Filching Funds Facilitates Falciparum

The Sunday Times has reported that, “The world’s largest Aids fund has been the victim of a multi-million-pound fraud involving its programme to help chronically ill children in Africa.” Full details have not been released but, “Whitehall sources said that the concerns related to a Global Fund contract given by the United Nations Development Programme (UNDP) to a firm in Denmark. The firm is said to have received help from a British aid consultancy, which has led to suspicions of kickbacks.”

Allegations of Global Fund ‘misdirection’ or ‘loss’ have occurred at the country level. For example, a series of articles in Kenyan newspapers addressed problems of supposed financial impropriety. Accusations of fraud were raised by one government agency against another (The Nation, 26 June 2003). Another article described concerns over lack of timely releasing of and reporting on funds (The East African Standard, 17 March 2006). The issue of lack of transparency and accountability were mentioned when there were drug shortages (The East African Standard, 24 July 2006).

In neighboring Uganda the New Vision reported on 31 December 2006 in a year-end report that, “Mismanagement of the Global Fund dominated the media throughout the year.” Former Cabinet Ministers were implicated in fraud and demands for refunds were made.

In no way should these allegations be taken lightly, but one explanation for the inability in come countries to account may be systemic. Traditionally in most health ministries and agencies program reporting and financial reporting are separate processes serving separate masters. The Global Fund, in contrast, requires that program and financial reporting be linked in order to guarantee that performance based funding (PBF) can occur. As a guiding principle the Global Fund aims to “Focus on performance by linking resources to the achievement of clear, measurable and sustainable results.” Countries often learned about PBF through trial and error since the Global Fund does not provide technical assistance, either management or programmatic, to countries. Not surprisingly during the start-up period, and even into the fourth or fifth year of Global Fund experience, some countries were still trying to link the programmatic and financial channels in reporting by their principal and sub-recipients.

A lack of link between financial and programmatic aspects of projects could as easily imply poor accounting practices as it could embezzlement. Holding of judgment until evidence was in was necessary at the country level, and consequently few grants have been suspended or canceled to date.

Back to what The Sunday Times reported – what appears to have happened is on a grander scale and completely inexcusable. Obviously the Global Fund needs to focus not just on country performance, but also on all the international systems that support procurement and assistance for those countries. There are big fish to catch.

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