Global Fund identifies fraud, media has learned

Circle of money

Today’s big global health news: An international fund that was created (with significant support from the Gates Foundation) to fight AIDS, tuberculosis and malaria in poor countries has identified episodes of fraud or at least misappropriation of funds amounting to tens millions of dollars.

That sounds pretty bad all right.

But first, let’s keep in mind that the media normally doesn’t usually pay that much attention to the Global Fund for AIDS, Tuberculosis and Malaria — which I’ve written about a bit, and is estimated to have saved millions of lives so far. This story about fraud, however, really had legs!

As a journalist-blogger covering global health and development, I’m supposed to add value by not just reporting the news but also providing perspective, or context, on the nature of the news story.

So, let me just start by saying I had to chuckle when I read this story from the Associated Press over the weekend:

GENEVA — A $21.7 billion development fund backed by celebrities and hailed as an alternative to the bureaucracy of the United Nations sees as much as two-thirds of some grants eaten up by corruption, The Associated Press has learned.

No, I didn’t chuckle because I think fraud and corruption is funny (though it can be, just take a look at this video from the Colbert Report with Arianna Huffington expounding on Wall Street corruption).

I chuckled first because of the phrase “backed by celebrities” and mostly because I’ve known about these fraud allegations and the investigations for months now. As the AP story notes, it was the Global Fund’s own investigators that identified these problems with specific programs in Mauritania, Mali, Zambia and Djibouti.

(I also chuckle when media organizations say they “have learned” something when all they are doing is reporting information that someone else has already said publicly.)

The problem of fraud in the Global Fund is real and serious. All fraud needs to be identified and weeded out, which is what the Global Fund said it is doing.

But the first piece of context to consider is that the Global Fund, besides having flagged the problem in the first place, is seeking to recover $34 million in misspent funds from four countries out of a total portfolio of about $13 billion in grants made to 145 countries to fight AIDS, TB and malaria.

If my math is correct, that translates into about 0.003 of all grants, or 0.3 percent.

Certainly, many of the individual instances of misappropriation and fraud are, as the AP not-so-objectively characterized them, “astonishing” in their boldness and criminality. There are criminal proceedings under way in some cases. But these appear to be an aberration, rather than a “plague” afflicting the entire fund.

Of great concern to some is the way this story is being played out — largely, probably, due to the way it was initially “framed” by the AP — which risks exaggerating the nature of the problem and providing ammo to those who would abandon these grand initiatives aimed at improving the health and welfare of the developing world.

The Global Fund is already struggling to deal with broken funding promises by governments.

Michel Kazatchkine, executive director of the Fund, is well aware that the fraud allegations — viewed incorrectly — could be all some donors need to further reduce support for this project. In an interview with Voice of America, Kazatchkine noted that this “comes at a time when governments are under pressure to cut public expenditures.”

Millions of lives now depend on the Global Fund, he said, and the project today saves an estimated 4,000 lives every day by getting necessary AIDS or TB drugs, bed nets to protect against malaria and other public health measures out to people for whom these efforts literally mean the difference between life and death.

So, yes, fraud is bad and needs to be dealt with swiftly and severely. But let’s not lose the forest for the trees.

Postscripts:

Here’s one of those celebrity-backed organizations (RED) that advocates for the Global Fund trying to put a positive spin on the AP story.

The Gates Foundation, which has donated $650 million to the initiative, came out Monday afternoon with a statement supporting the Global Fund, saying it is doing a “tremendous job” and that problems with fraud don’t change the fact that “not trying to save these lives is unacceptable.”

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About Author

Tom Paulson

Tom Paulson is founder and lead journalist at Humanosphere. Prior to operating this online news site, he reported on science,  medicine, health policy, aid and development for the Seattle Post-Intelligencer. Contact him at tom[at]humanosphere.org, follow him on Twitter @tompaulson and/or send a comment below.

  • Rmcclure

    Valuable analysis, Tom. Keep it up!

    • http://humanosphere.kplu.org Tom Paulson

      Thanks Robert,
      Gotta work on my math skills, however.

  • John

    i never myself understood why does good cause need celebrity support in first place..i think they should re look at there communication strategy thats meant to create awareness and iec material….Poorest of poor dont even know who these celebrity are and often selection and choice of communication agency are urban centric…Awareness message that can save million of life must be spread with local partner and smaller local agency then with large conglomeration. One must attention to procurement procedure to weed out corruption.

  • Fabio Saldanha

    I think caring for someone’s life is need, especially in cases like this around the world. Even in natural disasters we can see few people try to get “their” share from the donations, which is not acceptable. Most people do the right thing and try to help others, very few think they can use the system to profit from it. There must be procedures to enable such actions and gaurantee the efficency of the institution. We can’t judge celebrities and the Global Fund anly because few wrong people.

  • ratweiler

    hello? The Global Fund didn’t just open up and say “oh dear, we have fraud here” no … there was a whistleblower and guess what? They got rid of him to try and shut him up…. :-) This is just the tip of the iceberg….

    • http://humanosphere.kplu.org Tom Paulson

      Thanks Ratweiler,
      I would appreciate it you could send me info regarding this, which you can do by email (tpaulson@kplu.org) if you wish. I wasn’t aware of the whistleblower and would like to learn more about what happened.

    • Lawson McNaught

      The “whistle-blower” that you are conveniently creating is not a “leak” inside the Global Fund but is, in fact, the OIG (Office of the Investigator General), an independent entity of the Global Fund whose mandate is specifically to investigate each grant in every country where GF programs are run, and to report its findings in a transparent way. The OIG/GF is the actual source of all of the information that was quoted in the original AP article. We are not talking about “wikileaks” here; the OIG is an internal and very transparent department of the Global Fund, but independently run (somewhat like the FED in the US) whose job is to specifically point out instances of misuse of funds, however small, to the Global Fund, so that they can take the appropriate follow up action(s): in some cases, asking for further documentation that was initially missing (not fraud, just poor financial management: a “disorder” that is not specific to only aid organizations and very common across most poor countries), and in other case, taking legal action against, and recovering loss funds from, those who perpetrated actual fraudulent activities (a very small percentage of all grant activities, as can be seen quite clearly in this article). There is no conspiracy theory here, just a very well structured and well run organization that has published their actions and activities in a very open manner for years, and who has only very recently been criticized for taking appropriate steps to minimize these kinds of abuses in contexts where they are the generally considered the norm. The Global Fund should be applauded for being so transparent and up-front about the challenges it faces day-to-day in implementing its life-saving programs and the very comprehensive systems that it has put into place to reduce these rare occurrences, and not penalized for keeping its “books open” for all to see as is the case for many of the other organizations working in the aid community.

  • http://humanosphere.kplu.org Tom Paulson

    NOTE: My attempt at math was slightly off, which I have since corrected. I originally wrote that the amount of identified misspent funds represent 0.003 percent of the total grants. That was wrong. The total amount of “fraudulent” funding the Global Fund is trying to recover does represent 0.003 of the total, but that is 0.3 percent.
    If this blogging thing doesn’t work out, I guess I shouldn’t consider an alternate career in accounting.
    Thanks to the observant reader who pointed out my error!

  • Gerry Donaldo

    It seems that a key point is being missed – the auditors investigated only a small amount of grants. But of those they did, they discovered between 30-67% of funds were misused or simply missing. So we can assume that misuse of funds is also widespread in the majority of projects not yet audited. The Global Fund currently employs 100s of people – a lot of medical staff – what are they doing in what is basically a financial mechanism? They should fire them all (starting with the Director, who is a doctor) and employ a team of accountants that leave Geneva and go out and check how our (the taxpayers) money is being used..

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