The Global Fund Secretariat has been mandated to recover US$0.99 million from the Ministry of Health as a result of "systemic fraud and misappropriation" -- leading to several grant funds meant to fight AIDS, Tuberculosis and Malaria being wasted or misused.
The mandate comes after an investigation by the Office of the Inspector General, a body charge with safeguards the Global Fund’s assets, investments, reputation and sustainability uncovered that the Global fund lost US$0.19 million in systemic procurement fraud, and US$0.52 million in grant funds were wasted or misused for the mother peer program and travel- related costs; while MoH concealed improper payments of fuel taxes of at least US$0.16 million.
"There was systemic fraud and misappropriation by staff of the Ministry of Health (MoH), a Principal Recipient for Global Fund grants in Liberia," the report said. "Our investigation found non-compliant expenditures and/or various types of wrongdoing in 91% of the expenditures reviewed. Non-compliant expenditures totalled US$1.1 million, of which we recommend recovery of US$0.99 million."
"Staff of the National AIDS Control Program (NACP) conducted fraudulent procurements of vehicle repairs and advertising services. No assurance could be provided over program delivery in 75% of MoH field activities that we reviewed, and the MoH overcharged for daily subsistence allowances and misused grant funds by providing incorrect allowances and catering expenses."
"This investigation found prohibited practices and/or no reasonable assurance of program delivery in 91% of expenditures reviewed. Our findings implicate over 200 MoH staff members. This includes staff who were directly responsible for fraud and other wrongdoing in procurements and program activities, as well as staff who benefitted from this wrongdoing by receiving DSA for more days than the permitted number of days, or receiving DSA for activities that did not take place," it added.
The report noted that the findings indicate that fraud and wrongdoing at the MoH is systemic, and raises concerns with respect to all expenditures incurred by MoH and its national programs (representing US$47.8 million of grant funding between January 2018 and June 2021).
In response, the Global Fund Secretariat noted that they are committed to taking any further necessary actions needed to address the key issues and risks identified in this investigation.
"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," Global Fund said In a statement.
The MOH meanwhile in a written response to OIG said they had previously removed NACP’s Finance Manager from his position, and OIG’s report will be used as a basis for its investigation to assist the MoH in its decisions against persons found liable or culpable for the fraud and misappropriation identified in this report.
"The [MOH] Investigation Committee’s findings in relation to MoH could result in suspension, restitution, dismissal, or possible criminal prosecution," the MOH response noted. "However, the Committee’s findings will not impact OIG’s investigation findings, or the subsequent actions taken by the Global Fund as a consequence of OIG’s investigation findings."
US$0.52 million wasted or misused
The mother peer program, which saw US$0.52 million being misused, was a component of the prevention of mother-to-child transmission of HIV modules under the HIV/TB grant.
According to MoH, it was an essential component for early infant diagnosis, which had been identified as a key program activity in Liberia.
"The Global Fund invested US$0.25 million towards incentive payments to mother peers, who were required to provide MoH with reports on mothers they had enrolled into the program, and the infants that had been tested," the report said. "The OIG found that there was no reasonable assurance that these activities took place. Depending on the period, our review highlighted that between 92-100% of the dates allegedly provided by the mother peers for the receipts of their incentive payments fell outside of the dates of travel reported by MoH staff."
"In 50% of cases, MoH attendance records showed that staff were at headquarters during dates of the alleged travel. Separate travel cost claims for the same activity, to the same counties, were made by both NACP and PCU staff," it added.
The OIG report noted that after comparing the signatures of 122 mother peers on identification documents, contracts and DSA distribution lists, they found inconsistencies between signatures in 92% of cases.
Other travel-related costs, the Global Fund watchdog said it reviewed 47 payment vouchers for DSA totalling US$0.35 million and found that MoH overcharged the Global Fund by "approximately 44%, or US$0.15 million, by applying incorrect US$ exchange rates which inflated the amounts."
The report added that given the number of payments for travel-related costs, the total amount of overcharge was likely even higher.
Non-compliance, insufficient controls
The OIG report noted that 75% of program activities carried out by the National AIDS Control Program (NACP) and the National Malaria Control Program (NMCP), totalling US$0.54 million, was fraudulent conduct with no reasonable assurance that the activities took place as reported or even at all.
"US$75,640 of unsupported expenditures for field activities. The OIG reviewed five payment vouchers for field activities, totalling US$75,640, which did not include any justification for the grant funds spent. US$92,074 of unsupported fuel expenditures," OIG said. "The OIG obtained 46 payment vouchers for the procurement of fuel coupons, totalling US$0.12 million. Of these, 63% did not contain a vehicle log and therefore are deemed ineligible. "
In October 2020, according to OIG report, the Global Fund approved MoH’s request for US$14,650 for three teams to conduct a Diagnostic Quality Assurance and Quality Control review of health facilities but surprising they discovered that one of the three teams travelled for only 6 of the 15 days claimed, and to 2 of the 4 counties they reported visiting.
"In the counties to which the team did travel, the team did not travel to at least five health facilities which they reported visiting. The second team only travelled for 8 of the 21 days they reported, and did not travel to at least 3 health facilities they reported visiting. A review of the third team’s travel revealed its members were eligible for 2.5 days of DSA, as opposed to the 17 days they claimed. "
Procurement fraud totalling US$0.19M
OIG report added that NACP conducted procurements for vehicle repair and advertising services that contained numerous red flags of fraud, leading to non-compliant expenditures or prohibited practices in 98% of payment vouchers for vehicle repairs and advertising services, representing a value of US$0.19 million.
The report disclosed that payments made to suppliers contained multiple red flags of fraud including: similar handwriting on invoices, bid evaluations dated before request for quotations, supplier invoices dated before bid evaluations, and identical dates for request for quotations, evaluation, and purchase orders.
"We found no evidence that Supplier 2 actually exists. None of the telephone numbers listed on its invoices were in service, and neighbors could not confirm its existence. Similarly, we could not establish the existence of two competing bidders, bidder 4 and bidder 5: the phone numbers listed on their invoices were either not in service or the person answering the phone had no knowledge of them. Similarly, neighbors could not confirm the existence of the garages."
As with Supplier 1, the above evidence indicates fraudulent and collusive practices and with Suppliers 1 and 2, there was no evidence that Supplier 3 physically exists. Equally, there is no evidence that Supplier 3 provided any of the services for which it was paid, such as scripts or audio files of the radio messages developed, or adverts delivered to radio stations, or aired. "
The Global Fund watchdog report noted that between January 2018 and September 2020, the MoH improperly used grant funds to pay at least US$0.16 million in fuel taxes -- something the "OIG considers that the amount of fuel taxes paid under the grants during this period is likely higher, because OIG’s calculations did not include the taxes on fuel paid by the grants’ sub-recipients. "
"Grant Regulations require each country receiving Global Fund grants to ensure their tax-exempt status as a condition for funding, meaning grant funds contribute directly to the fight against the three diseases. "
Meanwhile, the OIG also found that the Global Fund Secretariat was aware of fraud red flags and other wrongdoing in MoH-managed grants from 2015, but did not report the matters at issue in this investigation to the OIG.
The OIG report noted that it observed an increase in reports of suspected wrongdoing at MOH from the Global Fund Secretariat since it initiated this investigation in 2020.
"Had the Secretariat reported the matters brought to its attention by the Fiscal Agent more promptly, the OIG would have launched its investigation earlier and potentially limited the extent of the fraud. Inadequate awareness of reporting thresholds and responsibilities for addressing and managing identified fraud were cited as impediments to the Liberia Country Team reporting the fraud allegations," the report said.