Multibillion-dollar health fund fires watchdog

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Associated Press

Posted on November 15, 2012 at 4:00 AM

Updated Thursday, Nov 15 at 9:35 AM

GENEVA (AP) — A $23-billion health fund trying to restore its image announced Thursday that it fired its top internal watchdog, whose office had uncovered millions in financial losses that led some donors to withhold funding.

The Global Fund to Fight AIDS, Tuberculosis and Malaria said in a statement that its board had terminated the employment of Inspector General John Parsons "after a careful review of his performance, which was found to be unsatisfactory."

The fund was shaken after Associated Press articles last year reported on the millions of dollars in financial losses revealed by Parsons' office. The articles led some donors, including Germany and the European Commission, to temporarily withhold funding, and the fund scaled back spending.

The turmoil at the Global Fund reflects the difficulty for a global financing organization that has set the goal of unusually high transparency standards to keep up good relations with donor nations that want to see their money spent wisely.

In the wake of the reports, the Global Fund appointed a special review panel that recommended tighter financial controls and led to the departures of the executive director, French immunologist Dr. Michel Kazatchkine, and the fund's chief spokesman, Jon Liden.

But the panel also found friction between Kazatchkine, who was trying to reassure donors, and Parsons, whose teams of auditors and investigators were reporting the losses.

The inspector general's office is supposed to function independently and was created in 2005 at the urging of the fund's biggest donor, the United States. The board held a closed-door session with Parsons on Wednesday then deliberated into the night.

The fund said Parsons' firing was based on performance and independent peer reviews and a report by the board committee that oversees Parsons' office.

Before joining the Global Fund in 2007, Parsons, a British citizen, had gained more than 35 years of experience in audits, investigations and evaluations and had served as a director at U.N. agencies UNESCO and UNICEF. He headed Britain's National Audit Office from 1989 to 1996.

He could not immediately be reached for comment.

The Geneva-based fund was set up in 2002 as a new way to coordinate world efforts against the diseases and to speed up emergency funds from wealthy nations and donors to the places hardest hit. It currently pays for the treatment of around half the developing world's AIDS sufferers.

The board said it would soon name an interim inspector-general and expects to find a permanent replacement for Parsons within six months. On Thursday, the board also was selecting a permanent replacement for Kazatchkine.

Earlier this year, the aid group Medecins Sans Frontieres — also known as Doctors Without Borders — said the Global Fund's cancellation of plans for $2 billion in grants between 2011 and 2013 had caused thousands of new patients to go untreated and some treatment clinics to shut down.

The board also has been debating the future of a malaria program that has cost more than $460 million, mostly funded by the Global Fund, UNITAID, and the Canadian and British governments. The Affordable Medicines Facility was launched in 2010 to provide cheap drugs for poor patients, but a report by Oxfam in October questioned its effectiveness.

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