The OIG investigation of a sub-recipient for HIV/AIDS grants was triggered after a spot check from the Global Fund’s Local Fund Agent had identified forged and missing expenses documents.

The OIG investigation confirmed the Local Fund Agent’s initial findings and found more evidence that supporting documents for airline tickets, boarding passes, hotel invoices, vehicle fuel and stationery receipts had been forged. The investigators found proof that seven sub-recipient staff members and three external consultants had colluded. The collusion enabled the individuals to embezzle funds in many different ways: for example by inflating the number of people attending grant-funded meetings and trainings; exaggerating their respective duration; overstating the amounts paid to hotel venues to host these events; and colluding with the hotel staff and other events suppliers to receive kickbacks. The investigation revealed that falsified receipts relating to daily subsistence allowance (per diem) entitlements, and transportation expenses had been submitted.

The OIG concluded that the sub-recipient did not have an effective system of internal controls to safeguard Global Fund financed grants, nor did the Principal Recipient of the grant effectively monitor its sub-recipient’s implementation and use of program funds. Although the Principal Recipient conducted spot-checks on the sub-recipient accounting and financial procedures in 2012 and 2014, the oversight was limited and proved ineffective in detecting or preventing the fraud.

Following the conclusion of the OIG investigation findings, the Global Fund Secretariat terminated its relationship with the sub-recipient and has prohibited the individuals identified by the investigation from implementing Global Fund funded grants in the future.

An external fiscal agent is now in place to monitor and validate all travel and training-related expenditure, and to ensure that all vendors are paid by bank transfer rather than by cash.  Effective oversight helps ensure that funds provide services for which they are intended.