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65–543 PDF 

" ! COMMITTEE PRINT 

112TH CONGRESS

1st Session 

S. PRT. 

2011

112–17 

FRAUD AND ABUSE OF GLOBAL FUND 

INVESTMENTS AT RISK WITHOUT 

GREATER TRANSPARENCY 

A MINORITY STAFF REPORT 

PREPARED FOR THE USE OF THE 

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

APRIL 5, 2011 

Printed for the use of the Committee on Foreign Relations 

Available via World Wide Web: 

http://www.gpoaccess.gov/congress/index.html 

COMMITTEE ON FOREIGN RELATIONS

JOHN F. KERRY, Massachusetts, Chairman

BARBARA BOXER, California 

ROBERT MENENDEZ, New Jersey 

BENJAMIN L. CARDIN, Maryland 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

JEANNE SHAHEEN, New Hampshire 

CHRISTOPHER A. COONS, Delaware 

RICHARD J. DURBIN, Illinois 

TOM UDALL, New Mexico 

RICHARD G. LUGAR, Indiana 

BOB CORKER, Tennessee 

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

JAMES M. INHOFE, Oklahoma 

JIM DEMINT, South Carolina 

JOHNNY ISAKSON, Georgia 

JOHN BARRASSO, Wyoming 

MIKE LEE, Utah 

FRANK G. LOWENSTEIN, Staff Director

KENNETH A. MYERS, JR., Republican Staff Director

(II)

C O N T E N T S 

Page 

Letter of Transmittal ............................................................................................... v 

History and Background ......................................................................................... 1 

The United States and the Creation of PEPFAR .......................................... 1 

Funding History of PEPFAR ........................................................................... 2 

The Role of International and Other Organizations ...................................... 2 

Establishment of the Global Fund to Fight AIDS, Tuberculosis and Malaria ... 2 

Funding History ....................................................................................................... 2 

Operation and Structure of the Global Fund ........................................................ 3 

Process for Providing Medicines and Services ...................................................... 3 

Accomplishments of the Global Fund .................................................................... 3 

Benchmarks and Transparency .............................................................................. 4 

Creation of the Office of Inspector General ........................................................... 4 

Current Response by the OIG ................................................................................ 5 

Secretariat Response ............................................................................................... 6 

United States Recommendations on Reform .................................................. 7 

Budget Implications ................................................................................................. 7 

United Nations Development Program ........................................................... 8 

Department for International Development .......................................................... 9 

Recipient Countries As Donors ............................................................................... 9 

APPENDIX

2004–2009 Statistical Data Provided by the UN, World Bank, WHO, 

UNAIDS ................................................................................................................ 11 

Staff Recommendations ........................................................................................... 12 

(III)

LETTER OF TRANSMITTAL 

UNITED STATES SENATE, 

COMMITTEE ON FOREIGN RELATIONS, 

Washington, DC, April 5, 2011. 

DEAR COLLEAGUES: Through the President’s Emergency Plan for 

AIDS Relief (PEPFAR), the United States is providing both bilateral and multilateral assistance to disadvantaged populations to 

prevent and treat people with HIV/AIDS, tuberculosis and malaria. 

As of December 2010, U.S. investment in these programs totaled 

more than $32 billion. The U.S. provides its multilateral assistance 

through the Global Fund to Fight AIDS, Tuberculosis and Malaria, 

an independent entity which receives contributions from both countries and private organizations and provides medication and health 

services through nearly 600 grants in more than 140 countries. Although the Global Fund has demonstrated significant accomplishments and successes in saving lives through its antiretroviral drug 

programs and its prevention work, it has recently come under fire 

for mismanagement of grants in several countries. Following the 

release of several critical reports, some donors to the Fund have 

suspended their contributions until all mismanagement practices 

and abuses of funds can be rectified. 

Many of the new Members of the Senate who have no direct experience with PEPFAR and the Global Fund have asked Committee staff for a brief primer on these programs in anticipation of 

having to make funding decisions relative to the these global initiatives. I requested Senior Professional Staff Members Shellie 

Bressler and Lori Rowley to produce this primer. Their report examines the history and operation of PEPFAR and the Global Fund, 

the problems and initial improvements made to it, and the most recent challenges it faces. It also provides a series of recommendations for implementation by both the U.S. Government and the 

Global Fund for strengthening existing systems for the distribution 

of supplies, medication and services in order to prevent further 

mismanagement and to ensure that the maximum number of people may benefit from the health prevention and treatment efforts 

of the Global Fund. 

V

vi 

These tough recommendations run the gamut from withholding 

U.S. funds to the United Nations Development Fund (whose Development Program is a large recipient of Global Fund grants) until 

the organization’s internal procedures allow for greater access to 

their internal audit and investigation documents, to a recommendation for the development of an additional layer of protection and an early warning system in those nations where instability and/or government corruption are a concern. 

I hope you find this report useful and that we may work together 

to reduce fraud, improve transparency and ensure maximum value 

for the U.S. investment in these global health programs. 

Sincerely, 

RICHARD G. LUGAR, 

Ranking Member. 

(1) 

FRAUD AND ABUSE OF GLOBAL FUND 

INVESTMENTS AT RISK WITHOUT 

GREATER TRANSPARENCY 

HISTORY AND BACKGROUND

The United States and the Creation of PEPFAR 

The United States has been at the cutting edge of research into 

the cause and treatment of HIV/AIDS among its citizens since the 

early days of the detection of the disease. Its interest in addressing 

the devastating consequences of HIV/AIDS internationally began in 

earnest in early 2001 under the leadership of President George W. 

Bush when he established a cabinet-level task force to address 

HIV/AIDs globally. Co-Chairs Secretaries Colin Powell (State) and 

Tommy Thompson (Health and Human Services) led a diverse 

team from many sectors of the executive branch to develop the initiative. 

Despite the fact that the task force developed its proposal as the 

nation coped with the aftermath of the September 11 attacks, it received strong focus from the President, driven both by his own 

point of view and the encouragement of the evangelical Christian 

movement, some members of which believed that overcoming this 

devastating disease was a moral obligation. President Bush unveiled a proposal, now referred to as the President’s Emergency 

Plan for AIDS Relief (PEPFAR), in his 2003 State of the Union address. He requested Congress to commit $15 billion over five years 

for the effort, primarily for Africa and the Caribbean. 

At this time, Members of the House and the Senate were also developing their own legislation, including a bill Senators Lugar and 

Kerry were drafting. Following the President’s proposal in January 

of 2003, the pace of the legislative effort accelerated. Under bipartisan leadership of Chairman Henry Hyde and Ranking Democrat 

Tom Lantos, the House acted first, passing H.R. 1298—the United 

States Leadership Against HIV/AIDS, Tuberculosis and Malaria 

Act of 2003—by a vote of 375-41 in May of that year. 

On May 7, 2003, Chairman of the Senate Foreign Relations Committee Richard Lugar, along with Ranking Member Joseph Biden, 

Senator John Kerry, and Democratic Leader Tom Daschle, led the 

Senate effort as sponsors of S. 1009, The United States Leadership 

Against HIV/AIDS, Tuberculosis and Malaria Act of 2003. Together 

with the backing of Senate Majority Leader Bill Frist, the Senate 

approved the legislation, authorizing the U.S. to participate in the 

Global Fund to fight AIDS, Tuberculosis and Malaria. Following 

House adoption of the Senate’s amended version, President Bush 

signed the bill into law on May 27, 2003 as Public Law 108-25. 

2 

On July 18, 2008, the Senate approved the reauthorization of the 

legislation, the Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis and Malaria Reauthorization Act (P.L. 110-293), by a bi-partisan vote of 80-16. The 

reauthorization increased funding; set higher targets for prevention, treatment and care; and gave country teams the flexibility to 

tailor their programs to meet their countries’ epidemics. 

Funding History of PEPFAR 

Since its creation in Public Law 108-25 in 2003, PEPFAR has received annual appropriations from Congress totaling $32.367 billion through fiscal year 2010. (Final funding levels for fiscal year 

2011 remain unknown pending the outcome of the continuing resolution). The largest portion of this funding flows through appropriations to the State Department’s Office of the U.S. Global AIDS Coordinator, while other funds also are dispensed to PEPFAR from 

the Departments of Health and Human Services, Defense, Commerce, Labor, and the Peace Corps via other appropriations bills. 

PEPFAR represents both the United States’ bilateral efforts to support the treatment of HIV/AIDS, TB and Malaria and our international financial support of the Global Fund. (See below). 

The Role of International and Other Organizations 

As the President and the Congress worked to set the parameters 

for a U.S. program and its partnership participation in a global effort against HIV/AIDS, other countries and the United Nations also 

engaged in the effort. In remarks at the African Leaders Summit 

in Abuja, Nigeria, in April of 2001, Secretary-General Kofi Annan 

put forth a number of specific actions for African nations themselves to stem the HIV/AIDS epidemic on the African continent. He 

called for ‘‘the creation of a Global fund, dedicated to the battle 

against HIV/AIDS and other infectious diseases.’’ 

ESTABLISHMENT OF THE GLOBAL FUND TO FIGHT AIDS, 

TUBERCULOSIS AND MALARIA

The United Nations General Assembly held a Special Session on 

AIDS in June 2001 at which the organization agreed to establish 

a fund to address the global AIDS pandemic. Additionally, the G8 endorsed the establishment of the fund at its 2001 Summit in 

Genoa. The Global Fund to Fight AIDS, Tuberculosis and Malaria 

was established in 2002, not as a United Nations organization, but 

rather as an independent financing entity that both receives contributions and disperses these donations to countries for the treatment, prevention and care of HIV/AIDS, tuberculosis and malaria. 

FUNDING HISTORY

Since it began receiving contributions in 2001, the Global Fund 

has received nearly $18 billion from more than 43 countries. Additionally, private donors and other contributors have provided significant funding. An early donor, the Bill and Melinda Gates Foundation, made its first contribution in 2004 and has contributed 

$650 million to date. Through a recent re-focus on prevention of the 

disease, and noting the Global Fund’s focus on treatment, the 

3 

Foundation has recently expanded its commitment to the Fund to 

$500 million over a five year period, thus bringing its contributions 

to over $1 billion by 2014. Private donors have contributed nearly 

$950 million and together, with country donors, $18.9 billion has 

been donated to the Fund since its inception through 2010. Additionally, more than $2.5 billion has already been pledged for 2011 

from both countries and foundations. Of the $32.367 billion the 

U.S. has provided to date for PEPFAR, more than $5 billion has 

been transferred to the Global Fund through fiscal year 2010. 

OPERATION AND STRUCTURE OF THE GLOBAL FUND

The Fund’s board is composed of 20 voting members representing 

nations, both donor and developing countries, non-governmental organizations and private sector representatives. An additional six 

non-voting members serve on the board, representing the World 

Health Organization, the Joint United Nations Programme on 

AIDS (UNAIDS), the World Bank, a health partner organization, 

the Executive Director of the Global Fund and one Swiss citizen. 

The Fund’s overall operations are led by the Secretariat, with 

more than 500 employees in its offices in Geneva, Switzerland. 

PROCESS FOR PROVIDING MEDICINES AND SERVICES

The Global Fund opens grant applications for services, medications and supplies to competitive bids from entities that work together in partnerships called County Coordinating Mechanisms 

(CCMs). These entities are composed of representatives of organizations including governments, either multilateral or bilateral agencies, non-governmental organizations, academic institutions, private businesses, and people living with the diseases. CCMs select 

Principal Recipients (PRs), which are usually national organizations to carry out the work in each country or area. While the majority of the Fund’s grants are approved to CCMs, others may also 

apply. In areas of severe internal conflict, it may be the case that 

no CCMs apply. In these instances, the United Nations Development Program (UNDP) may be called on to conduct the work, or 

the UNDP may win a competitive contract among many bidders. 

Contracts are released through a series of funding rounds that 

include several levels of review, first from the Secretariat, which 

ensures the overall eligibility and completeness of the application 

and next from the Technical Review Panel (TRP). This panel is an 

independent panel of up to 40 experts in the health fields of the 

Fund’s focus and may not include any members of the Fund’s 

Board. Following the recommendation of the TRP, the full Board 

must approve each grant. 

ACCOMPLISHMENTS OF THE GLOBAL FUND

According to statistics kept by the Global Fund, through December 2010, the Global Fund committed $21.7 billion for 579 grants 

in 144 countries and had disbursed $ 9.3 billion to grant recipients. 

Global Fund-supported programs have saved an estimated 6.5 

million lives through the delivery of significantly expanded key 

services: 

4 

• 3 million people currently on antiretroviral treatment for HIV 

• 7.7 million people on effective TB treatment under the internationally approved TB control strategy (DOTS) 

• 160 million insecticide-treated bed nets distributed to protect 

families from malaria 

Additional results in treatment, prevention and care include: 

• 150 million people reached with HIV counseling and testing 

• 142.4 million malaria drug treatments delivered 

• 2.7 billion condoms distributed 

• 5 million basic care and support services provided to orphans 

and vulnerable children 

• 160.4 million people reached with community outreach services 

• 12.3 million people trained to deliver services for prevention 

and treatment of AIDS, TB or malaria 

BENCHMARKS AND TRANSPARENCY

The Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis and Malaria Reauthorization Act (P.L. 110-293) included a series of transparency and administrative benchmarks for the Global Fund to Fight AIDS, Malaria and Tuberculosis. These benchmarks include the requirements to strengthen the Office of the Inspector General (OIG) and 

make available the OIG reports on the Global Fund’s website; the 

online publication of all Global Fund Board reports, meeting decision points, and United States positions taken on votes; the online 

publication of all grant and sub-grant recipient funding and performance for grants; a requirement to take steps to prevent the imposition of tariffs and taxes by host countries on goods and services 

provided by the Global Fund. 

CREATION OF THE OFFICE OF INSPECTOR GENERAL

As initially set up in 2002, the Global Fund did not include any 

independent, oversight mechanism to ensure transparency and accountability. As early as September 2004, about 18 months into the 

program, representatives from the Bush Administration publicly 

raised concerns about the administration of the Fund ranging from 

slowness in grant distribution to inadequate staffing levels to review grants as well as the distribution of grants to corrupt or repressive states. In their ‘‘Fiscal Year 2005 Report on the Global 

Fund to Fight AIDS, Tuberculosis and Malaria’’ document, the 

President’s Emergency Plan for AIDS Relief (PEPFAR) expressed 

concerns about the understaffed Secretariat. Although the Secretariat successfully monitored financial programs regarding the 

number of grants issued and pushed to move quickly on new grant 

negotiations, the understaffed Secretariat could not properly analyze reports coming in from Local Fund Agents (LFAs), which monitor programs on-the-ground at the country level. 

The United States representatives to the Board continued to 

press for greater transparency. Recognizing the need to provide 

better transparency, in July 2005 the Board of the Global Fund to 

Fight AIDS, Tuberculosis and Malaria established an independent 

5 

1 ‘‘Professor Michel Kazatchkine Appointed a Second Term as Executive Director of the Global 

Fund’’ Press Release, Global Fund to Fight Aids, Malaria, and Tuberculosis, January 11, 2011. 

Office of the Inspector General that sought to ensure the integrity 

and effectiveness both of the programs of the Global Fund and its 

internal operations. The Office of the Inspector General (OIG) reports to the Board of the Global Fund, with the Finance and Audit 

Committee as the primary point of contact. The U.S. delegation 

was instrumental in developing the policies of this new position to 

include best practices of U.S. government inspector general offices 

and in consultation with the U.S. government’s Inspector General 

legal counsel. 

Consequently, in an effort to increase transparency, it was established that the Office of the Inspector General would publicize its 

reports, whenever possible, while reserving the right to redact portions of documents. These guidelines require reports to be posted 

on the Global Fund’s website within three days of completion. In 

those instances where public disclosure would not be prudent, the 

information could be made available on an ‘‘as needed’’ basis, and 

recipients would be informed of the circumstances under which the 

issuance of the report would be harmful if publicly posted. 

On February 5, 2007, the Boston Globe ran an article entitled 

‘‘Disease-Fighting Fund’s Expenses Hit’’ alleging that Global Fund 

Executive Director Richard Feacham used a little known, private 

bank account to incur excessive and lavish expenses on the Global 

Fund’s tab. The claims were based on an unpublished report by Inspector General Ibrahim Zeekeh who resigned around that time for 

health reasons. The Inspector General’s report said that Feachem’s 

spending habits created ‘‘potential risks,’’ including loss of donor 

confidence because of ‘‘inadequate internal controls over funds,’’ 

and that ‘‘senior management failed to convey and reinforce the 

need for careful and prudent use of donor funds.’’ 

Richard Feachem served as Executive Direction until March 31, 

2007. Upon Dr. Feacham’s departure, Dr. Michel Kazatchkine became the Global Fund’s new Executive Director. In December 2010, 

he was reappointed for a second term as Executive Director, a term 

that extends until March 2014.1

Following Zeekah’s resignation, the position of Inspector General 

of the Global Fund remained vacant for nearly a year until, in January 2008, John Parsons, a former Inspector General at the United 

Nations Educational, Scientific and Cultural Organization, joined 

the Global Fund as its new Inspector General. At his first board 

meeting, John Parsons made it clear to the U.S. delegation that his 

highest priority would be accountability and effectiveness at the 

country level. 

CURRENT RESPONSE BY THE OIG 

Under the leadership of IG John Parsons, the Office of the Inspector General has aggressively performed individual country and 

program audits and investigated allegations of fraud, whether reported through one of the Fund’s hotlines or as a result of a scheduled audit. According to the Inspector General’s December 2010 report to the Board of the Global Fund, the Secretariat was following 

up on 12 audits that contain 432 recommendations. Through its 

6 

2 United States Global Aids Coordinator Eric Goosby email to the Board of the Global Fund, 

February 6, 2011 

public reports, the Global Fund has established records of finding, 

investigating and reporting fraud. In the past, a number of these 

investigations, including an extensive report on embezzlement and 

misappropriation of funds in Uganda, have led to the repayment of 

funds and the prosecutions of three individuals, including a 10-year 

sentence for one individual. Additionally, Ugandan officials believe 

that additional prosecutions are likely. 

Recently, several audits and reports of the Office of the Inspector 

General of the Global Fund have received widespread media coverage. This media attention has revolved around alleged widespread corruption and fraud in four of the 145 countries that receive Global Fund grants: Mali, Djibouti, Mauritania and Zambia. 

The reports involve false and forged receipts for travel, training 

and general overhead expenses, and deficient record keeping. The 

Global Fund is demanding repayment of more than $34 million 

from grants approved in these four countries and is working with 

host governments on full prosecution of the wrongdoers. Specifically, in Mali, the Inspector General found that $4 million 

was misappropriated through forged per diem records and falsified 

travel expense documents. To date, sixteen people have been arrested, and the Minister of Health resigned days before the report 

was released. Criminal proceedings have also been launched in 

Mauritania and Zambia. Additional safeguards have been implemented in these four countries regarding existing grants, and the 

Global Fund Secretariat is placing more attention on monitoring 

activities in other high risk countries in order to improve the local 

capacity of the implementing team and to detect potential fraudulent activities. 

Donors have begun to express concerns over the reports of fraud. 

For example, Germany and Sweden have halted donations (an estimated $85 million) until ongoing investigations are complete. Additionally, the United States delegation has stressed the need to 

enact measures and adopt procedures to ensure that all necessary 

steps are taken to ‘‘correct and prevent the misuse of Fund resources.’’ 2

Nevertheless, the underlying question remains as to why fraud 

occurs in the first place. Over the past three years, a number of 

routine country and program audits have unearthed allegations of 

fraud and have led to full-fledged investigations. Is there something endemic with the grant issuances and partner selection? Do 

those entrusted with monitoring and evaluating the programs, and 

thus ensuring that funds are not finding their way into individual 

pockets, understand how to pinpoint fraud and quickly remedy the 

situation? 

SECRETARIAT RESPONSE

After much delay, the Board made two decisive moves: 1) it increased the staffing and budgetary support for the Office of the Inspector General from a 2009 budget level of $6.67 million and 19 

staff to 30 staff positions and a proposed budget of $19.79 for 2011; 

and 2) it acknowledged that reforms would be necessary in order 

7 

3 ‘‘Global Fund Names Former HHS Secretary Leavitt and Former President of Botswana 

Mogae to Lead Independent Review,’’ Global Fund to Fight Aids, Malaria, and Tuberculosis 

press release, March 16, 2011 

to prevent additional donors from terminating their support or 

freezing and conditioning their contributions until the enactment of 

meaningful reforms by the Board of the Global Fund. 

At the December 2010 Board meeting, the Global Fund created 

the Global Fund Comprehensive Reform Working Group that has 

been tasked to produce a report with specific reforms to address recent shortcomings in fiduciary responsibilities and transparency. 

The Working Group consists of the Chair and Vice Chair of the 

Board of the Global Fund, the Executive Director of the Secretariat, three donor representative (the United States, France, and 

one from the Norway/Denmark/Ireland/ Luxembourg/Netherlands/ 

Sweden consortium), and three representatives from the recipient 

countries community (Latin America and Caribbean, Eastern Europe, and East Africa). On March 16, 2011, the Global Fund Announced that former U.S. Health and Human Services Secretary 

Michael Leavitt and former President of Botswana, Festus Mogae, 

will lead this panel which is expected to present its findings at the 

June 30, 2011 Global Fund Board meeting.3

United States Recommendations on Reform 

The United States has outlined seven steps it believes important 

to create the confidence that the Global Fund can reduce the risk 

of fraud and abuse of resources. These steps include the following: 

1. Identify high risk grants 

2. Conduct an immediate review of grants and activities deemed 

as high risk 

3. Develop an early warning system to identify and address risk 

at the earliest possible stage 

4. Create a rapid response system to crack down on corruption 

as soon as it is realized 

5. Apply lessons learned from Inspector General audits and reports 

6. Better train in-country entities (local fund agents and country 

coordinating mechanisms) on spotting and addressing fraud 

7. Strengthen ties between the Secretariat, the Inspector General and the in-country implementers. 

BUDGET IMPLICATIONS

At last fall’s replenishment conference, the Obama Administration pledged $4 billion over three years to the Global Fund—a 38 

percent increase over the previous three years. Much pressure was 

placed on the United States not only from the Global Fund but also 

from the development assistance advocates to make a multi-year 

pledge, with the hope that other donor nations would follow suit 

with their own multi-year, robust pledges. The Global Fund estimates that every dollar contributed by the U.S. is leveraged with 

$2 from international donors. 

The President’s fiscal year 2011 budget request included $1 billion for the Global Fund, and the Senate Appropriations Committee 

8 

4 ‘‘UNDP-Global Fund Partnership’’ Fact Sheet—UNDP, February 2011. 

5 ‘‘Iran’s Mini-Empire at The U.N.’’ by Claudia Rosett, Forbes.com July 23, 2010. 

6 ‘‘The Office of the Inspector General Progress Report for March–October 2010 and 2011 

Audit Plan and Budget,’’ Office of the Inspector General, the Global Fund to Fight Aids, Malaria, and Tuberculosis, December 2010. 

approved this funding level in the 111th Congress. However, on 

February 11, 2011, the House Appropriations Committee released 

its outline of proposed reductions in government spending for the 

remainder of fiscal year 2011 (from March 4, 2011 through September 30, 2011). This Continuing Resolution cuts the U.S. contribution to the Global Fund by $450 million. 

United Nations Development Program 

Worldwide, the United Nations Development Program (UNDP) is 

one of the largest administrators and overseers of Global Fund programs. In recent years, the United States has contributed $100 

million annually to the UNDP through the State Department’s 

International Organizations Account. Additionally, the United 

States has allocated between $150 million and $250 million annually to the UNDP for specific programs. 

At this time, UNDP has a presence in 27 countries where it manages nearly $1.1 billion in Global Fund grants, both as the Principal Recipient and as a sub-grant implementer.4 Oftentimes, the 

UNDP is called upon to take over the role as Principal Recipient— 

operating in a number of countries where no other organization 

will go, or where there are citing concerns about safety, lack of infrastructure to operate, or extreme dysfunction and/or corruption of 

the host government. 

Over the years, the UNDP has lost credibility owing to controversies ranging from the ‘‘Oil for Food’’ scandal to the appointment of 

Iran to chair the UNDP 36-member executive board in 2009.5 The 

UNDP is commonly referred to as the ‘‘Principal Recipient of Last 

Resort’’ when the Global Fund has no other option in a country. 

Often, a decision must be made either to turn the responsibility 

over to the UNDP or to terminate the country’s program. 

The UNDP internal policy does not allow outside entities, such 

as the Global Fund or World Bank, to examine the UNDP’s books— 

even when the UNDP is administering and overseeing a grant. The 

UNDP offers summaries of audits to the Global Fund OIG, but the 

Inspector General has stated that these summaries are insufficient 

and that the UNDP auditing team has refused to partner with the 

Global Fund auditors on joint investigations. The UNDP claims 

‘‘special immunity’’ that allows the UNDP to restrict access to this 

information.6 As a United Nations Member State, the United 

States has access to UNDP’s Office of Audits and Investigations reports, but only a limited group of people can view them. All reviews 

are conducted at the UNDP offices, with the reviewer only allowed 

to take notes, not to make copies of the reports. Although overlap 

of UN Member States and Global Fund Board Memberships exists, 

this limited access to pertinent documents is not conducive to 

theperformance of complete investigations. 

Such UN bureaucratic roadblocks came to light when the Office 

of the Inspector General at the Global Fund investigated reports of 

fraud in Mauritania, where the UNDP was Principal Recipient for 

9 

7 ‘‘The Office of the Inspector General Progress Report for March–October 2010 and 2011 

Audit Plan and Budget,’’ Office of the Inspector General, the Global Fund to Fight Aids, Malaria, and Tuberculosis, December 2010. 8 Ibid. 

9 Ibid. 

10 UNDP-Global Fund Partnership Fact Sheet—UNDP, February 2011. 11Statement by the Secretary of State for International Development: the Bilateral and Multilateral Aid Reviews to the House of Commons, March 1, 2011. 

two malaria grants and two tuberculosis grants. The Inspector 

General analyzed the expenditure of some $3.5 million of the $9.9 

million in disbursements and found that approximately $2.7 million had been misappropriated. The Inspector General was unable 

to examine the rest of the funding in question (approximately 55 

percent of the total grant) because the UNDP refused to grant the 

Global Fund OIG access to documents, staff, and witnesses.7

In the same report, the Global Fund Office of the Inspector General raised additional problems with programs associated with the 

United Nations Development Program. In Haiti, the Global Fund 

revoked Principal Recipient responsibilities from the UNDP due to 

lack of access to internal UNDP audits by the Global Fund Inspector General after he found a $519,326.00 discrepancy between the 

records of the UNDP and records of the sub-grant recipients.8 In 

Mali, the UNDP has instructed sub-recipients not to provide the 

Global Fund investigators access to any information, documents, or 

witnesses, even after fraud and misappropriation of funds were detected in preliminary investigations.9

On February 4, 2011, the UNDP announced plans to ‘‘submit a 

proposal to UNDP’s Executive Board to allow the Global Fund to 

access the UNDP audit reports of Global Fund projects, a privilege 

currently restricted to UN Member States.’’ 10 The UNDP staff has 

confirmed that this proposed change, which will be presented to the 

UNDP Executive Board at their June 2011 meeting, would grant 

‘‘limited access’’ to the Global Fund but not full access to the audit 

and investigation materials. 

DEPARTMENT FOR INTERNATIONAL DEVELOPMENT

On March 1, 2011, the Department for International Development in Great Britain (DFID) issued a Multilateral Review. This 

report evaluated the 43 international funds and organizations to 

which the United Kingdom contributes with respect to value for the 

money and each fund’s and organization’s effectiveness in combating poverty, taking in account transparency and accountability. 

British Secretary of State for International Development Andrew 

Mitchell reported to the House of Commons that nine organizations 

provided ‘‘a very good value for the British taxpayer.’’ 11 The organizations given the highest recommendations in the findings include a number of global health multilaterals: the GAVI Alliance, 

UNICEF, and the Global Fund. 

RECIPIENT COUNTRIES AS DONORS

Currently, the Global Fund Board is considering changing its 

prioritizing criteria for the funding of grants. One of the main 

issues being discussed is lowering the funding priority for grants 

10 

12 ‘‘Global Fund Mulls Loans to Fight Aids’’ by James Kilner, Reuters News Service, May 4, 

2008. 

to middle-income countries. (Income levels are determined by the 

World Bank Income Indicator). 

According to the Global Fund, in 2010, eleven countries were 

considered both donors and recipients: China, India, Malaysia, Namibia, Nigeria, Romania, Rwanda, Russia, South Africa, Thailand, 

and Tunisia. On a whole, the contribution by such countries is a 

token one; for the amount each country is donating pales in comparison to the amount they are receiving in grants. However, there 

is one exception: at the 2006 G8 Summit in St. Petersburg, Russia, 

Russian President Vladamir Putin pledged to repay 80 percent of 

the $320 million Global Fund grants it has previously received (approximately $270 million). 12

In terms of countries that have historically received large grants 

but have contributed a miniscule amount, China stands out. Since 

2002, the Global Fund has approved 14 grants in China worth 

$1.87 billion, of which $832.5 million has been committed. In contrast to the vast bilateral investment in non-health related infrastructure, including soccer stadiums, performing arts centers, and 

road projects, China has committed very little to multilateral 

funds. In the latest replenishment round, China has pledged $14 

million to the Global Fund over three years. In contrast, the Russian Federation has paid back its previous grants and pledged $60 

million over three years. 

According to the World Bank, China is considered a lower middle-income country with a per capita income of $3,650. The Global 

Fund’s policies include cost-sharing provisions, and lower middleincome countries are expected to contribute as much as 65 percent 

of program costs. The Chinese government, according to the Global 

Fund, China is contributing 80–83 percent of total costs of its incountry program. As China graduates to become an upper middleincome country (above $3,945 per capita income), it should no 

longer apply for Global Fund grants and thus should pick up the 

entire costs of the programs. 

11 

Appendix 

2004–2009 Statistical data provided by the UN, World Bank, WHO, UNAIDS 

Disease Burden in China: 

HIV/AIDS 

People living with HIV ........................................................................... 700,000 

Adult HIV prevalence (percent) ............................................................. 0.1 

AIDS-related deaths ............................................................................... 39,000 

Estimated number of people receiving ARV therapy ........................... 65,481 

Tuberculosis 

TB case notifications ............................................................................... 975,821 

TB treatment success rate (percent) ..................................................... 94 

TB incidence, smear-positive (rate per 100,000 population) ............... 48 

TB incidence, smear-positive (number) ................................................. 640,000 

TB prevalence, all forms (number) ........................................................ 1,200,000 

TB prevalence, all forms (rate per 100,000 population) ...................... 88 

Malaria 

Estimated malaria deaths ...................................................................... 24 

Reported malaria cases .......................................................................... 16,650 

Reported malaria deaths ........................................................................ 23 

Disease Burden in South Africa 

HIV/AIDS 

Estimated number of people needing ARV therapy (WHO 2006 

guidelines) ............................................................................................ 1,700,000 

Orphans due to AIDS ............................................................................. 1,400,000 

Estimated number of people receiving ARV therapy ........................... 971,556 

AIDS-related deaths ............................................................................... 350,000 

Estimated number of people needing ARV therapy (WHO 2010 

guidelines) ............................................................................................ 2,600,000 

Adult HIV prevalence (percent) ............................................................. 18.1 

People living with HIV ........................................................................... 5,700,000 

Tuberculosis 

TB prevalence, all forms (number) ........................................................ 300,000 

TB treatment success rate (percent) ..................................................... 74 

TB incidence, smear-positive (rate per 100,000 population) ............... 410 

TB case notifications ............................................................................... 343,855 

TB incidence, smear-positive (number) ................................................. 200,000 

TB prevalence, all forms (rate per 100,000 population) ...................... 610 

Malaria 

Reported malaria deaths ........................................................................ 43 

Reported malaria cases .......................................................................... 12,098 

Estimated malaria deaths ...................................................................... 146 

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2004–2009 Statistical data provided by the UN, World Bank, WHO, UNAIDS—Continued 

Disease Burden in the Russian Federation 

HIV/AIDS 

AIDS-related deaths ............................................................................... 40 000 

People living with HIV ........................................................................... 940,000 

Estimated number of people receiving ARV therapy ........................... 75,900 

Adult HIV prevalence (percent) ............................................................. 1.1 

Tuberculosis 

TB treatment success rate (percent) ..................................................... 58 

TB incidence, smear-positive (number) ................................................. 46,000 

TB prevalence, all forms (number) ........................................................ 98,000 

TB incidence, smear-positive (rate per 100,000 population) ............... 33 

TB case notifications ............................................................................... 128,263 

TB prevalence, all forms (rate per 100,000 population) ...................... 69 

STAFF RECOMMENDATIONS

1. Future U.S. contributions to the Global Fund should be contingent upon the 

Global Fund Boards’ adoption of reforms laid out by the United States Department 

of State. The Department of State would be required to certify to Congress that the 

reforms were in place before funds could be released. 

2. Withhold ALL funding to the United Nations Development Fund until it certifies that its internal rules and procedures have been sufficiently modified to allow 

the Inspector General of the Global Fund, the Inspector General of the World Bank, 

and any investigative arm of any multilateral organization to which the United 

States contributes funds FULL access to their audits, investigations, records and 

personnel. 

3. Withhold U.S. contributions from the Global Fund to the UNDP until the U.S. 

receives confirmation of such certification. 

4. Instruct the Government Accountability Office to conduct a study regarding 

the coordination of the Office of Inspectors General (or equivalent offices) of all U.S. 

Government entities and multilateral organizations receiving U.S. taxpayer funds 

that oversee the integrity of global health programs. 

5. The United States Representative to the Global Fund should reiterate in the 

strongest terms to the Board of the Global Fund that the United States has no tolerance for fraud and abuse and that the Office of the Inspector General needs to acquire adequate resources and personnel to audit and investigate programs on the 

ground. 

6. A high number of routine audits of Global Fund grants have turned into fullfledged investigations. The Global Fund should take any steps necessary to ensure 

that Local Fund Agents and CCMs are capable of managing grants and are properly 

trained on how to spot and mitigate suspected fraudulent activities. 

7. The United States Government should conduct a top to bottom analysis of 

U.S. investment and contributions to international organizations and funds, similar 

to that conducted by Britain. On March 1, 2011, the United Kingdom Department 

for International Development issued a Multilateral Review, which evaluated the 43 

international funds and organizations that the United Kingdom contributes with respect to value for the money and each fund’s and organization’s effectiveness in combating poverty, taking in account transparency and accountability. 

8. The U.S. government should work more closely with host governments on establishing or increasing the country’s commitment to making its own investments 

in health programs. When possible, the countries must demonstrate some commitment in moving towards sustainability and cease complete reliance on the donor 

community for the indefinite future. 

13 

9. The Global Fund should more clearly define its eligibility criteria to ensure 

that countries which truly do not need grants, due to high income or low disease 

burden, do not receive grants. 

10. The Global Fund should develop a more precise ‘‘early warning system’’ and 

possibly an extra layer of the protection for resources in countries with a history 

or threat of government instability, and in countries that exhibit high levels of government corruption. 

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