28 Sep 2011

Consolidated Transformation Plan to be developed by November 2011

Several recommendations to be implemented immediately

The Global Fund Board has formally "adopted" the report of the High-Level Independent Review Panel on Fiduciary Controls and Oversight Mechanisms of the Global Fund to Fight AIDS, Tuberculosis and Malaria (hereinafter, "High-Level Panel", or HLP). At its special meeting on 26 September 2012, the Board said that it accepts the report's underlying analysis, and that the report "presents a compelling case for a rapid and urgent transformation of the Global Fund."

At the meeting, the Fund's Executive Director and the Fund's Inspector General both said that they agreed with the findings of the High-Level Panel, adding that they would carry out in full and with enthusiasm the Board's decisions regarding the Panel's report. After discussion, the Board explicitly agreed with most of the Panel's recommendations, but reserved its position on a few of them.

The Global Fund established the High-Level Panel following extensive media coverage earlier this year of the Fund's findings regarding misappropriation of Global Fund money by some recipients in certain African countries.

The Global Fund Board said that it acknowledges that the Fund has "significant weaknesses" in fiduciary control and financial oversight, as identified in the HLP Report. The Board added that it is determined to take "the necessary corrective actions" to address these weaknesses.

The Board said that implementation of the Panel's recommendations will require that a detailed implementation plan be developed. To this end, the Board decided that the Board Chair and Vice-Chair, together with the Secretariat and the Office of the Inspector General (OIG), will develop a single, time-bound and costed Consolidated Transformation Plan which will integrate reform work already underway with recommendations from the Panel. (This responds to the third part of the Panel's Recommendation 6 .) A draft of the Consolidated Transformation Plan will be sent to the Board for adoption at the Board meeting on 21-22 November 2011.

The Board decided that implementation of some of the Panel's recommendations will start immediately. (See here for a summary of the Recommendations that we provided in GFO Issue 158.) Specifically:

  • The Secretariat and the OIG will commence implementation of Recommendation 1 of the HLP Report. (The link provides the full text of the recommendation.) This recommendation called for the Global Fund particularly the OIG to focus its oversight activities on grants from Round 6 (2007) and later; for the relationship between the Secretariat and the OIG to be strengthened; and for there to be some modest limitations on what aspects of the OIG's reports get published.
  • The Board, the Secretariat and the OIG will commence implementation of most of Recommendation 2 of the HLP Report , which called on the Global Fund to adopt a new risk-management framework and apply it to the existing portfolio, and to redefine the concept of "country ownership." However, the Board decided to defer a decision on the Panel's recommendation that pooled procurement and outsourcing of drug storage and delivery should be the norm. At the meeting, the Panel's leadership made it clear that it did not propose that the Fund establish parallel drug storage and distribution systems whenever the Fund found that a country's own systems were risky. Instead, the Panel believed that the Fund should assess capacities in each country and then, when necessary, make investments to strengthen the country's storage and distribution systems rather than set up parallel systems
  • The Policy and Strategy Committee will integrate Recommendation 4 of the HLP Report into the Five-Year Strategy that will be voted on at the November Board Meeting. Recommendation 4 called for a two-stage grant application process in which the first stage would be a concept paper and the second stage would be a full proposal that would, in effect, be worked on until it is collectively agreed by the CCM, the Secretariat, technical partners and the TRP. Recommendation 4 also called for the Board to specify how much money is potentially available to different groups of applicants, based on factors like risk, capacity, burden, funding available from other sources, programme category and type of intervention.
  • The Secretariat will implement Recommendation 5 and the first two parts of Recommendation 6 of the HLP Report. Recommendation 5 was aimed mostly at making the Secretariat more effective. It called for a Chief Risk Officer position; for certain changes to Secretariat staffing patterns; for more authority for fund portfolio managers; for streamlining and expanding the country teams; for certain measures to strengthen the Executive Management Team; for certain changes in how local fund agents are used and managed; and for defining the role and responsibilities of external auditors. The first two parts of Recommendation 6 called on the Global Fund to take steps to measure outcomes, not inputs, and to focus on quality and value rather than quantity. The third part of Recommendation 6 was covered earlier in this article.

Governance matters

The Board Chair and Vice-Chair will integrate Recommendation 3 of the HLP Report into the Board Governance Plan currently being developed. Recommendation 3 called for the Board to focus more on policy-setting, strategy development, and overseeing management and risk management; and to re-organise its committee structure. The High-Level Panel proposed a specific committee structure.

The Board said that it is adopting Recommendation 3 with some modifications. Effective 1 December 2011, the Board's four existing standing committees will be replaced by three standing committees, as follows:

  • Strategy, Investment and Impact: ten voting members, five from the donor bloc and five from the implementer bloc, with a chair from the donor bloc.
  • Finance and Operational Performance: ten voting members, five from the implementer bloc and five from the donor bloc, with a chair from the implementer bloc.
  • Audit and Ethics: seven members, with four independent members (i.e. people who are independent of the constituencies on, and who are not members of, the Global Fund's Board), one of whom will be the chair. There will be an open and transparent process to identify potential independent members, with appointments being determined at the November Board meeting.

In addition, the Board decided to create a "Coordinating Group" comprised of Board and committee chairs and vice-chairs. The Coordinating Group will be responsible for monitoring and tracking the Consolidated Transformation Plan and reporting to the full Board on progress.

The Board said that the terms of reference of the three committees will include the duties recommended in the HLP Report. Ethics-related matters will be added to the terms of reference of the Audit and Ethics Committee (the High-Level Panel had recommended that this committee cover only audit functions).

In addition, without defining this further, the Board said that the committees can include ex-officio members of the Board and will have the ability to delegate operational matters to the Secretariat.

Information for this article was taken from Decision Point GF/B24/DP3 of the Decision Points document for the 24th meeting of the Global Fund Board, held on 26 September 2011.

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