Global Fund halts contracts over bribes for mosquito bednets in Cambodia

Investigation finds two international companies paid Cambodian officials for deals to supply anti-malaria bednets

theguardian.com, Friday 15 November 2013

A family rest under a bednet treated with insecticide in Prey Mong kol village in Pailin province, Cambodia. Photograph: Paula Bronstein/Getty Images

The Global Fund to Fight Aids, Tuberculosis and Malaria has suspended contracts with two international firms that supplied mosquito bednets over "serious financial wrongdoing" in Cambodia.

Contracts with Vestergaard Frandsen and Sumitomo Chemical Singapore were suspended on Thursday pending a full review after a two-and-a-half-year investigation.

A report published by the Global Fund's office of the inspector general found that between 2006 and 2011, the suppliers paid commisions to two Cambodian officials from the National Centre for Parasitology, Entomology and Malaria Control (CNM), totalling $410,000 (£304,534), in return for awarding contracts for insecticide-treated bednets, which help prevent the spread of malaria.

The report also cited "improper charges and manipulation of procurement practices" at two other organisations, which brought the total amount involved to about $431,000.

The Global Fund's sanctions panel, which includes internal and independent experts to evaluate cases of wrongdoing, recommended that the two suppliers named in the report be suspended pending a full review of the case. The investigation found that all the mosquito nets procured by the grant had been provided.

"We cannot tolerate unethical conduct anywhere," said Mark Dybul, the Global Fund's executive director. "Although this case had no direct impact on Cambodia's fight against malaria, taking commissions in exchange for contracts violates our mission of public service. We remain fully committed to pursuing fraud and taking action when we find it."

The fund, which is due to hold a replenishment event in December, said Vestergaard and Sumitomo had "both fully co-operated with the investigation", and had taken action against the employees involved, as well as steps to prevent similar incidents in future.

At the time of publication, neither company was available to comment.

The Global Fund has disbursed $331m to support HIV, TB and malaria programmes in Cambodia since 2003. Since then, Cambodia has seen an 80% drop in malaria deaths, a 45% fall in TB cases and a 50% decline in HIV infections.

Over the past few years, the fund has sharpened its procedures to investigate allegations of corruption and fraud among recipient countries. Serious allegations of financial mismanagement prompted Germany to suspend its donations to the fund at the beginning of 2011, sparking concerns that other donors may follow suit.

In a statement published on Thursday, the fund said that over the past two years, it had taken "multiple actions to protect its investments by significantly strengthening deterrence and minimising the risk of abuse".

"A new framework for procurement was established, with a comprehensive approach to ensure all bulk purchasing is consistently undertaken in a fair, transparent, lawful and ethical manner," it added.

The organisation has also faced a gaping hole in funding, which led to the cancellation of its 2011 to 2013 round of grant-making.

In December, the fund will hold its fourth replenishment round, where it hopes that donors will pledge the $15bn (£9.3bn) it needs between 2014 and 2016. In September, the UK promised £1bn over three years on condition that other donors step up. The US has promised $1.65bn in its 2014 budget; Sweden, Norway, Finland, Denmark and Iceland have already pledged $750m.

Over the past year, the fund has held several meetings with donors to highlight its value for money. The organisation was set up in 2002 as a public-private partnership to focus on tackling three of the world's major diseases.