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Down the drain

January 26, 2011

Financial inspectors at the global fund to fight HIV, tuberculosis and malaria say large amounts of money have been lost to corruption. Officials from the Fund say they have zero tolerance for financial abuse.

The Global Fund in action in South Africa
The Global Fund fights HIV aids, tuberculosis and malariaImage: The Global Fund/Juda Mgwenya

Financial inspectors working for the global fund to fight HIV, tuberculosis and malaria say large amounts of money have been lost to corruption. Reacting to the revelations, officials from the Fund said they had zero tolerance for corruption, and were seeking the return of misappropriated money.

For some time there have been rumors about problems with the Global Fund, but the latest findings from the Fund's own inspectors are a shock. Huge quantities of money appear to have been siphoned off.

In Mauritania, an anti-HIV program lost $4.1 million (3 million euros) - two-thirds of its total budget - through faked invoices.

In Djibouti $5 million was spent on cars and motorcyclesImage: picture alliance/dpa

In Djibouti meanwhile, $5 million went missing on bills for cars and motorcycles, and a further $750,000 was simply transferred out of an account with no explanation.

The inspectors also found that tens of millions of dollars worth of malaria medicines, intended to be provided free to patients, were stolen and re-sold on the black market.

'Zero tolerance'

The revelations, some of which were already in the public domain, have forced Michel Kazatchkine, the Global Fund's executive director, into a hasty press conference:

"The Global Fund has zero tolerance for corruption, and actively seeks to uncover any misuse of its funds," Kazatchkine told Deutsche Welle. "The vast majority of funds dispensed by the Global Fund is untainted by corruption and is delivering results in the fight against the three diseases."

In recent years, the multi-billion dollar fund has received huge donations from business leaders and prominent personalities, including Bill and Melinda Gates, Bono of the band U2, and Carla Bruni, wife of French President Nicolas Sarkozy.

Tuberculosis patients in Durban, South Africa
Tuberculosis patients in South Africa benefit from Global Fund moneyImage: The Global Fund/Juda Mgwenya

Fund officials point out that the $34 million they want to recover are just a fraction of the Fund's total expenditure of $13 billion. They claim all the rest has been spent honestly.

John Parsons, the Global Fund's inspector general, has tried to put an optimistic spin on things. He says the fact that the Fund is openly admitting its problems, and openly investigating them, should reassure donors.

"Transparency also has a tremendous deterrent effect," Parsons said, "in that it sends a signal to people that if there is any question of misappropriation, action is taken, things happen, people are asked to repay the money, people get taken through the courts and end up in prison if they misappropriated our funds."

Donor uncertainty

Despite his assurances, some donors are already drawing consequences: Sweden, one of the Fund's most generous donors, has suspended its annual contribution pending clarification of the corruption allegations. Kazatchkine admits the news of financial misuse is likely to be very damaging.

"This shapes global public opinion at a time when governments are under pressure to cut public expenditure," he said, "and where the millions of lives that depend on the Global Fund could be at risk."

What's more, it's not entirely clear whether the Fund has uncovered all the funding abuse, because inspectors have so far investigated only a fraction of the money being spent.

The news of corruption couldn't have come at a worse time - just days before the start of the World Economic Forum in Davos, where the Global Fund traditionally maintains a high profile in the hope of attracting new support from the rich, the famous and the powerful.

Author: Imogen Foulkes, Geneva / jli
Editor: Michael Lawton