Board Decisions

GF/B25/EDP18

Approved by the Board on: 16 April 2012

Appointment of Independent Members of the Audit and Ethics Committee

The Board notes that:

1. In September 2011, the Board decided (GF/B24/DP3, entitled “High Level Independent Review Panel”) to form an Audit and Ethics Committee (“AEC”) comprised of seven members, four of whom would be independent of any constituency of the Board.
   
   
2. In November 2011, the Board mandated the Coordinating Group (GF/B25/DP14, entitled “Appointment of Committee Leadership”) to provide nominations to the Board to fill the four independent member seats on the AEC, with one of those seats being for the Chair of the AEC.
   
   
3. The Coordinating Group’s 27 March 2012 “Electronic Report” to the Board on the nominations process (GF/B25/ER11) recommended that the Board increase the number of independent AEC members from four persons to five in order to ensure that the AEC will have an appropriate level of expertise in its financial audit function, in addition to the three other necessary disciplines of forensic investigation, ethics, and legal and dispute resolution.

The Board:

1. Approves the increase in independent members of the AEC from four persons to five, to bring the full membership of the committee to eight.
   
   
2. Amends the Charter of the Audit and Ethics Committee and the Board and Committee Operating Procedures in the manner set forth below with immediate effect:
   
   
   1. Amendments to the Charter of the Audit and Ethics Committee:
      
      
      1. the word “four” is deleted in each of paragraphs 3.i, 6 and 7, and is replaced with “five”; and
         
         
      2. a new paragraph is inserted immediately following paragraph 4, containing the following text: “In instances in which the Committee is unable to take a decision, the AEC Chair shall, in consultation with the AEC Vice-Chair, exercise an additional vote in order to resolve such impasse.”
         
         
   2. Amendments to the Board and Committee Operating Procedures:
      
      
      1. Table 3.b of Annex 1 (“Expected Minimum Key Competencies and Responsibilities of Members of each of the Standing Committees of the Board”), is amended by striking out the whole of the text in bulleted item 1 in column three of that table (“Key Competencies of Audit and Ethics Committee Members”); and
         
         
      2. replacing it with the following text: “At least two voting members with financial audit experience, with professional accreditation in financial accounting (Committee Chair should be selected from amongst the independent members who hold professional accreditation in financial accounting)”.
         
         
      3. The word “four” is deleted in paragraph 44.1.3 and is replaced with “five.”
         
         
3. Approves the appointment of the following individuals as independent members of the AEC to serve for two-year terms from the date of effect of this decision, or until the appointment of their respective successors:
   
   
   1. Graham Joscelyne (Financial audit competency) as member and Chair of the AEC
   2. Gabor Amon (Forensic investigation competency) as member of the AEC
   3. Veronica Charlesworth (Financial audit competency) as member of the AEC
   4. Wendy Harrison (Ethics competency) as member of the AEC
   5. Barry Metzger (Legal/dispute resolution competency) as member of the AEC
      
      
4. Acknowledges that the Finance and Operational Performance Committee will bring to the November 2012 Board meeting a comprehensive remuneration and honorarium strategy across the Global Fund’s governance and advisory entities, which will include a recommendation on the appropriate honorarium for independent members of the AEC having regard to their role and fiduciary obligations.
   
   
5. Approves an honorarium for the period April to December 2012 of US$ 14,000 for the independent Chair of the AEC, and US$ 9,000 for other independent members of the AEC. The Board notes that the FOPC’s recommendations in November 2012 may include a recommendation to retroactively increase the honorarium of independent members of the AEC.
   
   
6. Requests the Audit and Ethics Committee to provide recommendations into the Phase 2 Governance Reform process on revised “Criteria for Independent Members of the Audit and Ethics Committee” that takes into account lessons learned during the process of constituting the committee.