30 January 2017
The OIG undertook an advisory review in order to inform a Secretariat project aimed at putting in place stronger integrity due diligence processes (IDD) in the organization. In its review, the OIG made a series of recommendations to help the Secretariat define what IDD should look like in the specific context of the Global Fund business model. This model relies on third party implementers in some of the world’s riskiest environments, characterized by weak governance, poor access to health services, and corruption.
The Global Fund has shown strong commitment to ethics and integrity as demonstrated by its zero tolerance to fraud and corruption in the programs it finances. The organization has also put in place several initiatives such as conflict of interest and codes of conduct, an ethics committee and the recent appointment of a full time ethics officer.
The concept of “due diligence” has been an essential component of good governance since the stock market crash of 1929. Integrity due diligence has emerged over the last few years in response to increased regulations that address bribery and corruption; most notably the US Foreign Corrupt Practices Act 1977, the UK Bribery Act 2010, and provisions within the Wall Street Reform and Consumer Protection Act (Dodd Frank Act), amongst others. In the Global Fund context, IDD requires assessing the threats and risks to the values, objectives and reputation of the organization arising from its interactions with related third parties.
In its review, the OIG concluded that IDD is currently not prioritized by the Secretariat. Whilst the organisation has implemented many anti-corruption controls, it is still in the process of integrating these into an overall framework, as well as IDD at the corporate level. In the meantime, five departments have developed their own processes, albeit to different standards. Consequently, at the time of the review, IDD remained fragmented across the organization with limited mechanisms in place to assess whether processes deployed by departments were adequate, consistent across the organization and that there are no duplications and/or gaps among them.
The OIG also found that the building blocks for effective IDD are not yet in place. The Secretariat needs to put in place elements such as a clarified structure as a foundation against which to develop IDD; policies to guide IDD implementation; training and communication to create awareness as well as reinforce the need for IDD; monitoring and review mechanisms to embed and ensure the effectiveness of the set processes; and put in place incentives and disciplinary measures to drive compliance with laid down processes.
Due diligence processes are not currently informed by risk assessments. The Secretariat has not undertaken a formal organization wide risk assessment to guide the level and extent of IDD processes. Consequently, IDD processes deployed may not be cost effective. Risk assessments would ensure that IDD adds value by identifying and focusing due diligence to the counterparties that pose the greatest risks to the organization.
The Secretariat is currently reviewing the OIG’s recommendations and mobilizing a project to implement IDD.
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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.
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