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 2010-06-16 09:05 pm Back to NEWS
Global Fund suspends funding to health ministry, citing evident fraud

Zambia's efforts in fighting against AIDS, tuberculosis and malaria may be under threat following the decision by the Global Fund to suspend funding to the health ministry citing strong evidence of fraudulent activities.

The decision was made at its 21st Board Meeting in Geneva held between April 28 and 30, 2010.

The Global Fund has stated that it will not proceed with signing any new grants with the Ministry of Health until it is satisfied that the situation is under control and that adequate measures are in place to allow for a return to normal arrangements.

Furthermore, any activity and spending linked to the grants under the management of the Ministry of Health such as funds for the continuation of treatment have to be verified and recommended by the local fund agent (LFA) and approved by the Global Fund secretariat.

The Fund has stated that arrangements are being made to transfer management of the grants to the United Nation Development Programme (UNDP).

The Ministry of Health has been the principal recipient (PR) for several grants.

The Global Fund's Office of the Inspector General (OIG) has concluded that there was fraud in connection with one or more of the grants.

However, disbursements are being allowed for life-saving interventions (drugs and other directly related costs), but these disbursements are being made directly to procurement agents or suppliers, not to the Ministry of Health.

According to the Fund, arrangements are now being made to transfer the Ministry of Health grants to a new PR, the UNDP, on an interim basis.

The report stated that the OIG conducted investigation missions to Zambia in July and September 2009 in order to initially gain a fuller understanding of allegations of theft the Ministry of Health and a clearer indication of the level of risk to grant funds.

The OIG had sought to engage with the national authorities Anti Corruption Commission (ACC) and police in relation to the scope of their investigations and possible expert assistance from the Global Fund and other funding partners.

The Fund stated that the response received was very disappointing.

"The national authorities have failed thus far to provide assurances of appropriate action regarding fraud against Global Fund grant programs. In October 2009, during the audit of all grants within Zambia, the OIG audit team uncovered further evidence of fraud and other irregularities within the Global Fund grant programs in the MoH, in particular multiple apparently fraudulent allowance claims by senior members of the MoH staff. An OIG investigation team was deployed to the country and, in November 2009, referred comprehensive evidence to the Zambian ACC," stated the Fund.

"The OIG remains in the dark regarding the scope of any investigations being conducted by the ACC or police, which stem from the original whistleblower allegations. Neither does it have information about whether the investigations extend beyond those persons originally named as suspects. Similarly, despite numerous requests, the OIG has not received any feedback on the clear evidence of fraud against the Global Fund that was formally referred in November 2009 for criminal investigation."

In both cases, the OIG is unable to report with any confidence on the capacity, will or efforts of the national authorities in conducting timely and appropriate investigations.

"The OIG is therefore unable to provide assurance as to the safety of investing further funds through the Ministry of Health while the issues surrounding the investigations by national authorities remain unresolved," it stated.

According to the report, in May 2009, as a result of a whistleblower allegation, the Anti Corruption Commission (ACC) launched an investigation into fraudulent practices within the Ministry of Health.

Most of the reported fraud related to funds that were part of the expanded health basket in Zambia, in which the Global Fund does not participate. However, the investigation also included one fraudulent transaction relating to a Global Fund grant. The ACC searched the offices of the Ministry of Health, resulting in the suspension of 30 staff members.

The report stated that the ACC requested assistance from the OIG to strengthen its capacity to undertake a potentially large-scale investigation.

In light of this, the OIG contacted a number of other agencies to make arrangements for a series of joint capacity.


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