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Global Fund limits access to private expense account

Internal report had labeled some charges excessive

By John Donnelly

Boston Globe

February 10, 2007

WASHINGTON -- The board overseeing a $7 billion fund that fights deadly infectious diseases in some of the world's poorest countries yesterday sharply limited access to a private expense account following an internal investigation that revealed the executive director and his top-level staff used it to pay for limousines and lavish dinner parties.

The board of the Global Fund to Fight AIDS, Tuberculosis, and Malaria said the Credit Suisse bank account will be restricted to paying for an external audit, office rent, and the rental allowance for outgoing executive director Richard G.A. Feachem until the end of March.

The account had been used to pay the expenses of Feachem and other staff members, business-related meals, plane tickets, and staff parties. Feachem told auditors in 2005 that the account paid for expenses that may not be reimbursed through the World Health Organization, which has an arrangement with the Global Fund to oversee business spending.

Along with tightening access to the money, the board canceled credit cards linked to the fund; Feachem and a handful of other senior officials had voluntarily stopped using them in September after an investigation by the Global Fund's inspector general. The board also decided that the account would continue to be funded with donations from private sector groups or individuals who cannot directly contribute to the Global Fund's trust account in the World Bank.

The Global Fund's board took the steps after the Globe reported details of the inspector general's investigation, which the board has kept secret. Global Fund spokesman Jon Liden did not return messages requesting comment. Lieve Fransen , the board's deputy chairwoman, reached by telephone last night, declined comment, saying she was not present when the board made its decision.

The Credit Suisse account amounts to a fraction of the spending by the Geneva-based organization, accounting for roughly $3 million from 2002 to 2005, including nearly $1 million for office rent. But the inspector general found a lack of control over the account and warned that the spending could hurt the Global Fund's reputation.

The report called some of the expenses excessive and outside United Nations rules, including back pay to employees (seven $5,000 lump-sum payments) , limousine rentals, and expensive meals.

The Global Fund secretariat, which is run by Feachem, had responded that the expenses were necessary to conduct business. It also said the inspector general's report was of "extraordinarily poor quality."

But yesterday, the Global Fund's board agreed with the inspector general's chief recommendation for "improvement in controls" over the Suisse Credit account and asked that the WHO inspector general oversee the private account on an interim basis.

Michael Weinstein , president of the Los Angeles-based AIDS Healthcare Foundation, which treats AIDS patients in 17 countries, praised the board for limiting the use of the bank account but said it needed to do much more.

"The bottom line is that there is a problem with the culture of the Global Fund, and this one action is not going to be enough to correct it," he said, referring to the extravagant perks.

Weinstein, whose group receives life-extending antiretroviral drugs and other supplies from the Global Fund, said that if the Global Fund was "tied to its mission completely, it would not occur to them to take money intended to save people's lives and spend it on limousines. But you can't scapegoat the management alone. The board has a fiduciary responsibility, which it has not fulfilled."

On Capitol Hill, meanwhile, Senator Tom Coburn , an Oklahoma Republican, filed an amendment yesterday to a House spending bill that would give $724 million to the Global Fund this year. The amendment said the Global Fund would get the money only if its board made public all internal and UN audits and investigations of the organization.

Article link: http://www.boston.com/news/nation/washington/articles/2007/02/10/global_fund_limits_access_to_private_expense_account/