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The Global Fund Welcomes Ugandan Corruption Inquiry Report

02 June 2006

Transparency, Accountability Augur Well for Future Effective Use of Resources

Geneva - The Global Fund welcomes the delivery of the Ugandan Government's report of the Commission of Inquiry into allegations of mismanagement of grants from the Global Fund to Fight AIDS, Tuberculosis and Malaria that led to the Global Fund's decision to suspend grant funding in Uganda in August last year.

"The openness and thoroughness with which President Yoweri Museweni addressed the Global Fund's concerns about the management of the grants it finances in Uganda has set an example for how allegations of corruption should be dealt with," said Richard Feachem, the Executive Director of the Global Fund. "By conducting a public inquiry under the competent leadership of Justice Ogoola, Uganda has given a clear message that abuse of money meant for those suffering the consequences of malaria and AIDS is unacceptable."

The portfolio of grants to Uganda is worth US$ 367 million and includes two grants to combat HIV/AIDS, two grants targeting malaria and one grant for tuberculosis. All five grants were suspended in August last year due to concerns about mismanagement by the Project Management Unit (PMU), an entity within the Ugandan Ministry of Health.

An independent audit requested by the Global Fund and conducted by PricewaterhouseCoopers, Local Fund Agent for Uganda, found incidents of inadequate and inappropriate management of Funds by the PMU. The findings of this audit led the Global Fund to conclude that payments to all grants that were managed by the PMU should be suspended and new management structures put in place.

Funding for life-preserving program activities was maintained throughout the suspension period.

The Principal Recipient and Uganda's Country Coordinating Mechanism (which oversees the grants) were asked to propose a plan for the restructuring of implementation arrangements for all the programs funded under the grant agreements. The grant activities were resumed in November 2005 after the Ugandan Government and the Global Fund had agreed on new arrangements for managing the grants.

The Commission for Inquiry report contains over seventy recommendations for action by the Ugandan Government. The Global Fund particularly welcomes the Commission's recommendation in relation to reimbursement to the Global Fund of misused funds and will be pursuing this with the Government.

"Unfortunately, corruption and mismanagement is a risk in development finance, but the main lesson from this incident is that our transparency and willingness to take strong and rapid action when we detect irregularities enable us to protect our assets and to direct money where it is used well," says Prof Feachem. "The effectiveness of our system is also supported by the mainly positive experiences in most of the 130 countries where the Global Fund finances grants."

Professor Feachem stressed, however, that the Global Fund will study the Commission of Inquiry report thoroughly and learn from any weaknesses it reveals in the Global Fund's own processes. "The Ugandan incident should help us strengthen our procedures so that we can avoid such problems in the future," Professor Feachem concluded.

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