A news report published Sunday by the Associated Press, claiming broad misuse of funds granted by The Global Fund to Fight AIDS, Tuberculosis and Malaria, is causing quite a stir in the global health community and spurred a response from the Fund Monday.
The headline for the AP story – “Fraud plagues global health fund” – would appear to be misleading since the article and the Fund are discussing fraud affecting only a very small number of grants. The Fund is seeking recovery of $34 million in misused funds, which is 0.26 percent of Global Fund disbursements to date.
The article states, “… as much as two-thirds of some grants [are] eaten up by corruption… Much of the money is accounted for with forged documents or improper bookkeeping, indicating it was pocketed.”
However, it is unclear if in all cases improper bookkeeping indicates money was in fact pocketed. Longtime Fund watchdog Bernard Rivers recently stated that a distinction should be made between fraud and “inadvertently failing to obtain/retain/provide documentation for an expenditure that genuinely happened and was justified.” Rivers has criticized the Fund’s Inspector General, John Parsons, for not adequately distinguishing between the two and of “coming down almost equally as hard” on both.
The Fund responded to the AP article Monday morning stating that it reveals nothing new and that, “the vast majority of funds disbursed by the Global Fund is untainted by corruption and is delivering dramatic results in the fight against the three diseases.”
The Global Fund Inspector General report in 2010 detailed the “grave misuse of funds” uncovered in four of the 145 grant-receiving countries – Djibouti, Mali, Mauritania and Zambia. The Fund took immediate action by demanding the return of $34 million in misspent funds (out of a total disbursement of $13 billion), suspending the relevant grants in Mali and Zambia, and taking steps to prevent these abuses from happening again.
Interestingly, a follow up story published Monday by the same AP writer gave more context and corrected information on the proportion of funds channeled via the United Nations Development Programme. Bill Gates is quoted in the piece, stating the original AP story “gave an incomplete picture and would breed reluctance to give to good causes.” AFP also published an article in which the Fund ‘s Executive Director, Dr. Michel Kazatchkine said that $19 million of the $34 million lost has already been returned to the Fund and that Sweden plans to increase its contribution to the Fund with an announcement expected soon. The original AP story indicated that Sweden was withholding further contributions to the Fund until issues of fraud were addressed.
“The Global Fund has zero tolerance for corruption and actively seeks to uncover any evidence of misuse of its funds,” according to the Global Fund press release. And while it is impossible to deter all fraudulent attempts, “It deploys some of the most rigorous procedures to detect fraud and fight corruption of any organization financing development.”
The Fund release also states it is, “devoting additional specialist staff to monitor higher risk countries and improve the capacity of Local Fund Agents, who are responsible for grant oversight in countries, to detect potential fraud.”
In the original AP article, the text read that, “Donated prescription drugs wind up being sold on the black market,” suggesting it happens regularly, an issue also raised recently in a piece by Roger Bate in Foreign Policy. Fund Director Dr. Kazatchkine and Inspector General Parsons recently posted a response, which said Bate’s article presented only half of the truth regarding theft of malaria medications.
Bate called on Republicans in Congress to scrutinize the U.S. contribution to the Global Fund as an example of “wasteful spending.” These remarks come as the newly-empowered Republican majority of the House is preparing a package of cuts to the federal budget for the current fiscal year; putting Global Fund advocates and recipients are on high alert. The U.S. has historically contributed one-third of its overall funding. These remarks could trigger spending reductions that could hinder the Fund’s ability to fund new and continuation grants to dozens of countries to respond to AIDS, TB and Malaria.
The Fund recently estimated that a total of 6.5 million lives were saved by the Global Fund supported programs by end of 2010, meaning about 4,400 lives saved every day.