Global Health Fund Finds Some Fraud, Recoups Losses

The is one of those lumbering, multilateral organizations that dispenses billions of dollars donated by wealthy countries to help those in need.

Since 2002, it has raised and spent more than $13 billion for the treatment and prevention of those pernicious diseases in 150 countries with drugs, mosquito nets, and other help.

Recently, the Geneva-based group learned from an internal audit that $34 million of its well-intentioned dollars wasn't reaching the people they were meant for. Instead, workers in four African countries — Mauritania, Mali, Djibouti, and Zambia — seemed to have pocketed it by forging receipts, documents, and even reselling donated malaria drugs on the market.

The Associated Press sounded the alarm in a story yesterday, calling the levels of corruption in the audited grants "astonishing." In fact, the fund had already made the misuse of the money known in its inspector general's most recent progress report in December.

Today, in a statement, the fund's executive director Michel Kazatchkine went on defense, saying, "The global fund has zero tolerance for corruption and actively seeks to uncover any evidence of misuse of its funds." He added that the organization's fraud controls were "most rigorous" and told AFP it had already recouped $19 million.

To get a handle on what the revelations of corruption mean for the fund, Shots called up William Savedoff, a senior fellow at the Center for Global Development, who wrote a blog post today critical of AP's coverage of the global fund's problems. He noted that the fraud dollars uncovered last year only make up about 0.3% of the total grants it has dispensed – a figure that's probably normal for an organization wielding such a massive budget.

Savedoff has written a lot about corruption in the health sector and says it happens everywhere from the poorest country to the richest country. "There's a lot of money at stake in the health sector, and unfortunately people find ways to steal it from any system," Savedoff told Shots. Indeed, the U.S. government said today that its fraud-fighting during the fiscal year led to the recovery of $4 billion.

In 2006, Transparency International looked at corruption and health in its Global Corruption Report, which Savedoff helped coauthor. The report noted that the health sector is "particularly vulnerable to abuse," in part because the private sector is often entrusted to play a public role in delivering care.

Since that report came out, Savedoff notes, big organizations like the Global Fund have gotten a lot better at rooting out corruption and being open about it. But there still could be a lot more fraud happening than they've been able to spot. "They need to get a handle of how respresentative these cases are," said Savedoff. Otherwise it's hard to know how much of their actual funds are being pilfered.

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