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Protecting Whistleblowers since 1977

Stonewalling at the Global Fund

Bea Edwards, April 08, 2013

As virtually all observers of the Global Fund (GF) operations know by now, the Board of the organization fired John Parsons, the Inspector General, in November 2012. At the time, Simon Bland, Chairman of the Board of GF, issued a press release that attempted to justify the termination by criticizing Parsons’ performance. In January 2013, Parsons filed two lawsuits at the Administrative Tribunal of the International Labor Organization (ILO) in Geneva. He’s suing GF for wrongful termination and defamation. 

As a longtime observer of intergovernmental organizations and as an organization that defends whistleblowers, GAP recognizes a troubling pattern of events here that smacks of retaliation.

The facts are these. Parsons is a longtime auditor and investigator with forty years’ experience at increasingly responsible positions in both national and international settings. In 2011 his reports, as issued by the Office of Inspector General (OIG) at GF, began to reveal a problem of what appeared to becorruption and fraud in certain grants. His findings were consistent with the concerns of Zubair Hassan, former CFO at GF, who reported to the Board that the organization’s internal controls were extremely weak and ad hoc. Hassan detailed these issues in a 12-page letter to the Board, just before he resigned, apparently under a great deal of pressure.

The Board convened a High-Level Panel (HLP) to explore the issues raised by both Hassan and Parsons in 2011. The HLP concluded that, of all oversight mechanisms at GF, only the OIG was functioning effectively.

The Board then fired the IG and issued a career-wrecking press release about Parsons to explain its actions.

In the meantime, the Board also removed responsibility for investigating Hassan’s allegations from the OIG, and the Chair of the Board contracted an ad hoc investigation. In removing the OIG from the process, the Board Chair also relieved the organization of its obligation to be transparent and release the report. Nonetheless, when asked, the Chair of the Board promised to release the report. A spokesman for the Global Fund, however, responded to GAP's request for the report two weeks ago to say that the Board received the report last May and decided not to release it. Hassan himself is unable to speak publicly. Presumably, he was forced to sign a non-disclosure (gag order) when he left the Global Fund. 

So here’s the problem for the Global Fund. The United States, the organization’s largest single donor, can only authorize its contribution after the State Department certifies to the Congress that the OIG is functioning independently. It’s difficult to certify that the OIG is functioning independently when the Board fired the IG subsequent to his reports of corruption and fraud in the organization’s grants (actually, firing an auditor, investigator or IG under any circumstances raises red flags, but with this background, the flapping flags are large and bright).

At the same time, here’s the problem for Parsons, Hassan and the public. Parsons is muzzled while his case makes its way through the judicial process. In a normal court of law – from which GF and other intergovernmental organizations are shielded by legal immunities – filings such as Parsons’ would be public information. The taxpaying public – whose involuntary levies finance the GF – would hear Parsons’ side of this story. In the Administrative Tribunal at the ILO, where Parsons must file, however, all documents are confidential until the judges issue a ruling. On average, about two years elapse between a case submission and a decision. By 2014 or 2015, when we can expect a ruling in Parsons’ case, his reports will be utterly forgotten, operations will continue as before, and those who profit from the fraud will be fatter, happier and richer. While the sick and the poor in the developing world, whom GF claims to help, will be sicker and poorer.  Many, of course, will be dead.

Parsons’ reports raised issues of defective medical devices, counterfeit medications, inflated prices – all the usual scams that scar health care projects. For a number of reasons, these types of projects are, as we know, popular targets for those who would illicitly enrich themselves. First, because there are a lot of small payments floating around for “beneficiaries,” it’s easy to build an illicit channel into a funding flow and divert a great deal of money. Secondly, it’s easy to substitute expired drugs acquired at a deep discount for effective ones that cost a great deal more – and pocket the difference. Ditto for medical devices (GAP once worked on a case in India where corrupt officials substituted expired medical test kits for HIV/AIDS blood test kits, producing many, many false negatives). And finally, funders are reluctant to suspend operations no matter what’s going on because, they say, “people will die.” The Global Fund in particular is insulated from criticism by its squeaky clean, do-gooder image. No US Congressman who responds to a constituency wants to suspend a contribution putatively destined to help those suffering from AIDS, malaria and/or tuberculosis in Africa without very strong evidence of corruption. And that’s not forthcoming until Parsons can exonerate himself – some years from now – or the report on Hassan’s allegations is released.

So we can’t produce the evidence, and without the evidence, nothing changes. Or nothing positive changes. We have detected clear signs of institutional obfuscation going on at GF. The terms of reference for the IG and his office have been altered, with the approval of the Board (including of the representative of the US, the country that insisted on independence for the OIG – go figure) to make it improper for the OIG to report to the full board, to soften up recommendations, and to divert the OIG’s work away from detailed country level scrutiny where corruption is most likely to occur.

We’re still looking into this, but there will be more to come.

Bea Edwards is Executive & International Director for the Government Accountability Project, the nation's leading whistleblower protection and advocacy organization.