Procurement and Cash Advance Irregularities Identified in Papua New Guinea
25 March 2014
The Office of the Inspector General has published the findings of its investigation into irregular procurement procedures and cash advances at the National Department of Health in Papua New Guinea, a grant recipient of Global Fund grants. The investigators found that the Department of Health had failed to comply with government procedures and Global Fund grant agreement requirements, resulting in USD 1,352,696 of non-compliant expenditure.
The investigation revealed that, between 2007 and 2009, staff at the National Department of Health chose higher bidders over more competitive bidders and acquired pharmaceuticals and health products from a single source. Single source procurement is considered uncompetitive as it leads to higher prices.
As a result, there were unnecessary extra costs of USD 468,340. This is contrary to the Papua New Guinea government’s procurement procedures which are designed to obtain the best value for money. It also goes against the Global Fund’s grant agreement requirements which insist that funds are managed carefully and that a reasonable price is paid for goods and services.
The National Department of Health also mismanaged cash advances in 2009 and 2010: Staff with outstanding non-reimbursed cash advances were given further funds. The total advances amounted to USD 884,356. Some of this was also used to the pay for accommodation and training at hotels and other venues which is, again, contrary to Papua New Guinea government policy
The Global Fund is seeking to recover the misspent funds as soon as possible. It has also suspended all local procurement and disbursement to the Department of Health except for life-saving and other critical activities. The Department of Health has relinquished its role as principal grant recipient for the round 8 malaria grant and has been replaced by the Oil Search Health Foundation.
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The Office of the Inspector General works to ensure that the Global Fund invests the world’s money in the most effective way possible in the fight against AIDS, tuberculosis and malaria. Through audits, investigations, oversight and consultancy work, it makes objective and transparent recommendations to promote good practice, reduce risk and condemn abuse.
Established in 2005, the Office of the Inspector General is an independent yet integral part of the Global Fund. It is accountable to the Board through its Audit and Ethics Committee and serves the interests of all Global Fund stakeholders. Its work conforms to the International Standards for the Professional Practice of Internal Auditing and the Uniform Guidelines for Investigations of the Conference of International Investigators.
The Office of the Inspector General believes that every dollar counts and has zero tolerance for fraud, corruption and waste. Through its whistle-blowing channels, the Office of the Inspector General encourages all to come forward to point out any irregularities that prevent Global Fund resources from reaching those who need them.