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Global Fund probe leads to others

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Men sit in the village of Phnom Dambang where around 95 percent of people suffer from malaria, in Pailin province. Photograph: Reuters

As details continue to emerge over how Cambodian health officials allegedly defrauded a multibillion-dollar fund principally financed by countries such as the United States, Japan and Australia, one of Cambodia's main providers of bed nets says it has launched its own internal corruption investigation.

Sumitomo Chemical Singapore – which sold the Cambodian government millions of dollars of anti-malaria mosquito nets between 2007 and 2010 – confirmed to the Post it had launched an inquiry in the wake of an investigation by the Global Fund that has uncovered significant financial malfeasance.

"Immediately upon receiving an inquiry from Global Fund, we launched our own internal investigations of those local employees who may have been implicated, bringing on board third-party experts. We are also working fully in cooperation with [the Global Fund] Office of the Inspector General as it completes its investigations," a spokesman for Sumitomo wrote in an email, later adding that they could not say when the results would be released.

A source with knowledge of the Global Fund investigation, which has not yet been made public, say the fund found evidence that malaria centre staff allegedly insisted on kickbacks in exchange for the procurement of mosquito nets from Sumitomo Chemical Singapore.

According to figures from Sumitomo, the company provided an average of 300,000 nets per year to Cambodia between 2007 and 2010 at a cost of $1.6 million a year.

The investigation by the Global Fund into the programs it finances in Cambodia has been running for 18 months and is believed to have uncovered significant evidence of corruption, kickbacks and financial mismanagement within the National Malaria Center, sources say. While the fund has refused to provide details before its official report is released in the coming weeks, a spokesman admitted last week that the audit had “uncovered credible and substantive evidence of serious financial wrongdoing, on procurement and other issues.”

While fallout has yet to be seen – officials at the Ministry of Interior say they are not investigating the malaria centre and officials at the Anti-Corruption Unit have repeatedly refused to comment on whether an investigation is pending – the fund has already moved to shift financial management away from the government.

Last Wednesday, the organisation’s local partner announced that a planned $46.9 million grant from the fund set to launch in April 2013 would be awarded only if the National Malaria Center was replaced as the principal recipient. The principal recipient, or PR, is given autonomy to manage and disburse money granted by the Global Fund.

As early as 2010, the Global Fund expressed concern over the malaria centre’s ability to administer funds highlighting, in an audit published that year, gross malfeasance, including nearly $18,000 of “ineligible expenses” incurred by the small department.

But even as details begin to emerge, precious little public information has been made available regarding financial malfeasance that is perhaps still happening in Cambodia. The fund has refused to provide details on the scope of the investigation, while embassies of the aforementioned countries as well as other principal donors have remained mum – though all have been briefed on the probe.

Asked whether they would provide information given that the serious financial wrongdoing uncovered potentially represented an “immediate and ongoing threat” to patients, all parties involved have refused to release details.

The board of Global Fund, meanwhile, on Thursday sacked its chief auditor, John Parsons, but has refused to say why, other than that his performance was “unsatisfactory”. The Washington Post reported that Parsons stormed out of a contentious board meeting on Wednesday before being sacked the next day, when the Post’s initial story on the investigation broke.

Meanwhile, the New York Times reported that Global Fund executive director Dr Michel Kazatchkine had privately clashed with Parsons, who had aggressively pursued corruption as inspector general, and that aides claimed Parsons slipped information to media outlets and left the impression the board was covering up rampant theft after an earlier investigation.

The embassies of all major donors have either declined to comment on why Parsons was sacked or not responded.

Emails to Parsons’ Global Fund account have bounced and calls to his mobile have not connected.

Though Parsons as chief auditor ostensibly had oversight of the Cambodia investigation, a Global Fund spokesman on Friday insisted his dismissal would not affect the forthcoming report or in any way “invalidate or interrupt ongoing investigations”.

To contact the reporters on this story: Abby Seiff at abby.seiff@phnompenhpost.com ; David Boyle at david.boyle@phnompenhpost.com
With assistance from May Titthara

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