31 Mar 2015
Secretariat issues report on recoveries

The Office of the Inspector General (OIG) issued its annual report for 2014 and reported to the Board on the implementation of agreed management actions (AMAs) by the Secretariat as part of a presentation at the 33rd Board meeting on 31 March. In a separate report, the Secretariat provided the Board with an update on recoveries.

While the work was carried out under the direction of Martin O'Malley, who held the IG position until January 2015 when he stepped down for personal reasons, the presentation of the report was a first opportunity for the new IG, Mouhamadou Diagne, to lay out his vision for the office that has weathered a series of personnel changes over the last several years. 

OIG audit unit

In the year to December 2014, the audit unit reduced the number of planned audits from 21 to 11, citing staffing considerations among others. All 11 audits were completed, with five reports  published in 2014 and another two in early 2015. The remaining four reports will be published shortly.

The audit unit’s 2015 workplan includes six internal audits and10 country audits: Ghana, Nigeria, Tanzania, Uganda, Pakistan, Indonesia, Honduras, Uzbekistan, Chad and South Sudan. Some of the topics to be covered in the internal audits are the effectiveness of country coordinating mechanisms; the methodology for allocating funding to countries; grant-making under the new funding model; and controls to ensure that the Global Fund measures and achieves its strategic objectives.

OIG investigation unit

The OIG’s investigations unit has cleared the backlog of so-called legacy cases dating  from 2009-2012. In 2014, the unit published 11 reports. At the start of 2014, the unit had 60 open active investigations. During the year, 45 new investigations were started and 53 others were closed (including the 11 published reports), leaving a balance of 52 active investigations at year’s end.

In 2014, the investigations unit screened 157 allegations of fraud and abuse, of which 38 became active investigations, 74 were found not to be actionable, and 45 were deemed not to be related to Global Fund projects. Another 21 allegations are awaiting screening. Finally, a further 18 allegations were received related to existing investigations.

The OIG is working with the Secretari­at to integrate human rights violation allegations into complaint handling processes. In 2014, the OIG screened 11 reports of potential violations; nine originated from the Fund’s Community, Rights and Gender De­partment and two came through the OIG hotline. After vetting, the OIG determined that because most of the cases could not be directly linked to Global Fund activities, an investi­gative response was not appropriate; it  referred these cases these cases to the Secretariat. However, the OIG is pursuing the remaining cases.

A newly established  intelligence and operational excellence team in the investigations unit has analyzed OIG investigations data from 2011-2014 and developed a database of information, which will be used to extract lessons learned and analyze the root causes of fraud and abuse. The database has a search capability and profiles of a thousand entities with whom the Global Fund has worked. The data will help the OIG intervene early to prevent or disrupt fraud before it becomes systematic, lengthy, and costly.

Other developments

In 2014, the OIG created a strategy and policy unit to serve as an incubator for ideas and improve­ments. The team is piloting new initiatives such as the revised role of the OIG in the recoveries process, and the tracking of agreed management actions in a more effective and transparent manner.

In the second half of 2015, the OIG will develop a communications and training campaign to encourage people to speak out about fraud and corruption in programs financed by the Global Fund. Initially, the campaign will be piloted in two or three countries.

At the end of 2014, the OIG had a head count of 41, just seven shy of a full complement. Since then, five of the vacant positions have been filled. The OIG’s budget for 2014 was $17.1 million; it ended the year underspent by $4.9 million. This was mainly due to the fact that the audit unit operated for most of the year with just half of its staffing complement.

Agreed management actions

Since the OIG began to track agreed management actions (AMAs) in July 2014, the number of AMAs implemented by the Secretariat has gone from 93 to 216, a 229% increase. At the same time, the number of overdue AMAs also increased. (AMAs have replaced recommendations in OIG audit and investigation reports. They represent actions that the Secretariat has agreed to implement in response to the OIG’s findings.)

The OIG has a procedure for validating and closing AMAs once the Secretariat reports them as having been implemented. From June 2014 through 15 January 2015, the OIG has validated and closed 119 AMAs, leaving 94 still awaiting validation.

The OIG has been tracking progress on five control issues that have yet to be fully mitigated through reforms at the Secretariat: (1) documentation retention and record management; (2) recoveries; (3) grant closures; (4) the accountability framework; and (5) combined assurance. It provided an update on each issue in its report to the Board, as well as comments from the Secretariat’s management executive committee (MEC) on the OIG’s findings.

The OIG said that controls and processes related to record-keeping, information management and the building of institutional knowledge represent a material risk to the Global Fund. The majority of audits done in 2013 highlighted a lack of documentation and inconsistent record-keeping. Of the 44 AMAs related to documentation and record management, 32 have been implemented. However, there are significant issues regarding the implementation of Salesforce, the Fund’s new online grant management platform. The project has been delayed nine months and further delays are likely. The MEC responded that increased resources are being assigned to implement Salesforce.

Recoveries are discussed in the next section of this article.

With respect to grant closures, the OIG noted that an audit conducted in 2013 revealed that 50% of grants due for closure had not yet been closed. This represented 242 grants. The MEC said that 90% of them have now been financially closed, with 55% being both financially and administratively closed.

Concerning the accountability framework, a review conducted by the OIG in 2013 concluded that individual responsibilities in the grant management division were not always well-defined. It cited as examples the relationships between specialists in country teams and technical hubs in grant management that had not been sufficiently delineated; there has also been confusion at times as to who is ultimately responsible for approving grant-related documents.

These issues have been partially addressed with the development of a country team responsibilities matrix. In the OIG report on AMAs, the MEC said that a matrix management project has been established to clarify the roles and responsibilities of stakeholders who have a management control function outside the country teams, and that in February an associated working group of representatives from the relevant units in the Secretariat met for the first time.


In its report to the Board on recoveries of money owed by countries, the Secretariat reported that in January the MEC approved a “last-resort” approach to the resolution of difficult cases. The approach involves a reduction of the country allocation. If all efforts to recover the funds have failed, the Fund will reduce the allocation to the country concerned by a factor of 2:1. This means that if a country owes $2.3 million, its allocation would be reduced by $4.6 million. There was no indication in the report that this approach has already been applied, or where it could be applied.

As of 31 December 2014, the total amount deemed recoverable was $84.6 million, of which $20.5 million had been recovered, leaving $64.1 million still to be recovered. The Fund has received commitments to repay amounting to $15 million.

The report said that since the inception of the Fund, $34.4 million has been recovered. This compares to $29.2 million recovered as of 30 June 2014.

Between 31 December 2014 and the preparation of the report to the Board, a further $2.2 million was recovered from the Republic of Congo; and a new OIG investigation report on procurement irregularities in Kazakhstan recommended an addition recovery in the amount of $5.2 million.

The Secretariat said that the process of recovery remained slow in the second half of 2014, but that the pace should pick up in 2015, for reasons including the recruitment of a full-time recoveries officer.

At its meeting in November 2014, the Board asked the Secretariat to develop a methodology for reporting measures taken to recover amounts identified in the course of grant management operations (i.e. separate from recoveries identified by the OIG). The Secretariat has proposed a methodology. Assuming that it is approved, starting in December 2015, recoveries reports will include information on both OIG and non-OIG reported recoverable amounts.

“The Office of the Inspector General 2014 Annual Report” (GF-B33-06) should be available shortly here.  “Agreed Management Actions: Status Update” (Board Document GF-B33-08) and “Recoveries Report” (Board Document GF-B33-21) should also be available shortly at the same site. 

Read this article in French. Lire l'article en français.

Leave a comment