03 March 2017
An OIG investigation found evidence of small-scale fraudulent payments of per diems totaling US$3,940 for field missions billed by a grant sub-recipient, the National Center for Parasitology, Entomology and Malaria Control (CNM). The investigators also found systemic donor double-billing, instances of nepotism, conflicts of interests, and inefficient controls to safeguard grant funds. The Global Fund has since put in place stronger controls to prevent recurrence and increase oversight of grant funds. It will also work with partners to recover any lost funds and supervise more closely implementer training and related travel costs by implementers.
The OIG found that 197 days of per diem payments for training field missions were billed to the Global Fund and another donor simultaneously between 2014 and 2015. The payments, valued at US$3,940, involved 21 CNM staff members for multiple field missions in different locations throughout Cambodia during overlapping periods. Several CNM staff went on excessive field missions, sometimes exceeding the number of available days in a given month, and claimed fraudulent per diem payments, which were approved by CNM management.
Despite conflicts of interest, several family members of CNM staff were recruited without a transparent or independent process. They also participated in field missions following approval by the Director of CNM. This nepotism facilitated the opportunity for improper financial gain. Furthermore, the director did not effectively delegate financial responsibility, resulting in delays to the approval of expenditures and the subsequent delay or cancellation of some planned anti-malarial activities.
CNM did not implement any anti-malarial activities for five months from July to December 2015 while it delayed signing a sub-recipient agreement with the United Nations Office for Project Services (UNOPS). UNOPS replaced CNM as the Principal Recipient of Global Fund grants in Cambodia following a previous OIG investigation in 2013. The investigation had led to the suspension of two mosquito nets suppliers, who paid kickbacks worth US$410,712 to two CNM officials (which has since been fully refunded). The five-month delay resulted from CNM's obstruction to revised risk mitigation measures, including the verification of travel expenditures, demanded by the Global Fund following the 2013 OIG investigation.
The OIG found that the per diem fraud was the result of poor controls to safeguards funds and a lack of oversight. In 2014, UNOPS had limited oversight of CNM financial processes. From 2016, this risk was mitigated by the use of a Fiscal Agent who reviewed, pre-approved and verified all transactions at CNM, including travel-related costs and per diems claimed by staff. This has resulted in a significant reduction of administrative staff conducting field missions and of overlapping field missions.
As of February 2017, the Global Fund has invested US$427,831,856 in Cambodia. To date, 58,000 people are on HIV antiretroviral therapy, 143,000 new smear-positive tuberculosis cases have been detected and treated and 7,590,000 insecticide-treated nets distributed.
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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.
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