30 October 2015
Investigators from the Global Fund's Office of the Inspector General (OIG) confirmed that two Burkinabé wholesalers, Liz Telecom/Azimmo and Disgefa, supplied a Global Fund Principal Recipient with approximately 2 million mosquito nets that did not meet the World Health Organization Pesticide Evaluation Scheme (WHOPES) standard for insecticide treatment. The substandard nets were part of a 2010 mass distribution campaign of 6.6 million nets to protect families in Burkina Faso from malaria.
As funds from the United States Agency for International Development (USAID) were also involved, the OIG conducted its investigation in conjunction with the Inspector General of USAID. Following its investigation, the USAID Inspector General referred the case to the United States Attorney's Office, Southern District of New York, for federal criminal prosecution. Finalization and release of the OIG report was postponed pending the conclusion of the US criminal investigation and the assessment of any relevant additional evidence. On 29 October 2015, the U.S. Attorney's Office, Southern District of New York, unsealed an indictment against the head of Liz Telecom/Azimmo for a fraudulent scheme to obtain payment for counterfeit mosquito nets.
When the Global Fund learned that substandard nets had been delivered and distributed in Burkina Faso it placed the remaining substandard nets in quarantine to minimise the public health threat. The nets were replaced with WHOPES-recommended nets. The OIG is recommending the recovery of €9,027,877 corresponding to the loss caused by the delivery of the substandard nets.
The OIG investigation focused on a particular mosquito net tender organized by the Principal Recipient, le Programme d'Appui au Développement Sanitaire (PADS), which was largely financed by the Global Fund and required the purchase and distribution of WHOPES-recommended nets.
As a result of the tender, Liz Telecom/Azimmo won contracts to provide 1,876,433 Global Fund-financed WHOPES-recommended insecticide-treated nets. However, the wholesaler only procured 50,000 of WHOPES-recommended nets. The remaining 1,826,433 nets did not meet the requisite-WHOPES recommendation for insecticide treatment. They represented a value of € 8,639,028.
Disgefa was also awarded contracts as part of the tender to deliver 869,250 WHOPES-recommended nets but only delivered 769,250. The remaining 100,000 nets did not meet the required WHOPES-recommendation for insecticide treatment. The cost of the substandard nets was € 377,000.
On hearing about the substandard nets, the Global Fund took the following actions to mitigate the negative health impact of the substandard nets: The remaining undistributed nets were tested for quality and the nets were placed in quarantine. A subsequent mass distribution campaign was undertaken and 9,273,750 WHOPES-recommended nets were procured in December 2012 through the Global Fund Voluntary Pooled Procurement mechanism, a system that ensures grant recipients get the best quality health products for the best prices. The new quality-assured insecticide-treated nets were distributed to the population of Burkina Faso.
The OIG concluded that the structure and specifications of the PADS tender allowed less experienced bidders to win the award, which resulted in the delivery of substandard nets. To address this and avoid any recurrence, the Global Fund has adopted additional precautionary measures covering the entire Burkina Faso portfolio including the Global Fund Pooled Procurement Mechanism, greater oversight over large procurements, the introduction of an independent fiscal agent and a restricted cash policy for sub-recipients of funds. The Global Fund is also reviewing and updating policies to clarify the need for pre-shipment quality testing of mosquito nets as well as enhanced oversight to address whether bidders have appropriate experience and capacity to participate in a tender.
The Office of the Inspector General safeguards the assets, investments, reputation and sustainability of the Global Fund by ensuring that it takes the right action to defeat AIDS, tuberculosis and malaria. Through audits, investigations and consultancy work, it promotes good practice, reduces risk and reports fully and transparently on 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 Global Fund 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 speak out to report fraud, abuse and human rights violations that prevent Global Fund resources from reaching those who need them.