Global Fund uncovers N591.5m embezzlement in HIV grant

An investigation by the Global Fund for HIV/AIDS, Tuberculosis and Malaria (GF) has found “extensive evidence of systematic embezzlement, fraudulent practice and collusion” worth $3.82 million by the Department for Planning Research and Statistics of the federal health ministry. That’s around N591.5 million. Its accusations point to staff and consultants assigned to a GF-financed programme […]

An investigation by the Global Fund for HIV/AIDS, Tuberculosis and Malaria (GF) has found “extensive evidence of systematic embezzlement, fraudulent practice and collusion” worth $3.82 million by the Department for Planning Research and Statistics of the federal health ministry.

That’s around N591.5 million.

Its accusations point to staff and consultants assigned to a GF-financed programme to establish a National Health Management Information System at sites supported by GF.

Seven DPRS staff and three consultants assigned to the programme were involved or linked to the misappropriation of funds, investigators said in their report.

The Fund’s inspector general initiated the investigation after a spot-check of $1.3 million of DPRS spending from July 2012 to December 2013 found two-thirds of it were “forged or missing supporting documentation.”

“Irregularity or fraud”

DPRS was to implement and administer a web-based reporting platform known as the District Health Information System (DHIS) and its staff and consultants were to train and provide support to users, termed service delivery.

Under that heading, its activities involved extensive travel throughout several states and some procurement of supplies.

Its spending was meant to come through the National Agency for the Control of HiV/AIDS (NACA) which received $330.8 million, according to GF accounts.

Between 2010 when the grant started and late 2014, DPRS spent a total $4.03m.  Out of that amount, $3.82m was on delivering its services.

But the latest investigations found “some form of irregularity or fraud” in more than half the vouchers spanning 2010 to 2014.

At least 202 payment vouchers out of 355 had “some form of irregularity of fraud”, the report said.

The vouchers account for 77% of total funds spent on service deliveries of $3.8 million.

The findings

GF says it found “direct evidence that supporting documents for items such as airline tickets, boarding passes, hotel invoices, and fuel and stationery receipts were forged.

“For many expenses, DPRS staff also systematically fabricated supporting documentation by creating a system to replace documents that appeared too “fake.”

“Reimbursements were also made to staff and consultants with little or no supporting documentation.

“Additionally, there is evidence that shows that there were transfers between two key DPRS staff and four other DPRS staff within the programme, including payments to the Programme Coordinator.

“The DPRS implementation team—led by its Project Coordinator, Program Officer, Monitoring & Evaluation Officer and Assistant Accountant—repeatedly violated the Global Fund’s Code of Conduct for Recipients by purposefully embezzling funds from the start.

“The OIG [Office of the Inspector General] concluded that all expenditures for service delivery activities of US$3,816,766 were not in compliance with the grant agreement.

Gravy train

Staff and consultants fingered in the investigation are said to have embezzled funds in many ways:

• ·        Misrepresenting or inflating amount paid to hotels for meeting venues and rooms
• ·        Inflating or falsifying receipts for entitlements, transport, fuel and stationery
• ·        Claiming expenses for travels they didn’t take, and in some instances colluding with and receiving kickbacks from hotels and suppliers
• ·        Inflating the number of people attending a meeting or training or its duration.

The fund said DPRS lacked effective internal controls to safeguard grant funds to avoid misuse or theft.

“DPRS’s Project Coordinator and Assistant Accountant—integral components of a functioning system of controls—were complicit in the schemes. These gaps exposed program funds to the risk of fraud,” the investigation report said.

It also blamed NACA, a principal recipient which disburses to DPRS, for not effectively monitoring how the funds were used or auditing DPRS as required by the grant agreement.

“Although a limited oversight system was in place with NACA spot-checks conducted in 2012 and 2014, it was limited and proved ineffective in preventing or detecting misuse and fraud,” the report said.

“NACA failed to either recognize or address the indicators and risks of fraud. Some indicators that were recognized went unchallenged or there was no follow-up.

GF halted all DPRS activities related to the program at the start of investigations, then announced it had discontinued use of DPRS in any GF programme.

At the moment, it is “exploring alternative ways” to support the National Health Management Information System under the new HIV grants.

But it has insisted it will pursue recovery of expenses not compliant with its requirements.

It will also restricting individuals identified in its report from “occupying any positions related to the implementation of Global Fund grants.”

It will also ensure spotchecks of subrecipients working under NACA are expanded to include “more tests and validations of training and travel-related expenditures.”