The Global Fund to Fight AIDS, Tuberculosis and Diseases is eyeing the recovery of some $1.89 million “misappropriated” grant funds following an investigative report on one of its sub-recipients in Bangladesh.
The money covers 52 percent of the total amount disbursed to nongovernmental organization Padakhep Manabik Unnayan Kendra under the fund’s 2004-2009 HIV and AIDS program. The NGO “fabricated” documents, including bank statements, accounting journals, invoices and copies of checks that were never issued, according to the report published online Tuesday (July 10).
The NGO’s actions to thwart efforts by the Office of the Inspector General to audit and investigate the funds in question by denying them access to records and “intentionally avoiding OIG investigators” were also highlighted in the report. Despite the discovery of the fraud scheme, PMUK refused to accept termination as sub-recipient and even threatened Save the Children’s country director Michael McGrath of expulsion in a letter, according to the report.
Save the Children is a Global Fund principal recipient in Bangladesh and was the first to notify the fund of PMUK’s activities.
The report recommends barring PMUK from receiving Global Fund grants and suggests notifying other donors of the case, presumably as warning for future transactions with the group. The report also recommends transfer of the case to the proper authorities in Bangladesh for criminal and civil action.
The misappropriated funds form part of the 3 percent of the fund’s audited and investigated funding between 2005 and 2012 that was not spent according to grant agreements. This covers ineligible expenses and those inadequately substantiated, lost to fraud and unreported funds.
“We do not tolerate any misuse of funds, no matter how minor,” Chief Risk Officer Cees Klumper said in a press release. Klumper cautioned, however, that the analysis does not represent a comprehensive accounting of all misspent funds. The percentage is “likely” to change following the completion of audits and investigations by the OIG.
The analysis shows the fund’s efforts to strengthen its financial oversight and grant management, as indicated in the recent reforms the fund has been undergoing under General Manager Gabriel Jaramillo. It also builds donors’ confidence that the Global Fund is ensuring every dollar spent is properly accounted. Last year, the Global Fund canceled its 11th funding round due to a budget shortfall as some donors withheld funding owing to corruption issues.
Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.