Global Fund has resolved to recover US $1,064,788 from Zambia’s Ministry of Health which was stolen in form of ARVs, HIV test kits, malaria and other drugs.
According to an investigation report released on April 26 and titled “Investigation of Global Fund Grants to the Republic of Zambia: Theft of Health Products from Medical Stores Limited”, the drugs and HIV test kits were stolen from Medical Stores between 2014 and 2016 and sold to other entities.
“In October 2016 and in April 2017, the Global Fund Secretariat notified the Office of the Inspector General (OIG) that they had been informed by Medical Stores Limited (MSL), a government distributor of health products that HIV test kits, funded by other donors, had been stolen from their warehouse. The OIG also received information that a non-governmental organisation (NGO) had bought HIV test kits in the capital, Lusaka, including some financed by the Global Fund that had been originally delivered to MSL. The ensuing OIG investigation determined that Global Fund-financed health products totalling US $1.06M could not be accounted for. Evidence suggests that these products were stolen over a two-year period, between 2014 and 2016. This issue of theft of products from MSL is currently being investigated by the Zambian authorities,” read the report.
“The investigation identified significant unexplained stock losses of Global Fund-financed pharmaceutical and non-pharmaceutical health products totalling US $1,064,788 delivered to MSL between 2014 and 2016. The losses, which were neither effectively investigated, nor reported to the Global Fund comprised: EF5,790 HIV test kits valued at US $416,379 (7.5% of total Global Fund-financed kits delivered between 2014 and 2016). 67,967 bottles of antiretrovirals (ARVs) valued at US$423,209 (2.6% of total Global Fund-financed ARVs delivered between 2014 and 2016). 11,442 artemisinin-based combination therapy packs (ACTs) valued at US $214,486 (2.4% of total Global Fund-financed ACTs delivered between 2014 and 2016). 2,521 malaria rapid diagnostic test kits (MRDTs) valued at US $10,714 (1.7% of total Global Fund-financed kits delivered between 2014 and 2016). The investigation found that stock quantities recorded in MSL’s electronic warehouse management system were negatively adjusted to reflect missing stock identified during annual stock takes. MSL staff could not explain the stock losses and the OIGs investigation also could not reconcile the stock adjustments with any outbound deliveries, expiries or other events. The overall loss totals US$1,064,788, 3.2% of a total of US $33.4M of deliveries investigated. These losses are non-compliant expenditure, as per the terms and conditions of the relevant Global Fund grant agreements.”
The investigation revealed that there were multiple opportunities for theft at Medical Stores due to ineffective internal controls.
“The internal controls at MSL were ineffective and resulted in multiple opportunities for theft and misappropriation of assets. Documented operating procedures, including procedures requiring biannual stock takes and weekly counts of randomly selected locations were not followed. OIGs investigation found that MSL undertook only one stock count in each of the years 2014, 2015 and 2016, and no weekly stock counts were conducted. Contrary to MSL’s operating procedures, there was no meaningful follow-up or investigation of stock variances. MSL staff were not able to explain the net negative adjustments; the assistant inventory manager suggested that the stock ‘must have been stolen’,” the report read.
“During a USAID sponsored market survey in Zambia and the Democratic Republic of the Congo in late 2017, 38 purchases of ACTs financed by the Global Fund were made at 26 commercial vendors in Zambia and 12 commercial vendors in the Democratic Republic of the Congo. The 38 packets of ACTs purchased displayed batch numbers corresponding with Global Fund financed ACTs delivered to MSL between May and December 2016. OIG’s investigation found that of the 38 purchases and 29 different batch numbers identified, five of the batch numbers identified (through eight of the purchases), correspond with batch numbers of ACTs found by the OIG to have been negatively adjusted and unaccounted for.”
And according to the report, Global Fund has resolved to recover US$1,064,788 from the Ministry of Health, which is the principle recipient.
“The Global Fund Secretariat and the OIG have agreed on specific actions, which are detailed in Section 5 of this report, and include: Recovering an appropriate amount from the Principal Recipient – Zambia’s Ministry of Health, based on the findings of this report, MSL’s implementation of all stock count control procedures, MSL, through the Principal Recipient, reporting to the Global Fund any negative stock discrepancies and the results of investigations into those discrepancies,” read the report.