Global Fund Announces New Measures to Fight Corruption

7 Mar 2011

Panel of experts will review the Fund’s financial management systems

Grant money will be used to strengthen financial controls in country

As many readers will have learned from articles in the mainstream media, the Global Fund is setting up a high-profile panel of international experts to review its financial management systems and approaches to fraud prevention.

This is one of the new measures announced by the Global Fund on 4 February 2011 in response to media coverage – starting with an article by the Associated Press (AP) on 23 January 2011 – of corruption unearthed by the Fund's Office of the Inspector General (OIG) and announcements from some donor countries that contributions to the Fund will be delayed or possibly reduced.

The other new measures announced on 4 February involved (a) ensuring that a portion of each grant is used to assess and strengthen financial controls at country level; and (b) increasing the number of the Fund’s staff responsible for financial management.

These measures are in addition to measures agreed before the AP story appeared, but after the OIG had reported on the misuse of Global Fund money in a few countries in sub-Saharan Africa. These earlier measures included the following:

  1. expanding the mandate of local fund agents (LFAs);

  2. providing a 2011 budget for the OIG that is double its 2010 budget;

  3. terminating one grant and suspending two others in Mali;

  4. implementing additional safeguards in a few countries where funds were considered vulnerable to misuse because of weak financial management systems;

  5. imposing extra security measures in five countries to prevent drug theft;

  6. imposing a freeze on training activities in all Global Fund grants until detailed training plans could be approved; and

  7. strengthening the role of country coordinating mechanisms (CCMs) in grant oversight.

Some of these measures (e.g., 2 and 3) have already been implemented. Others are being implemented now. The Global Fund said that all of the measures should be in place by June 2011. (The report from the panel of experts is expected to be provided to the Global Fund Board in May 2011.)

Tedros Adhanom Ghebreyesus, Chair of the Global Fund Board and Minister of Health of Ethiopia, said that “transparency and accountability are core principles of the Global Fund because they are essential to ensuring that every donor dollar is spent effectively and that the interest of our beneficiaries are protected. I am confident that the measures [we have] announced will further enhance the financial integrity and life-saving work of the world’s main multilateral health financing institution.”

UNDP announcement

Separately, also on 4 February 2011, the United Nations Development Programme (UNDP) announced measures of its own to guard against fraud and corruption. The measures include the recruitment of a dedicated and specialised full-time investigator to respond to credible allegations of fraud or corruption in UNDP-managed Global Fund grants; and the development of formal capacity development initiatives in all countries where the UNDP manages Global Fund grants, with specific attention to long-term anti-corruption, governance and accountability systems.

The UNDP is a principal recipient (PR) for approximately 12 percent of the Global Fund’s overall portfolio, often working in challenging environments, such as in countries emerging from natural disasters, conflicts or political crises.

Statement by Chair and Vice-Chair

On 8 February 2011, the Chair and the Vice-Chair of the Global Fund Board (Dr Ernest Loevinsohn) took the unusual step of issuing a joint statement, which appeared prominently on the Global Fund’s website.

In the statement, the Chair and Vice-Chair expressed their “full confidence in the Global Fund as a vital and effective instrument for fighting AIDS, tuberculosis and malaria around the world,” and said that the Board “remains firm in its commitment to ensuring that resources invested in the Global Fund reach people in need and that all its grants are managed effectively and made subject to rigorous oversight and financial controls.”

The Chair and Vice-Chair went on to say that “it is important that we do all we can to mitigate against the negative impacts that the recent media coverage can have on the vast majority of well-performing grants in the Global Fund’s portfolio. Most Global Fund-supported programs are achieving dramatic results by broadening access to services and saving lives on an unprecedented scale. It is vital that all the steps we take to address cases of misappropriation be as well-targeted and specific as they are vigorous. Global Fund donors should recognize that withholding their contributions would unduly penalize well-performing programs.”

Finally, the Chair and Vice-Chair said that “the Global Fund is widely known for its probity, transparency and effectiveness. The Global fund itself identified these latest findings, shared them widely, and has responded vigorously to them. This strengthens – rather than diminishes – the Global Fund’s hard-earned and well-deserved reputation.”

Editor’s Note: The Global Fund recently suspended another grant to Mali because of evidence of corruption (see next article).

Some of the information for this article was taken from “The Global Fund Announces Measures to Enhance Financial Safeguards and Strengthen Fraud Prevention,” Global Fund press release, 4 February 2011; “UNDP Joins Global Fund in Announcing Enhanced Financial Safeguards,” UNDP press release, 4 February 2011; and “Statement by the Board Chair and Vice-Chair,” Global Fund, 8 February 2011. The 23 January AP story is available here.

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