Guest guest Posted March 8, 2011 Report Share Posted March 8, 2011 GLOBAL FUND OBSERVER (GFO), an independent newsletter about the Global Fund provided by Aidspan to over 8,000 subscribers in 170 countries. Issue 141: 7 March 2011. (For formatted web, Word and PDF versions of this and other issues, see www.aidspan.org/gfo.) + + + + + + + + + + + + + + + + + + + CONTENTS + + + + + + + + + + + + + + + + + + + 1. NEWS: Global Fund Announces New Measures to Fight Corruption The establishment of a panel of international experts to review the Global Fund's financial management systems is one of the new measures announced by the Fund to address the issue of corruption on the part of organisations implementing grants. 2. NEWS: Another Grant to Mali Is Suspended The Global Fund has suspended a third grant to Mali, an HIV grant, due to evidence provided by the Fund's Office of the Inspector General (OIG) that grant funds have been misused. In December 2010, two malaria grants were suspended, and a TB grant was terminated, for the same reasons. 3. COMMENTARY: The Global Fund's Next Steps in Responding to Corruption " A speedy response by the Global Fund that is influenced more by the media scandal and knee-jerk responses from donors, rather than by the facts and conditions on the ground, runs the risk of being counter-productive, " writes McCoy. 4. EXCERPTS: Reaction to Findings of Corruption This article contains excerpts from editorials and columns commenting on the corruption by some recipients of Global Fund grants, and the reaction to that corruption by some media and donors. 5. NEWS: U.K. Will Increase Contribution to Global Fund Citing the Global Fund's " excellent track record for delivering results, " the U.K. government says that it will increase its contribution to the Fund. 6. ANNOUNCEMENTS: Board Seat; Newsletter (a) The Developed Country NGO Delegation is soliciting applications for the position of Global Fund Board member. ( " International Health Policies in the News " is a weekly newsletter that focuses on global health initiatives. + + + + + + + + + + + + + + + + + + + 1. NEWS: Global Fund Announces New Measures to Fight Corruption Panel of experts will review the Fund's financial management systems Grant money will be used to strengthen financial controls in country As many readers will have learned from articles in the mainstream media, the Global Fund is setting up a high-profile panel of international experts to review its financial management systems and approaches to fraud prevention. This is one of the new measures announced by the Global Fund on 4 February 2011 in response to media coverage - starting with an article by the Associated Press (AP) on 23 January 2011 - of corruption unearthed by the Fund's Office of the Inspector General (OIG) and announcements from some donor countries that contributions to the Fund will be delayed or possibly reduced. The other new measures announced on 4 February involved (a) ensuring that a portion of each grant is used to assess and strengthen financial controls at country level; and ( increasing the number of the Fund's staff responsible for financial management. These measures are in addition to measures agreed before the AP story appeared, but after the OIG had reported on the misuse of Global Fund money in a few countries in sub-Saharan Africa. These earlier measures included the following: 1. expanding the mandate of local fund agents (LFAs); 2. providing a 2011 budget for the OIG that is double its 2010 budget; 3. terminating one grant and suspending two others in Mali; 4. implementing additional safeguards in a few countries where funds were considered vulnerable to misuse because of weak financial management systems; 5. imposing extra security measures in five countries to prevent drug theft; 6. imposing a freeze on training activities in all Global Fund grants until detailed training plans could be approved; and 7. strengthening the role of country coordinating mechanisms (CCMs) in grant oversight. Some of these measures (e.g., 2 and 3) have already been implemented. Others are being implemented now. The Global Fund said that all of the measures should be in place by June 2011. (The report from the panel of experts is expected to be provided to the Global Fund Board in May 2011.) Tedros Adhanom Ghebreyesus, Chair of the Global Fund Board and Minister of Health of Ethiopia, said that " transparency and accountability are core principles of the Global Fund because they are essential to ensuring that every donor dollar is spent effectively and that the interest of our beneficiaries are protected. I am confident that the measures [we have] announced will further enhance the financial integrity and life-saving work of the world's main multilateral health financing institution. " UNDP announcement Separately, also on 4 February 2011, the United Nations Development Programme (UNDP) announced measures of its own to guard against fraud and corruption. The measures include the recruitment of a dedicated and specialised full-time investigator to respond to credible allegations of fraud or corruption in UNDP-managed Global Fund grants; and the development of formal capacity development initiatives in all countries where the UNDP manages Global Fund grants, with specific attention to long-term anti-corruption, governance and accountability systems. The UNDP is a principal recipient (PR) for approximately 12 percent of the Global Fund's overall portfolio, often working in challenging environments, such as in countries emerging from natural disasters, conflicts or political crises. Statement by Chair and Vice-Chair On 8 February 2011, the Chair and the Vice-Chair of the Global Fund Board (Dr Ernest Loevinsohn) took the unusual step of issuing a joint statement, which appeared prominently on the Global Fund's website. In the statement, the Chair and Vice-Chair expressed their " full confidence in the Global Fund as a vital and effective instrument for fighting AIDS, tuberculosis and malaria around the world, " and said that the Board " remains firm in its commitment to ensuring that resources invested in the Global Fund reach people in need and that all its grants are managed effectively and made subject to rigorous oversight and financial controls. " The Chair and Vice-Chair went on to say that " it is important that we do all we can to mitigate against the negative impacts that the recent media coverage can have on the vast majority of well-performing grants in the Global Fund's portfolio. Most Global Fund-supported programs are achieving dramatic results by broadening access to services and saving lives on an unprecedented scale. It is vital that all the steps we take to address cases of misappropriation be as well-targeted and specific as they are vigorous. Global Fund donors should recognize that withholding their contributions would unduly penalize well-performing programs. " Finally, the Chair and Vice-Chair said that " the Global Fund is widely known for its probity, transparency and effectiveness. The Global fund itself identified these latest findings, shared them widely, and has responded vigorously to them. This strengthens - rather than diminishes - the Global Fund's hard-earned and well-deserved reputation. " Editor's Note: The Global Fund recently suspended another grant to Mali because of evidence of corruption (see next article). Some of the information for this article was taken from " The Global Fund Announces Measures to Enhance Financial Safeguards and Strengthen Fraud Prevention, " Global Fund press release, 4 February 2011; " UNDP Joins Global Fund in Announcing Enhanced Financial Safeguards, " UNDP press release, 4 February 2011; and " Statement by the Board Chair and Vice-Chair, " Global Fund, 8 February 2011. The 23 January AP story is available here. + + + + + + + + + + + + + + + + + + + 2. NEWS: Another Grant to Mali Is Suspended Evidence that grant money has been misused The Global Fund has suspended another grant to Mali because of evidence that grant money has been misused. The exact amount of grant funds which remain unaccounted for has not yet been determined. The principal recipient, Groupe Pivot Santé Population, an NGO, will be replaced. The $13.9 million Round 8 HIV grant is the third Mali grant to be suspended as a result of irregularities discovered by the Global Fund's Office of the Inspector General (OIG). (Two malaria grants were suspended in December 2010; at the same time, a TB grant was terminated.) Groupe Pivot Santé Population was also PR for one of the suspended malaria grants. The Global Fund has grant agreements with Mali totalling $123 million, of which $79 million has been disbursed. The suspended HIV grant provides for prevention programmes, including condom distribution, voluntary counselling and testing, and support for children who have been orphaned or made vulnerable by the AIDS epidemic. The grant suspension does not affect any of the 22,500 patients currently on antiretroviral treatment in Mali. They are financed by another grant which is not affected by this decision. So far, 16 people have been arrested in connection with the misuse of Global Fund resources in Mali. Information for this article was taken from " The Global Fund Suspends AIDS Grant in Mali, " Global Fund press release, 2 March 2011. + + + + + + + + + + + + + + + + + + + 3. COMMENTARY: The Global Fund's Next Steps in Responding to Corruption " The Global Fund is being unfairly singled out. " by McCoy The corruption unearthed among grant recipients by the Global Fund's Office of the Inspector General (OIG), and the media storm that erupted following a January 23 Associated Press (AP) story, have created something of a crisis not only for the Fund, but also, by extension, for millions of people affected by HIV, TB and malaria. According to a recent article in theEconomist, politicians may " use the scandal to justify cutting back on commitments, not just to the Global Fund, but to aid in general. " In responding to this situation, the Global Fund, governments and health activists need to think and act carefully. In doing so, here are five things to remember: Note the facts; challenge the media hype. Beware the counter-productive consequences of a quick and over-zealous reaction. Recognise that corruption in the health sector is not limited to Global Fund grants or to poor countries. Pay attention to other forms of corruption that need greater attention as part of the fight against HIV/AIDS, TB and Malaria Address systemic problems with systemic solutions. 1. Note the facts; challenge the media hype Subsequent to the OIG's audits and investigations in 25 countries, the Global Fund is demanding the return of approximately $39 million. This is significant money; but the figure needs to be understood in the context of two additional facts. First, the $39 million is made up of three separate components: (1) proven or suspected theft and fraud; (2) expenditure that is unaccounted for, some of which no doubt involves fraud and the rest of which involves sub-standard, lazy or incompetent accounting practices; and (3) expenditure for programmatic activities that do not involve fraud but were not included in the agreed programme budget. To date, the Fund has not given a breakdown, country-by-country or collectively, of these three components. It should. Secondly, in terms of scale, the $39 million represents 0.8% of the $4.8 billion that the countries investigated by the OIG have received from the Global Fund. We don't know what the figure might be across the entire grant portfolio, but it is clear that we are not talking about theft and fraud on a grand scale. The vast majority of grant money channelled by the Global Fund appears to have been used legitimately to support health care delivery. These two facts have been frequently ignored in mainstream media reports and conveniently forgotten by opponents and ideological critics of the Global Fund. This must be challenged. 2. Beware the counter-productive consequences of a quick and over-zealous reaction. A speedy response by the Global Fund that is influenced more by the media scandal and knee-jerk responses from donors, rather than by the facts and conditions on the ground, runs the risk of being counter-productive. For example, the Fund might be tempted to institute a new and stricter accounting regime, with " bean counters " placed at every step in the flow of money from Geneva to hundreds of thousands of service delivery points around the world. While this may tighten financial controls, it would choke up the system with red tape and result in administrative costs that might exceed the amount of money at risk of fraud. Furthermore, if new financial management procedures are implemented in a way that is overly aggressive, this could cause principal recipients (PRs) and sub-recipients (SRs) to become resentful and less transparent (out of fear that small, unintended or accidental transgressions may provoke a disproportionate sanction). This in turn would only undermine the future ability of the OIG to promote a culture of trust and probity, and the development of sustainable and effective financial management systems. 3. Recognise that corruption in the health sector is not limited to Global Fund grants or to poor countries. The kind of fraud described by the OIG is not limited to Global Fund grants; nor is it a feature only of health systems in low income countries. As noted by Transparency International, a growing body of evidence shows that the scale of corruption is vast in the health sectors of both rich and poor countries. For example, on 24 January, the day after the AP ran its story about the Global Fund, the US government reported (with almost zero media interest) that last year it recovered more than $4 billion that had been stolen from government-financed domestic health care programmes. This does not mean that we should excuse the fraud detected by the OIG. But the Global Fund is being unfairly singled out. Even Bate of the American Enterprise Institute for Public Policy Research (who has previously been critical of the Global Fund) said: " If the Global Fund is punished simply because it has been more transparent than other multilateral agencies, transparency efforts will be thrown back by a decade [or] more, and this crisis will be tragically wasted. " It is also important to note that the Global Fund is one of the few health funding agencies in the world that have adopted an explicit strategy to seek out evidence of corruption. For this, the Global Fund should receive praise. 4. Pay attention to other forms of corruption that need greater attention as part of the fight against HIV/AIDS, TB and Malaria There are other forms of corruption that contribute to the high rates of poverty, premature mortality and disease in low and middle income countries. But these forms of corruption rarely get the media attention they deserve in spite of the fact that they are considerably more significant. According to Global Financial Integrity, $500 billion a year is lost from developing and transitional economies through illicit outflows of money. Of this amount, approximately 60-65% is lost through commercial tax-evasion (driven primarily through falsified pricing in imports and exports), often involving multinational corporations, banks, accountancy firms and tax havens. It is further estimated that for every $1 poor nations receive in foreign aid, about $10 in " dirty money " flows illicitly abroad. While it's important to constantly improve the use and impact of international aid to poor countries, the global health community needs to speak out much more about the systemic causes of poverty that arise from illicit outflows of finance, tax havens and deficient tax regimes. See here for more information. 5. Address systemic problems with systemic solutions. The obvious temptation for the Global Fund, in light of the OIG's discoveries, is to create for itself a stronger system of Global Fund-specific financial controls. But in line with the Global Fund's commitment towards harmonised health systems strengthening, it would be better for the Fund to work systemically and in concert with other agencies and national governments to strengthen country-based systems of financial management and fraud-prevention. It's worth noting that the widespread use of training allowances, per diems and other non-salaried forms of payment to health workers in low income countries provides an obvious opportunity for fraud, as the OIG has pointed out. Such allowances can also create perverse effects such as health workers shutting down clinics in order to attend training workshops. But, again, we need to look at the context. The frequent use of allowances and per diems in many countries has arisen partly as a consequence of the deterioration of health worker salaries. Thus, while it is important to minimise the abuse and corruption associated with allowances and per diems, the more sustainable solution is to fix the systemic problems associated with inadequate pay and remuneration. See here and here for more about the issue of health worker salaries. Lack of bookkeeping skills, limited availability of accounting software, broken or non-existent printers and photocopiers, and even unreliable electricity - these are also examples of systemic deficiencies that make it difficult to implement robust accounting procedures. Recommendations The response from the Global Fund to the corruption issue should be proportionate and sensible. Here are some suggested next steps. LFAs: Some of the fraud identified by the OIG was first spotted by local fund agents (LFAs), who " blew the whistle " in an appropriate manner. But LFAs apparently missed the rest of the fraud. Before expanding the mandate of LFAs, the Global Fund needs to clearly determine how that happened. CCMs: Before rushing to strengthen the role of CCMs in grant oversight, the Global Fund should think hard about whether this is the best way to go, and if so, how it could be done effectively. Remember, CCMs are committees made up of volunteers, many of whom have major conflicts of interest; and CCMs have few resources at their disposal to perform this kind of work. A worthwhile initial step might be to ask CCMs to comment on the fraud uncovered by the OIG and to suggest how the Global Fund, working with other agencies, can help reduce fraud and graft. Bureaucracy: The Global Fund should seek input from other donors, and from independent health-sector and non-health sector experts, on how best to strengthen fraud detection systems without creating an administrative nightmare. Systems: The Global Fund should seek to use the current scandal to leverage systemic improvements in financial management across the health sector as a whole; and not just seek to strengthen its own " vertical " financial management and audit systems. Cost-benefit: The Fund should conduct a cost-benefit analysis regarding corruption-related measures. There is a real danger that imposing additional financial controls will increase the cost of doing business, but not increase the extent of health care coverage. But in order for the Global Fund to be able to respond proportionately and sensibly, it will be necessary also for donor governments to act proportionately and sensibly; and for ministries of health in recipient countries to show their commitment towards improved systems of financial management. Meanwhile, the broader global health community needs to remind itself and the world that the Global Fund and its grant-making programme are largely a force for good and that there are other more harmful forms of corruption that deserve much greater attention. McCoy (d.mccoy@...), a Malaysian medical doctor and public health specialist, is about to join Aidspan as its Research and Policy Director. + + + + + + + + + + + + + + + + + + + 4. EXCERPTS: Reaction to Findings of Corruption " An overreaction to corruption can cost lives. " " Reputation of the Global Fund has been unfairly tarnished. " The following are excerpts from editorials and columns commenting on the corruption by some recipients of Global Fund grants, and the reaction to that corruption by some media and donors. " Corruption occurs in all countries, rich and poor, but thrives in environments where checks on those entrusted with power are loose, civil society is poorly represented, poverty is entrenched, and inequalities are vast. Germany should engage in debates about how to tackle these problems rather than taking measures that seem tough on corruption but will ultimately cost lives. " Source: The Lancet, 5 February 2011 (www.lancet.com/journals/lancet/article/PIIS0140-6736%2811%2960143-8/fulltext) " The reputation of the fund - which by its own estimates saved more than 4.9 million lives by 2009 - has been unfairly tarnished, and its fund-raising efforts perhaps hampered at a time when the economic crisis is already making donors reconsider the size of their contributions. When it comes to being transparent over problems of corruption in recipient countries the Global Fund has been far better than most aid donors or agencies. It has openly tackled corruption - with a " zero tolerance " policy, suspending grants at the first whiff of wrong-doing, and working with recipient countries to bring fraudsters to justice and recover what misdirected money it can. Could it do more? Yes: for example, by strengthening oversight further. But it is already well down the road to effectively tackling corruption. The same cannot be said for many of the alphabet-soup of aid agencies, which choose not to publicise their own uncovered fraud cases, perhaps out of fear of damaging their image, and losing donors. " Source: Nature, 2 February 2011 (www.nature.com/nature/journal/v470/n7332/full/470006a.html) " The $34 million in fraud that has been exposed represents about three-tenths of 1 percent of the money the fund has distributed. The targeting of these particular cases was not random; they were the most obviously problematic, not the most typical. One might as well judge every member of [the U.S.] Congress by the cases currently before the ethics committee. The irony here is thick. These cases of corruption were not exposed by an enterprising journalist. They were revealed by the fund itself. The inspector general's office reviewed 59,000 documents in the case of Mali alone, then provided the findings to prosecutors in that country. Fifteen officials in Mali have been arrested and imprisoned. The outrage at corruption in foreign aid is justified. But this is what accountability and transparency in foreign aid look like. The true scandal is decades of assistance in which such corruption was assumed instead of investigated and exposed. In a scandal, the first response is anger. In global health, corruption kills. The most important response, however, is to make sure the right people get punished - not an African child who needs a bed net, or the victim of a cruel and wasting disease. They had no part in the controversies surrounding the Global Fund, but depend, unknowingly, on their outcome. An overreaction to corruption can also cost lives. " Source: Gerson, (President W. Bush's chief speechwriter from 2001-2006), Washington Post, 4 February 2011 (www.washingtonpost.com/wp-dyn/content/article/2011/02/03/AR2011020305176.html) " The misuse of small fractions of Global Fund grants, while extremely serious, must be put into perspective and examined within the context of the complex challenges and emergencies that all international organizations face when dispersing large amounts of resources. Withdrawing donations and freezing funding to the Global Fund will not only condemn millions of people who are not involved in the corruption to terrible fates, but will also send the dangerous message that organizations aiming to achieve best practice in transparency and accountability will be punished. The Global Fund should be supported and empowered to continue its work, not condemned for its efforts to root out corruption and improve its results. " Source: Elly Katabira, President, International AIDS Society, quoted in Medical News Today, 9 February 2011 (http://www.medicalnewstoday.com/articles/215941.php) " With luck, the changes [announced by the Global Fund] will reassure the critics and start the money flowing again. The Global Fund sits on a big pile of credibility after more than meeting expectations in previous years. Sceptics may quibble with its claim to have saved at least 7m lives, and exactly how many more millions of lives it has improved, but mortality rates in the diseases it targets have dropped sharply. Until the latest storm broke, the aid world was abuzz with talk about expanding the fund's remit to include maternal and child health. It would be odd if that plan stalls as a result of the corruption worries and if the money went instead to other international agencies. These tend to be less efficient and more prone to fraud. Though they may also be less likely to claim corruption as a sign of probity. " Source: The Economist, 17 February 2011 (www.economist.com/node/18176062?story_id=18176062) + + + + + + + + + + + + + + + + + + + 5. NEWS: U.K. Will Increase Contribution to Global Fund Fund's " excellent track record " cited The government of the United Kingdom has announced that it will increase its contribution to the Global Fund because the Fund has " an excellent track record for delivering results. " In a statement made in the U.K. House of Commons on 1 March 2011, , the U.K. development minister, said that an in-depth review of 43 multilateral organisations conducted by the Department for International Development (DFID) found that nine of the organisations, including the Global Fund, were assessed as giving " very good value to the UK taxpayer. " According to the review, the Global Fund " is a results-focussed organisation; the quality and depth of reporting is very high, and allows donors to hold the Fund to account. Standards for financial management and audit are very high. " The review also gave the Global Fund high marks for transparency and accountability, saying that the " Fund's decision to publish/require recipients to publish procurement data has been a major driver for a range of innovations in transparency. " The announcement was welcome news for the Global Fund because three countries - Sweden, Ireland and Germany - had recently announced that they were putting their contributions on hold because of concerns about corruption on the part of organisations implementing Global Fund grants. The DFID review found that the Global Fund plays a critical role in delivering health-related Millennium Development Goals (MDGs) and is likely to remain a key financier of existing and new approaches to tackling AIDS, tuberculosis and malaria. The review said that " Global Fund support has catalysed and supported important and innovative policies and programmes in many countries. " According to the review, reforms under way at the Global Fund to simplify procedures and improve the effectiveness of its work with countries and partners " should reduce transaction costs, shorten grant processes, align reporting and shift from project to programme-type funding. " Not everything in the review was complimentary of the Global Fund. The review said that the Global Fund needs to do more to guard against misuse of funds. As well, according to the review: There are clear weaknesses and bottlenecks in the business model which impede faster progress and even more impressive results. The time between grant approval and first disbursement is not quick enough. The Fund's policies and practices are not sufficiently flexible or responsive to fragile contexts, given the high share of fragile states financing in the portfolio. Although the Global Fund carries out a thorough assessment of gender relevance of all proposals, the quality of proposals in terms of addressing gender issues has been poor. The Fund places heavy burdens on countries and partners and, despite its focus on a country-led approach, its own systems and requirements often take precedence. In his statement in the House of Commons, said, " Of course, there is always room for improvement and we will still require strong commitments to continued reform and even better performance. " Information for this article was taken from the following sources: " Multilateral Aid Review - Ensuring Maximum Value for Money for UK Aid Through Multilateral Organisations, " DFID, March 2011; " UK Minister Says Global Fund Has 'Excellent Track Record' and Will Receive Increased Funding, " Global Fund press release, 1 March 2011; and a statement in the House of Commons by , the U.K. development minister, 1 March 2011. Some of the quotes used in this article, and in the Global Fund's press release, were taken from a 4-page summary assessment of the Global Fund prepared by the DFID reviewers; this document is not available on the DFID or Global Fund websites. + + + + + + + + + + + + + + + + + + + 6. ANNOUNCEMENTS: Board Seat; Newsletter Call for applications for Global Fund Board member representing developed country NGOs Closing date for applications: 21 March 2011. The position will only become available in July 2011. but in order to provide for a transition period, the incoming Board member will be invited to join the delegation for the upcoming 23rd Global Fund Board meeting (11-12 May), and for delegation pre-meetings. Applicants need to work for an NGO from the constituency, comprising Western Europe, the U.S., Canada, Japan, Australia and New Zealand. Contact Wittebrood, International Civil Society Support (ICSS): jw@... to obtain the position's terms of reference and additional information. Weekly Newsletter on International Health Policies " International Health Policies in the News " is a weekly newsletter that provides articles from the journal " The Lancet " and other sources related to international health policies in low and middle income countries. Published every Friday, IHP News focuses on global health initiatives, global public goods, aid effectiveness in the health sector, and also ground-breaking articles in specific domains like AIDS and Malaria. IHP News is published as a blog at www.itg.be/ihp. Readers can also subscribe to the newsletter by sending an email toihpnetwork@.... Readers can choose to receive the English version, as well as a digest in French (published several days after the English version). The 4 March 2011 edition of IHP News contains articles on (among other things) U.S. funding for the Global Health Initiative; the " benefits of recession " ; and the Multilateral AID Review by the (U.K.) Department for International Development (also covered in this issue of GFO - see previous article). IHP News is published by the Institute of Tropical Medicine (ITM) in Antwerp, Belgium. The newsletter is part of a larger effort to get people from the South involved in global health discussions and decision-making processes. " Reproduced from the Global Fund Observer Newsletter (www.aidspan.org/gfo), a service of Aidspan. " Forwarded by: --------------------------- Yours in Global Concern, A.SANKAR Executive Director- EMPOWER INDIA - Professional Civil Society Organisation Founder and General Secretary - Confederation of Indian Civil Society Organisation’s (CICSO) National Convener- National Alliance for Health, Environment and Rights ( NAFHER) 107J / 133E, puram TUTICORIN-628 008, TN, INDIA Telefax: 91 461 2310151; Mobile: 91 94431 48599: www.empowerindia.org · You are invited to join an E FORUM AIDS-TN. To join this free E Forum kindly send an e mail to AIDS-TN-subscribe · This e Forum moderated by EMPOWER, a Non-profit, Non-Political, Voluntary and Professional Civil Society Organisation. P Please don't print this e-mail unless you really need to. 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