APNewsBreak: Global Fund to make losses public

AP News
Posted: May 13, 2011 12:36 PM
APNewsBreak: Global Fund to make losses public

A multibillion-dollar fund that fights three killer diseases said Friday that it will make public more detailed information about money it has lost to corruption and mismanagement, but won't release other information critics have sought.

The board of the $22 billion Global Fund to Fight AIDS, Tuberculosis and Malaria met this week to address a backlash among major donors over revelations by The Associated Press that the fund's internal watchdog was turning up losses of tens of millions of dollars of grant money.

Board members decided to publish detailed accounting of losses and money recovered, the fund said, in an effort to distinguish between fraud and other problems such as poor accounting.

The fund will not, however, provide other details from internal investigations and audits that might have made it possible to calculate how much of the money investigated is lost to corruption, or what percentage of the fund's overall disbursements are misspent.

"There is a danger that the most negative of the figures reported could be used to create a misleading and sensationalized image which would overstate the extent of the problem and cause significant damage to the reputation of the Global Fund," the board said, "or the most positive of the figures would be used to down play the seriousness of the problems we are dealing with."

In January, the AP reported that the fund was losing tens of millions of dollars to mismanagement and corruption. Germany, the European Commission and Denmark are now withholding euro315 million ($457 million) in funding, pending reviews of the fund's internal controls.

The fund also is not making public an internal chart obtained by AP showing that in 12 nations where internal audits and investigations reviewed almost $576 million in spending, an average of 8 percent was lost to fraud, undocumented or unauthorized spending.

In all, the fund has provided AP with documents showing losses of almost $53 million. Inspector General John Parsons says his office has identified even more from active investigations, but said it would be improper to release those until they were completed.

Dr. Christoph Benn, the fund's external relations manager, told AP that the overall level of misspent money among the $13 billion the fund has handed out is certainly much lower than the 8 percent figure might suggest, because investigators and auditors went after the highest-risk grants: "It follows the smoke."

Parsons had feared that the board would impose new restrictions on his investigations and on his reporting of the problems his office uncovers. But after AP reported on the possibility the board stopped short of enacting those restrictions and issued a statement affirming its commitment "to the highest standards of transparency and accountability."

It did, however, demand a review of "the position and scope of audit and investigation functions" _ setting the stage for another battle over those functions at the next board meeting.

The board also created an outside panel, headed by former Botswana President Festus Mogae and former U.S. Health Secretary Michael Leavitt, to help it figure out how to report losses, in an effort to reassure European donors and Republican skeptics in the U.S. Congress.

The steps taken by the Global Fund will have broad implications for development programs everywhere. The fund has more aggressively pursued misspent funds than others, and has more openly reported what it found, making it hard to compare the levels of losses at the Global Fund with those in other development agencies.