12 March 2019
In 2017, during a routine internal audit conducted by PSI of its malaria program in the Democratic Republic of the Congo (DRC), PSI uncovered fraudulent actions inflating the costs of transporting and storing a portion of the mosquito nets in a US$173 million grant from the Global Fund. PSI contacted the Global Fund right away, and the Office of the Inspector General conducted a full investigation over the course of many months. It confirmed US$7.38 million in fraudulently inflated costs, perpetrated by PSI employees in DRC.
PSI repaid the full amount to the Global Fund, so that no donor money was lost to fraud. PSI worked closely with the Global Fund to limit the damage from the fraudulent activity. The mosquito nets in question were purchased and delivered as planned.
The Global Fund engaged a new Principal Recipient for mosquito net distribution that began in January 2018. PSI determined that they could not continue implementing any grants in DRC.
The Global Fund is committed to supporting DRC’s program against malaria, an essential part of delivering on global targets. Although DRC has the second highest malaria burden in the world, with 11 percent of all malaria deaths, it has made significant progress as a result of investments from the Global Fund in close collaboration with other donors and partners, together with leadership of the Ministry of Health. DRC has achieved excellent mosquito net coverage nationally through mass campaigns. The number of people tested and treated is increasing, while deaths from malaria have decreased by 49 percent since 2000. This impact was successfully delivered in an extremely challenging and unstable environment. The Global Fund is the largest external financer against malaria in DRC and we have more work to do to enable the country deliver its life-saving targets against malaria.
Since the Global Fund learned about the issues in this investigation report, we have taken several steps to reduce the risk of similar occurrences in the future. We have begun by reviewing assurance mechanisms for PSI specifically. We are developing a quality assurance framework to assess the effectiveness of PSI’s proposed remedial actions, including an increased focus on controls at implementation level. We are taking steps to strengthen financial reporting, review governance and accountability mechanisms to identify additional safeguards that might be needed, and conduct bi-annual monitoring visits that review financial performance and manage emerging issues. Finally, we are enhancing the Local Fund Agent’s scope of work to emphasize fraud prevention, detection and timely escalation to the Global Fund. We will use the same approach for all international nongovernmental organizations that implement Global Fund grants, to make sure that we have the appropriate assurance that our funds are achieving the impact intended.
The Office of the Inspector General is an integral and important part of risk management, conducting independent audits and investigations to complement the active risk management and controls put in place by the Secretariat with oversight by the Board of the Global Fund. The Global Fund Secretariat thanks the Office of the Inspector General for this investigation report, which upholds our principle of zero tolerance for fraud or corruption of any kind, and our proactive approach to detecting and being fully transparent about problems in implementation of our grants. The Global Fund is committed to constantly strengthening measures to increase value for money, and improving the effectiveness of health investments so they can reach the people most in need, in countries and communities all over the world.