Health fund probe uncovers $20 million in losses
Wednesday, November 2, 2011
GENEVA (AP) — A global health fund investigating its own losses in grant money said Tuesday that 12 more probes had turned up an additional $20 million of mismanagement, alleged fraud and misspending.
The Global Fund to Fight AIDS, Tuberculosis and Malaria posted the results — contained in three fraud probes, eight audits and an internal review of travel involving about $1 billion in grant money — on its website.
Earlier probes by the fund’s internal watchdog, the inspector general’s office, had detected about $53 million in losses, according to fund documents, some unpublished, provided by senior officials.
The fund’s board chairman Simon Bland told the Associated Press it has now reviewed about one-seventh of $14 billion in grants disbursed but it would be misleading to extrapolate the percentage of corruption turning up in fund programs.
He said the fund, which has approved more than $22 billion in grants since its creation in 2002 as a major financing tool, is demanding repayment of the money — and two new cases in Nigeria and India could lead to criminal charges. The fund says it has recovered $19 million in misspent or undocumented money so far.
“We think the Global Fund standards of accounting are really high,” Bland said. “We will not tolerate misuse of our resources.”
In Nigeria, the probe found $22 million in unauthorized foreign currency exchanges by a not-for-profit center in Abuja, that diverted hundreds of thousands of dollars to non-fund accounts. In India, at least $872,000 had been misappropriated, some transferred to a shell corporation and used to rent and renovate an official’s home.
A third probe was in Mauritania, where $6.73 million in potential fraud and other losses were found but the country has already paid back $4.2 million.
Auditors also looked at grants in Dominican Republic, Madagascar, Sri Lanka, South Sudan, Swaziland and Togo, and examined almost a half-billion dollars in fund programs run by Washington, D.C.-based Population Services International.
Completion of the latest investigations and audits was delayed until after the end of a six-month review of the fund’s financial controls by an outside panel created in the wake of Associated Press reports on the losses that prompted intense scrutiny from donors over the misuse of some grant money.
The Global Fund suspended grants — or put in place new safeguards — in Djibouti, Mali, Mauritania and Zambia. The European Commission and some nations had decided to withhold hundreds of millions of euros from the fund until they could be reassured.
In January, the AP reported the fund was bleeding tens of millions of dollars to mismanagement and corruption, prompting Germany, the European Commission and Denmark to withhold a collective $457 million in funding. Spain, Italy, Japan and Ireland also delayed committing to 2011 pledges.
Sweden had previously withheld a pledge based on the inspector general’s findings.
The fund warned Germany that its withheld dollars would lead to the deaths of 43,000 people but Germany called that “extremely questionable” and said it’s corruption that kills.
The fund then created an outside panel headed by former U.S. Health and Human Services Secretary Michael Leavitt and former Botswana President Festus Mogae. In September it recommended a major overhaul in the fund’s financial practices.
Since the panel’s report, Germany released half of its $285.7 million pledge.
It also said the unhealthy tensions must end between the fund’s executive director, Dr. Michel Kazatchkine, who has sought to minimize the scale of misspent money, and the fund’s inspector general, John Parsons, whose job is to probe for losses.
“If it’s seen as a war, we have to stop that,” Bland said.
Japan paid the Global Fund $114 million Monday toward its 2011 contribution but is keeping frozen a second amount — some $178 million — that it might release in December, fund spokesman Andrew Hurst said.
He said the European Commission is still awaiting the outcome of a board meeting later this month in Ghana before deciding whether to unfreeze its 2011 pledge of $185.7 million.
Hurst said Denmark’s decision whether it might release its $33.5 million pledge for 2011 also might come next month.
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