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Chicago Tribune: Aid group backed by Bill Gates and Bono draws Senate scrutiny

May 05, 2016
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A Senate panel is examining whether a global aid group funded partly by billionaire Bill Gates and rock star Bono misled U.S. officials about its anti-corruption practices to retain government funding.

The inquiry stems from the handling of allegations of corruption that surfaced four years ago at the Global Fund to Fight AIDS, Tuberculosis and Malaria, a multibillion-dollar charity with private and public support. Seth Faison, a Global Fund spokesman, categorically rejected any implication that the aid organization had engaged in misconduct.

In the Senate, the staff of the Permanent Subcommittee on Investigations recently questioned at least one former official of the Global Fund, according to a person with direct knowledge of the matter. The questions relate to the firing of an inspector general for the charity who published reports alleging corruption and to subsequent affirmations by the charity that it had an independent inspector general.

A nonprofit advocacy group separately sent a letter this week criticizing the Global Fund for what it called efforts to muzzle the inspector general as a whistle-blower and asking for disciplinary action against those involved. In its letter to the fund's chairman, the Government Accountability Project added that the State Department, then led by Hillary Clinton, failed to provide adequate oversight of the charity.

The developments follow a ruling in February by the International Labour Organization Administrative Tribunal that the Global Fund had improperly fired the inspector general, John Parsons, in 2012 after his published reports alleged deep-seated corruption and a lack of accounting controls. The outside labor panel ordered the fund to pay Parsons through his planned retirement in June 2016 and to remove a news release critical of him from its website.

Faison, the fund's spokesman, said the ruling was made on procedural grounds rather than on the merits of Parsons' claims. He also questioned Parsons' credibility, calling him a disgruntled former employee. "The Global Fund conducts robust audits and investigations, and openly and systematically reports its findings, upholding a high degree of transparency and ethical accountability," Faison said by email.

A lawyer for Parsons, Laurence Fauth, responded that his client was "completely vindicated" by the labor panel's ruling. "The Global Fund is free to try to spin it any way they want to," Fauth said.

The Senate's investigation appears to be in its early stages, and there are no indications that anyone involved engaged in wrongdoing. The subcommittee has broad powers to examine suspected fraud and noncompliance with government rules. Although it can't impose penalties, it can issue subpoenas and provide a foundation for new legislation and for prosecutions. Staff members for the subcommittee didn't respond to requests for comment.

A State Department spokeswoman didn't directly address questions about the latest criticisms but pointed out that department officials serve on the Global Fund's board to protect taxpayers' interests. She called the charity "a critical partner in efforts toward ending the AIDS, tuberculosis and malaria epidemics."

The Global Fund has been applauded for saving millions of lives but has been clouded by Parsons' allegations of fraud. His findings prompted Germany and Sweden to suspend their contributions, though that funding has since been restored.

A subject of concern to the Senate panel is whether anyone at the Global Fund acted to cover up the inspector general's fraud findings, according to the person with knowledge of the inquiry.

In its letter to the fund, the accountability group raised questions about a written assurance the Global Fund sent to the State Department days after Parsons was fired saying that its inspector general was working independently, and a similar one the State Department then sent to Congress. The United States requires such assurances to provide funding.

The group points to emails sent by key former aides to then-Secretary of State Hillary Clinton. In one of them, Eric Goosby, who oversaw the review process for the Global Fund as the State Department's global AIDS coordinator, wrote that the success of the Obama administration's aid programs was "deeply interconnected" with the funding levels of the Global Fund. Goosby is now a director at the Clinton Foundation. He didn't respond to phone or email messages seeking comment.

A Clinton campaign spokesman didn't respond to a request for comment.

The Global Fund, based in Geneva, says it has received $33 billion in contributions from dozens of nations and private supporters since its inception in 2002. The U.S. is by far its biggest benefactor, with taxpayers accounting for more than $11 billion of its funding through 2015.

The Bill and Melinda Gates Foundation has made it a key part of its global health initiatives, pledging $950 million in the six years through 2016. Bono has raised $350 million for the fund through Red, a program in which a portion of the revenues from branded products go to the Global Fund.

Representatives of the Gates and Bono charities expressed faith in the fund in written statements. Gabriella Stern of the Gates Foundation said the group "provides a huge return on investment and has a well-earned reputation for transparency and accountability for results." Tom Hart, the North American executive director for One, which administers Bono's Red program, called the fund the "single best investment on the planet" for fighting AIDS, tuberculosis and malaria.

Unlike other aid groups, which often dispatch staff to manage programs on the ground, the Global Fund steers money to local organizations that carry out its programs. It is a decentralized model that the fund's critics say increases the risk of fraud.

Congress stipulates that 10 percent of U.S. contributions to the Global Fund are contingent on it meeting several conditions -- including a certification that its inspector general has adequate resources and operates without "undue interference."

That requirement became a subject of controversy in 2011 after Parsons began issuing reports detailing fraud within Global Fund programs, at least one of which was closed as a result. His office's findings included embezzlement, forged receipts and poor record keeping.

Since Parsons' reports of irregularities, the group has replaced several senior officials and appointed a panel to recommend financial safeguards. It also nearly doubled the staff of its inspector general's office to 47 professionals, said Faison, the charity's spokesman.

Author: 
Neil Weinberg (Bloomberg)
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