Office of the Inspector General - Updates

Letter from the Executive Director: Global Fund Grant in Pakistan

01 April 2021

An investigation by the Office of the Inspector General of the Global Fund (OIG) into a Global Fund tuberculosis (TB) grant in Pakistan found that The Indus Hospital, a Principal Recipient of Global Fund grants, engaged in anti-competitive and collusive practices, amidst failures to properly manage conflicts of interest. Interactive Research and Development and Interactive Health Solutions, two related suppliers, benefited from those practices. Losses ensued, resulting from non-compliant procurement practices or linked to the work of these suppliers.

As a major financing institution created to fight infectious diseases and strengthen systems for health, the Global Fund recognizes the absolute importance of accountability, integrity and transparency in all its operations. The Global Fund expects all its partners to adhere to the highest ethical standards. In consequence, the Global Fund has zero tolerance for fraud and abuse, or collusive or anti-competitive behavior of any kind involving its resources, funds or suppliers. Strict controls and monitoring systems are in place to ensure donor funds are used effectively in order to reach the people who need them most.

Starting in 2017, before this investigation started, the Global Fund had begun to progressively reinforce controls and risk management in Pakistan, in response to a range of fiduciary and programmatic concerns. Further precautionary measures were taken in July 2020, by subjecting the entire Pakistan grant portfolio to the Global Fund’s Additional Safeguard Policy. The Board-approved Additional Safeguard Policy enables the imposition of a series of reinforced oversight mechanisms and ensures enhanced visibility into and control of operational arrangements.

The Indus Hospital will not be a Principal Recipient for TB in the next grant cycle, which is scheduled to begin in July 2021. Alternative implementation arrangements are currently being assessed and will be finalized shortly, taking into account the Additional Safeguard Policy measures, as well as the specific management actions being taken by the Secretariat as a result of this report. The Global Fund has authorized The Indus Hospital to continue providing treatment to patients until the transfer to the new Principal Recipient is completed by April 30, 2021. Our main priority at this time is to ensure the continuity of treatment for TB patients and the Global Fund is encouraged by the commitment made by The Indus Hospital to ensure a smooth transition of the patients under its care.

Given that Pakistan has the fifth-highest TB burden in the world, and the fourth-highest burden of drug-resistant TB, it is vitally important to devise implementation arrangements for the new and increased cycle of grants that deliver greater impact in fighting the disease, while also providing better protection against operational and financial risks. The Global Fund is committed to working closely with our partners to achieve this.

After careful consideration, taking account of remedial measures taken by The Indus Hospital and the enhanced risk mitigation and oversight measures implemented by the Global Fund Secretariat, The Indus Hospital is continuing as the Principal Recipient of a malaria grant. The malaria program has achieved good progress and is managed directly by The Indus Hospital.

We will in parallel be assessing the appropriate actions to be taken with respect to the Principal Recipient and suppliers named in this report, including recoveries and sanctions processes. In line with the Sanctions Panel Procedures Relating to the Code of Conduct for Suppliers, we have decided to seek the Sanction Panel’s advice on the proper response to this report’s findings.

We also took note of the comments on Secretariat oversight in the OIG report and have already started taking appropriate action.

Looking beyond this immediate issue in Pakistan, we are determined to embed the learnings from this investigation across our global portfolio. We are therefore clarifying and strengthening our guidance on handling the type of challenges described in this report in order to enhance our ability to prevent, detect and respond to such situations across the entirety of our global portfolio.

The Office of the Inspector General is an integral and important part of risk management, complementing the active risk management and controls put in place by the Secretariat. The Global Fund Secretariat thanks the OIG for this report, which helps strengthen our procedures and oversight of activities to prevent future instances of prohibited practices, and ultimately ensure all our resources are used effectively and efficiently to fight the three diseases.