Office of the Inspector General

Investigation in Zambia

26 April 2018

An OIG investigation identified significant unexplained stock losses of US$1,064,788 of Global Fund-financed pharmaceutical and non-pharmaceutical health products at Zambia Medical Stores Limited between 2014 and 2016. The Global Fund and Medical Stores Limited (MSL) have responded to the findings with strong remedial and preventive measures.

The investigation found that stock quantities recorded in MSL’s electronic warehouse management system were negatively adjusted to reflect missing stock identified during annual stock takes. MSL staff could not explain the stock losses and the OIGs investigation also could not reconcile the stock adjustments with any outbound deliveries, expiries or other events. The value of the missing health products totals US$1,064,788, representing 3.2% of a total of US$33.4M of deliveries investigated.

The investigation concluded that internal controls at MSL were ineffective and resulted in multiple opportunities for theft or embezzlement of assets. Documented operating procedures including procedures requiring biannual stock takes and weekly counts of randomly selected locations were not followed.

Since this issue came to light, MSL has changed its senior management and co-operated fully with the OIG investigation. The Global Fund Secretariat provided financing for a multi-agency national task team, which conducted a series of high profile investigations and enforcement operations leading to arrests associated with an organized cross-border crime network targeting MSL. Stock controls and security arrangements have also been enhanced. Following the appointment of a new acting managing director in May 2017, MSL has introduced several initiatives to address the issues of corruption and theft.

  • Investigation of Global Fund Grants to the Republic of Zambia: Theft of Health Products from Medical Stores Limited (GF-OIG-18-007 - 26 April 2018)
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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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