08 April 2022
An investigation by the Global Fund’s Office of the Inspector General (OIG) identified systemic fraud and misappropriation by the staff of the Ministry of Health in Liberia, a Principal Recipient for Global Fund grants. The investigation found non-compliant expenditures, gaps in the Ministry of Health controls, policies and oversight, and instances of conflict of interest and misappropriation by the then fiscal agent. Within the scope of its investigation, the OIG also identified lapses by the Global Fund Secretariat to actively report fraud red flags and suspected wrongdoing in Liberia between 2015 to 2018.
The Global Fund recognizes the absolute importance of accountability, integrity, and transparency in all its operations and expects all its partners to adhere to the highest ethical standards. We pay keen attention to efforts to safeguard investments with the goal of making all resources count. The Global Fund has zero tolerance for fraud or corruption. We follow strict controls and monitoring systems to ensure donor funds are protected.
The Global Fund received the OIG’s preliminary findings of this investigation in November 2021 and the Secretariat’s response was swift. In November 2021, the Secretariat carried out a high-level mission to Liberia to discuss the OIG’s findings and other long-standing challenges in Liberia’s Ministry of Health. The mission secured important initial commitments from the Ministry of Health to address the issues highlighted in the OIG’s investigation. Building on these commitments, the Global Fund Secretariat developed a set of risk mitigation measures for immediate implementation in the Ministry of Health grants, which complemented existing measures in place. These immediate measures, which were shared with the Global Fund Board, include eliminating loopholes, establishing more rigorous reviews and controls, and strengthening verification processes, with a particular focus on local procurement and travel-related costs. The measures directly address the vulnerabilities that allowed for the instances of fraud and misappropriation at the Ministry of Health, which are cited by the OIG. The measures respond to implementation and management risks for the entire Ministry of Health Global Fund grant portfolio in Liberia. With these measures, the Global Fund has been able to disburse funds for critical grant activities and program continuity in the HIV, TB, malaria and COVID-19 responses, thereby avoiding disruption of critical patient care and treatment.
The Global Fund is committed to taking any further necessary actions needed to address the key issues and risks identified in this investigation. As noted by the OIG in their investigation report, the Global Fund Secretariat will complement the immediate mitigation measures already taken with additional strategic actions and controls. The conclusion of the OIG investigation now provides the Secretariat with the necessary information to move forward. We are prioritizing the recovery of identified non-compliant expenditures, taking appropriate action against all parties responsible for the prohibited practices and, in collaboration with the OIG, conducting a review to determine the scale and scope of non-compliant expenditures and any indications of further fraud which exist beyond the parameters of this investigation
The Global Fund Secretariat is also in the process of strengthening procurement oversight and fraud identification processes in Liberia. A new fiscal agent was appointed in January 2022; and the Secretariat will also be performing a cross-functional fraud risk assessment for Liberia that addresses the fiduciary and procurement risks whilst enabling the delivery of lifesaving programmatic objectives of the three diseases.
The OIG investigation report identified that, in breach of its grant agreement, the Ministry of Health used grant funds to pay taxes, and knowingly misreported these taxes and the grants’ tax exemption status to the Global Fund. The Global Fund will strive to ensure that the Ministry of Health takes the necessary corrective action. Beyond Liberia, work is already underway by the Secretariat to strengthen and harmonize the applicable policies and accompanying processes for the identification, treatment, reporting and recovery of ineligible expenditures resulting from payment of taxes using grant funds.
The Global Fund Secretariat is committed to its obligation of reporting suspicions of wrongdoing to the OIG and has taken note of the finding regarding lapses in the Secretariat’s timely reporting of suspicions relating to Global Fund grants in Liberia between 2015 to 2018. In its investigation, we note that the OIG has observed an increase in reporting of suspected wrongdoing from the Secretariat since 2020, when the investigation was initiated. The leadership of the Grant Management Division takes the reporting obligation to the OIG very seriously and is committed to ensuring that any issue brought to its attention is reported promptly to the OIG. Work is already underway to elevate our monitoring and oversight mechanisms to further enhance, clarify and communicate a robust fraud incident reporting process with clear reporting accountabilities.
The OIG plays an important role in risk management, complementing the safeguards and controls put in place by the Secretariat. The Global Fund Secretariat thanks the OIG for this investigation report, which contributes to the strengthening of procedures and oversight of activities to prevent future instances of prohibited practices. Both the Secretariat and the OIG are united in their commitment to ensuring all resources are used effectively and efficiently to fight the three diseases.