Defrauding of the Global Fund gives Sweden cold feet

By Ann Danaiya Usher

Sweden has withheld its pledge to the Global Fund because of concerns about the misuse of US$25 million in grants in four African countries. Ann Danaiya Usher reports.At the third pledging round of the Global Fund to Fight AIDS, Tuberculosis and Malaria in New York, Sweden’s AIDS Ambassador Anders Nordström surprised the gathering by announcing that Sweden would not be making a pledge. The decision is a response to findings by the Global Fund’s Office of the Inspector General, which has identified cases of misappropriated grant money in Cameroon, Mauritania, Mali, and Zambia.Nordström says Sweden, which has contributed US$85 million a year over the past 3 years to the Global Fund, has concerns about how the Fund has responded to these cases. “There is a certain pattern here and we’d like to see how the Global Fund is handling these cases; how the Fund behaves when fraud is detected in a country”, he says. Nordström denies that Sweden is cutting support to the Global Fund, and insists that Sweden remains a “concerned and engaged partner”.“Sweden is doing this because we would like to ensure to the maximum that resources are used to achieve the intended health outcomes and nothing else. We want to see progress on the broader reform agenda of the Global Fund. And we will continue our dialogue with them through the fall,” he says. The final pledging decision will be taken at the political level.The Office of the Inspector General has identified cases of corruption in Cameroon, where about $3 million must be repaid to the Global Fund; in Zambia, where almost $12 million in ineligible expenditures have been identified, and $1 million in non-delivered goods must be returned; in Mali, where about $4 million in grant funds have been misappropriated; and in Mauritania, where $6·7 million is unaccounted for. That adds up to about $25 million in misused funds, about 5% of the total $500 million in funds disbursed to these countries.According to Stefan Emblad, Director of Resource Mobilisation at the Global Fund, all misused funds identified by the Inspector General must be repaid by countries. “We have from the beginning been aware that we sometimes work in very risky environments”, he says. He notes that some of the measures that are in place to ensure that grant money is not lost to corruption include an independent Inspector General who reports to the Board, and a “robust response” when fraud is discovered.“There is a realisation that as the Global Fund has become so large, there is a need to further strengthen our systems”, Emblad says. He points to an ongoing discussion about how to strengthen effectiveness at country level, and is hopeful that Sweden will be satisfied with the measures being taken and renew its pledge.Meanwhile, MSF Sweden is highly critical of Sweden’s move. President of MSF Sweden Kristina Bolme Kühn welcomes the Swedish Government’s Open Aid Initiative, which aims to make Swedish aid more transparent. But she questions the choice of the Global Fund to make this “political signal”.

“Of course there is always corruption when money is involved. It’s not that we are naïve. But the Global Fund is one of the most transparent organisations we know about. When corruption occurs, they take every step to recover the funds”, she says. “We wonder why [Sweden] has chosen to target Global Fund, which is highly innovative when it comes to transparency. I would understand if [they withheld funds from] the World Bank or Sida, but why Global Fund? I fear this does more harm than good.”The Global Fund received $11·7 billion for 2011—13 from donors in the latest pledging round. This is 20% more than the fund received for 2008—10, but still falls well short of what the fund said is needed to maintain progress. Emblad insists that all ongoing programmes will continue to be funded, “but it means the scale-up will not be as a big or as fast as we had planned”, he says.

Ann Danaiya Usher writes on aid politics for Development Today

Courtesy of the Lancet

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