Office of the Inspector General

Message from the Executive Director – Zambia

26 April 2018

Zambia is a key partner in our mission to end epidemics, with three percent of the global burden of people living with HIV, and malaria as a major health problem. Programs supported by the Global Fund contributed to a 70 percent decline in malaria deaths in Zambia between 2010 and 2015. Global Fund-supported investments have also contributed to a reduction in HIV prevalence among the adult population from 15.6 percent in 2001-2002 to 12.9 percent in 2015-2016.

The Global Fund has zero tolerance for fraud or theft, and is committed to enhancing mitigation measures for operational risks. Following an alert to the Global Fund from Medical Store Limited (MSL) that donor-financed commodities had gone missing, this investigation by the Office of the Inspector General found that stock quantities recorded in an electronic warehouse management system by MSL were negatively adjusted to reflect missing stock identified during annual stock takes. Staff could not explain the stock losses and the OIG’s investigation also could not reconcile the stock adjustments with any outbound deliveries, expiries or other events. The overall loss totals US$1 million of the US$33.4 million of deliveries investigated.

While health partners often advocate for rapid scale-up, it is vital to ensure that country systems can cope. A separate OIG audit on Tanzania found that “in light of the country’s rapid expansion of people on treatment, its supply chain management system faces problems in delivering health products to patients and accounting for commodities received.” If the Global Fund and others are to manage risks and minimize potential losses associated with achieving impact faster, adequate investment and vigilance on essential systems are necessary.

After discovering the problem, Zambia’s response to the losses at MSL has been exemplary. Since this issue came to light, MSL changed its senior management and co-operated fully with the OIG investigation. It implemented enhanced stock controls and security arrangements. New management also strengthened its internal audits and developed a whistle-blower policy. The Global Fund initiated support to a multi-agency national task team, which conducted high-profile investigations and enforcement operations that led to arrests associated with an organized cross-border crime network targeting MSL. Seven people, including former employees of MSL and two foreign nationals, have been taken to court. The Zambian authorities continue to investigate.

The Global Fund is working with stakeholders in Zambia to review and strengthen physical security systems at MSL and its regional hubs and has agreed with MSL and the Principal Recipient, the Ministry of Health, on specific management actions to address gaps identified during the OIG investigation.

The Global Fund will take all necessary steps to recover the lost funds in Zambia.

Peter Sands