption, Global Fund Officials, Anti-Corruption Experts Argue

"Fund officials and several outside anti-corruption experts said that while the Global Fund's new investigative unit is aggressively tackling corruption, many of the world's biggest development agencies, including the United Nations, don't even look for major corruption in their midst for fear that would turn away donors," the AP's follow-up story continues. The article describes how the "dismantl[ing]" of the U.N.'s anti-corruption Procurement Task Force in 2008 resulted in a reduction in the number of "investigations into corruption and fraud within its ranks, shelving cases involving the possible theft or misuse of millions of dollars."

According to the anti-corruption group Transparency International "'accountability in development aid has been low' at many aid agencies, non-governmental organizations, the World Bank, the U.N. and other development banks and international bodies," the AP writes, before describing several instances of the investigations that highlighted the mismanagement of funds in such organizations.

In the case of the Global Fund, "officials provided new figures Monday that it has dispersed $13 billion since the fund was created in 2002, with the U.N. Development Program (UNDP) responsible for managing $3.88 billion of that -- $369 million this year -- in dozens of the most strife-torn and difficult nations," according to the AP. Global Fund Inspector General "Parsons said that money -- roughly a fifth of the fund's portfolio -- is effectively off-limits to investigators because UNDP won't share their internal audit reports. As a result, the fund's investigators can't look more closely at some of the fund's biggest multimillion-dollar losses."

"We are vigilantly seeking to protect funds that are earmarked to save lives," Robert Appleton said, according to the AP. "The Global Fund should be lauded, not criticized, for promoting transparency, having a strong inspector general and publicly identifying the issues and trying to get the fund's money back," he said. Quotes by Bea Edwards of the Government Accountability Project; Bill Gates, co-chair of the Bill & Melinda Gates Foundation; and Robin Hodess of Transparency International also appear in the article (1/24).

NPR's "Shots" blog features comments on corruption at the Global Fund by William Savedoff, a senior fellow at the Center for Global Development, "who wrote a blog post today critical of AP's coverage of the global fund's problems. He noted that the fraud dollars uncovered last year only make up about 0.3% of the total grants it has dispensed -- a figure that's probably normal for an organization wielding such a massive budget."

"There's a lot of money at stake in the health sector, and unfortunately people find ways to steal it from any system," Savedoff told Shots. "In 2006, Transparency International looked at corruption and health in its Global Corruption Report, which Savedoff helped coauthor. The report noted that the health sector is 'particularly vulnerable to abuse,' in part because the private sector is often entrusted to play a public role in delivering care," the blog notes (Barclay, 1/24).

VOA News quotes Kazatchkine's response to the media reports over Global Fund grants: "What is of concern to me, of course, is that this shakes beyond that a global public opinion somehow at a time when governments are under pressure to cut public expenditures and where millions of lives that depend on the Global Fund and the hope the Global Fund is bringing to the world could thus be at risk," he said (Schlein, 1/24).

On Friday, following talks with Global Fund Executive Director Michel Kazatchkine, Sweden's Development Minister Gunilla Carlsson announced the country is holding out on its initial commitment of 167 million euro ($226 million) "for the period covering 2011-2013 since a report by the United Nations last year showed how donors' cash had been diverted by corrupt officials in at least four countries," according to the daily newspaper Svenska Dagbladet, Agence France-Presse reports (1/22).

Kazatchkine rejected such reports on Monday, according to another AFP article. "Sweden did not say that it would withdraw. ... On the contrary I came back Friday evening from Stockholm with the statement that Sweden would contribute and would increase its contributions to the Fund," he added (1/24).

The AP details the history of the Global Fund, noting that since its creation in 2002, it has received an estimated $21.7 billion, and according to the Fund helped save some "6.5 million lives by providing AIDS treatment for 3 million people, TB treatment for 7.7 million people and handing out 160 million insecticide-treated malaria bed nets." The piece lists several "prominent backers" of the global private/public partnership, including rock-star Bono, former U.N. secretary-general Kofi Annan, French first lady Carla Bruni-Sarkozy and the Bill & Melinda Gates Foundation (1/23).

The Gates Foundation on Monday issued a statement in support of the Global Fund's work and its "rigorous audit and investigation system ... The Global Fund has contributed to unprecedented advances in preventing and treating some of the worst diseases in the world. We know that dealing with these hard-to-reach places is challenging, but not trying to save these lives is unacceptable" (1/24).

Back to other news for January 2011


This information was reprinted from kff.org with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Global Health Policy Report, search the archives, and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.



  
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This article was provided by Henry J. Kaiser Family Foundation. It is a part of the publication Kaiser Daily Global Health Policy Report. Visit the Kaiser Family Foundation's website to find out more about their activities, publications and services.
 
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