Global Fund team examines Muhwezi
Mar 21, 2006
Health minister Maj. Gen. Jim Muhwezi appeared before the commission of inquiry into the mismanagement of the Global Fund on AIDS, tuberculosis and Malaria yesterday, to answer queries about his involvement in the operations of the Fund. Muhwezi was witness number 133. The commission is chaired by J
Health minister Maj. Gen. Jim Muhwezi appeared before the commission of inquiry into the mismanagement of the Global Fund on AIDS, tuberculosis and Malaria yesterday, to answer queries about his involvement in the operations of the Fund. Muhwezi was witness number 133. The commission is chaired by Justice James Ogoola. Other commissioners are central bank governor tumusiime Mutebile, Lydia Obonyo, Dr. margaret mungherera, and Kasanya Mbalire. Phillip Karugaba is the lead counsel, while David Nsubuga is the assistant secretary. Jude Etyang, Milton Olupot and John Odyek recorded the proceedings at the UMA conference hall. Health ministry permanent secretary muhammad Kezaala sat next to Muhwezi on the witness table
9:20a:m: Ogoola calls the proceedings to order.
Ogoola: This commission was appointed by the Executive arm of government of which you are a senior member. I am therefore pleased you have come to assist us. Counsel can you take us through.
Karugaba: Can you give the commission a general perception of the Global Fund particularly with your role as a minister.
Muhwezi: As a Minister of Health I represented Uganda in matters of policy in the Global Fund. I was the first African board member of the Global Fund Secretariat in Geneva. I am representative of 15 countries in East and Central Africa.
The Minister of Health is the one who represents Uganda at the Global Fund Secretariat in all matters of policy. Because of that role I have the best experience and information about the arrangement of the Global Fund.
If there is any mismanagement of the Global Fund, some of this background (statement on history of conflict between Uganda and Geneva) might have a bearing to it.
(To start his testimony, Muhwezi requests to read a prepared statement on the conflicts between Uganda and Geneva. Ogoola allows him to read the highlights. This is the edited version)
I would like to give you some historical perspectives that may also have impacted negatively on the operations of the Global Fund both globally and locally.
Right from the beginning, the relationship between Uganda and Geneva (Global Fund headquarters) hasn’t always been smooth.
It was the view of most developing countries, and more specifically Uganda, that the Global Fund resources should be channelled through the existing institutional frameworks globally and at country level. These could have taken the form of institutions such as World Health Organisation (WHO) and the health financing systems – in the case of Uganda; the Health Sector Wide Approaches (SWAP) and budget support.
It was also the view of many countries that recipient countries should not establish parallel governance and management structures such as Country Coordination Mechanism (CCM), Local Fund Agent (LFA).
These parallel structures had been envisaged to increase transaction costs of programme implementation eg. fees paid to LFA, which in the case of Uganda is unknown.
It was the position of Uganda that we utilise existing healthcare delivery systems and structures to implement the programme. However, this was rejected by the Global Fund Secretariat in preference for the project mode with the creation of the Project management Unit (PMU).
Strategically, Uganda was concerned that the effects of unregulated aid inflow (G/Fund grants) would create excess liquidity and this could distort important macro-economic indicators.
These debates in fact delayed implementation of the first grants and continued to be a major concern of Government. This is confirmed by the current correct GOU decisions to move all project funds from commercial banks to Bank of Uganda.
May I also use this opportunity to highlight some of the difficult early problems we had in the structuring of the Global Fund operations;
It is my testimony that on a number of occasions GOU policy decisions were in conflict with positions taken by the Global Fund. A specific example was the Global Fund attempt to create the Global Electronic Market Place.
Through this, recipient countries were required to place orders for the procurement of all their requirements funded by the Global Fund. Using this method, Uganda was put on pressure to immediately commit a mindboggling $55m to procure one malaria drug- coartem from a single Swiss company (Novartis)!
In addition, the Global Fund had fixed the price of this drug for a period of three years in disregard of the potential for the emergence of other cheaper drug treatment regimes.
Imagine what would happen, if the malaria parasites developed resistance to this drug, as was the case recently with chloroquine. What would we do with all our money already committed to one drug and to one company?
Furthermore, I would like to bring to your attention to the fact that, surprisingly the former American ambassador (Jimmy Kolker) informed me that he was privy to information of the suspension of the Uganda grants seven months prior to the suspension.
Karugaba: Did representation give you a (management) role (of the Global Fund) at a national level?
Muhwezi: Not really, unless when there were matters between Uganda and the Global Fund (secretariat). I was involved in policy. At operational level I wasn’t involved. If the programme was on course, I was not involved, the principal recipient (Ministry of Finance) would receive the money with the PMU and may be the PS (Muhammad Kezaala) but not me.
This was unfortunate. Our preference had been to have a forum where all stakeholders sit and discuss, like other aid money channelled through budget support. Perhaps even the issues which led to the suspension could have been resolved through this forum.
Ogoola: Once the structure (PMU) was put in place that is what was governing the operation of the fund, were you tempted to intervene?
Muhwezi: Yes at Global Fund, Geneva. We heard that in spite of the system there was an inter-ministerial committee to do the function of the forum. We tried but it didn’t work.
Karugaba: According to the Global Fund guidelines, the structures that were provided for was the Country Coordinating Mechanism and the PMU, there was no requirement for an inter-ministerial committee to meet.
Do you agree that the Global Fund structure was technically set up, it didn’t have provision for political leadership at national level!
Muhwezi: It seems there was a deliberate policy to ensure that these (Global Fund money) don’t mix with the budget, in fact they used the term additionality, that government shouldn’t have any hand in the Global Fund.
Ogoola: That’s what they meant! Is that what you understood it to mean?
Muhwezi: What they meant was opposing our position. Our position was that we have a programme for these activities but we have gaps. Our argument was (that) why don’t you give us the money to fill the gaps. But they said no. That is where there was a struggle.
Karugaba: We enter specific areas of inquiry on you involvement in operation of the Global. Can we start with a correspondence in a letter dated May 15, 2003 by you to the PS (Kezaala). The subject is the administration and management of the GFATM. I will read it:
“It has come to my knowledge that the project Manager of the Project Management Unit for the GFATM in the Ministry of Health has requisitioned for US$287,029 as first disbursement to Uganda from the GFATM account in Geneva.
I am aware that the GFATM grant to Uganda for the first two years is $36,314,882 out of which $20,751,367 is supposed to be released to Uganda in the first year.
There should be no reason why the total amount for the first year cannot be requisitioned for at once, so that the money earns interest for the government of Uganda in a local bank.
Henceforth, you as accounting officer for the GFATM funds will requisition for funds from GFATM headquarters, through the Ministry of Finance, Planning and Economic Development. You will at all times do this only after you have notified me as the political head of the Ministry of Health.
The Project management Unit for the GFATM in the ministry should not be constituted until clearance with me, after I return from the 56th World Health Assembly in Geneva. You should diligently follow these instructions.â€
I want to begin on the third paragraph which says there is no reason why the money can’t be requisitioned for at once. Can we discuss the circumstances under which this letter was written.
Muhwezi: I wrote this letter just before I went to Geneva to attend the world health assembly. While there I was going to the Global Fund Secretariat to discuss policy matters, some of which are in this letter.
Karugaba: The contest is about the amount of the requisition, the requisition was not for the entire amount.
Muhwezi: At that time Uganda was being blamed for not absorbing the money (1st quota). There was an E-mail that Uganda was among the countries that was not taking their share so I was saying why not requisition the whole amount.
Karugaba: Your position was that you wanted all the money here, doesn’t this contradict the position you just stated (in the statement) that unregulated aid inflow of the Global Fund grant would create excess liquidity and this would distort macro-economic indicators!
Muhwezi: If it came through the budget support and the sector wide approaches it would be disbursed through the Ministry of Finance, there wouldn’t be macro-economic problems because government would control circulation instead of sending it straight to the NGOs.
They wanted to send it but they were controlling it, but I was saying why don’t you send it and we control it. It could earn government interest in a local bank, instead of keeping it in Geneva.
Ogoola: You addressed this letter to the PS, not to the Global Fund. You were reducing this issue to a macro level, which is operational level!
Muhwezi: I was going to address them.
Ogoola: You were directing him to go fight your policy battles in Geneva at the PMU, weren’t you risking descending into the area of operations. Your letter is about making interest rates, this is a micro matter, not policy.
The arrangement for Global Fund was that a country opens up a dollar account. If that was the agreement my understanding is that a dollar account doesn’t earn interest.
Muhwezi: I was going to Geneva to discuss these issues, my understanding was to tell the PS who would tell the Principal Recipient (Ministry of Finance) who requisitions for funds. I thought I should tell them because indeed when we went to Geneva Uganda was accused of not taking the money, I went to the floor and defended Uganda.
Kasanya: Honourable Minister you said there was an E-mail saying Uganda is not asking for its allocation, could you help us get a copy.
Muhwezi: Yes I will arrange for that.
Kasanya: In your letter wasn’t it appropriate to state why you urgently needed the money?
Muhwezi: I didn’t think that was prudent.
Ogoola: The letter gave the impression of you being interested in the interest other than fighting local diseases.
Muhwezi: I wasn’t suggesting that the money delays on the account. What I was talking about was between Uganda and Geneva.
Ogoola: But you can’t earn interest in one day.
Muhwezi: My interest was that instead of the money staying in Geneva, it should be kept in Uganda because it’s our money.
Ogoola: Did you know that there was a bank identified to put this money.
Muhwezi: No! I was not aware.
Karugaba: The bank pays interests to depositors because it lends it out. This position is not consistent with your argument on excess liquidity as you said not all $20m would be used. Do you agree this is not consistent?
Muhwezi: I wasn’t trying to write policy.
Karugaba: What if the funds were sent to Bank of Uganda, where it would not earn interest.
Muhwezi: I would be happy. In fact I was concerned. I called the PS and the project coordinator and told them they should quickly send the money in there. However, this is when I learnt that Global Fund didn’t allow to move the money from commercial banks.
Karugaba: (Reads paragraph 4 of Muhwezi’s letter to the PS.) Can you give us the context in which you wrote this paragraph.
Muhwezi: Because of the struggles between Uganda and the Global Fund, I was still engaged in these talks with a view of changing the policy. PMU was still interim and we were still debating whether to have it or not.
Karugaba: But at this time you had already established the PMU.
Muhwezi: But it was still possible to discuss with Geneva to change.
Ogoola: With what you have explained to us, why did you want the PS to refer to you as political head.
Muhwezi: They have never been to Geneva, as political head I am the one who used to attend meetings (of the Global Fund).
Ogoola: The plain meaning is to give the directive, that until you have been informed no other should requisition for funds. This is a classic example of interference in the disbursement of the Global Fund. You put yourself as a stumbling block such that whenever the PS wants to requisition for funds they had to go through you.
Muhwezi: I don’t agree. I have said my role was between Uganda and Geneva. I said I should be informed. There was no role for minister in the operations in Uganda. I was talking about Geneva.
Ogoola: There was nothing with Geneva. This was to do with this country. This is a directive to people operating funds in Uganda that the PS will at all times requisition funds only after he has notified you.
Muhwezi: This was as far as what I was doing (in Geneva) after I failed I didn’t follow up.
Ogoola: The poor PS said he lived under perpetual fear.
Muhwezi: If he told you that he lied. I know my PS. I don’t think he said that.
Ogoola: He said that every morning when he goes to office he prays to live through the day.
Muhwezi: But he is not complaining.
Ogoola: We are the ones complaining, that here is the genesis of some of our problems. I want to put it to you honourable minister that you misread your role and injected yourself in the operations of the Fund. You should have left this to the technicians.
9:20a:m: Ogoola calls the proceedings to order.
Ogoola: This commission was appointed by the Executive arm of government of which you are a senior member. I am therefore pleased you have come to assist us. Counsel can you take us through.
Karugaba: Can you give the commission a general perception of the Global Fund particularly with your role as a minister.
Muhwezi: As a Minister of Health I represented Uganda in matters of policy in the Global Fund. I was the first African board member of the Global Fund Secretariat in Geneva. I am representative of 15 countries in East and Central Africa.
The Minister of Health is the one who represents Uganda at the Global Fund Secretariat in all matters of policy. Because of that role I have the best experience and information about the arrangement of the Global Fund.
If there is any mismanagement of the Global Fund, some of this background (statement on history of conflict between Uganda and Geneva) might have a bearing to it.
(To start his testimony, Muhwezi requests to read a prepared statement on the conflicts between Uganda and Geneva. Ogoola allows him to read the highlights. This is the edited version)
I would like to give you some historical perspectives that may also have impacted negatively on the operations of the Global Fund both globally and locally.
Right from the beginning, the relationship between Uganda and Geneva (Global Fund headquarters) hasn’t always been smooth.
It was the view of most developing countries, and more specifically Uganda, that the Global Fund resources should be channelled through the existing institutional frameworks globally and at country level. These could have taken the form of institutions such as World Health Organisation (WHO) and the health financing systems – in the case of Uganda; the Health Sector Wide Approaches (SWAP) and budget support.
It was also the view of many countries that recipient countries should not establish parallel governance and management structures such as Country Coordination Mechanism (CCM), Local Fund Agent (LFA).
These parallel structures had been envisaged to increase transaction costs of programme implementation eg. fees paid to LFA, which in the case of Uganda is unknown.
It was the position of Uganda that we utilise existing healthcare delivery systems and structures to implement the programme. However, this was rejected by the Global Fund Secretariat in preference for the project mode with the creation of the Project management Unit (PMU).
Strategically, Uganda was concerned that the effects of unregulated aid inflow (G/Fund grants) would create excess liquidity and this could distort important macro-economic indicators.
These debates in fact delayed implementation of the first grants and continued to be a major concern of Government. This is confirmed by the current correct GOU decisions to move all project funds from commercial banks to Bank of Uganda.
May I also use this opportunity to highlight some of the difficult early problems we had in the structuring of the Global Fund operations;
It is my testimony that on a number of occasions GOU policy decisions were in conflict with positions taken by the Global Fund. A specific example was the Global Fund attempt to create the Global Electronic Market Place.
Through this, recipient countries were required to place orders for the procurement of all their requirements funded by the Global Fund. Using this method, Uganda was put on pressure to immediately commit a mindboggling $55m to procure one malaria drug- coartem from a single Swiss company (Novartis)!
In addition, the Global Fund had fixed the price of this drug for a period of three years in disregard of the potential for the emergence of other cheaper drug treatment regimes.
Imagine what would happen, if the malaria parasites developed resistance to this drug, as was the case recently with chloroquine. What would we do with all our money already committed to one drug and to one company?
Furthermore, I would like to bring to your attention to the fact that, surprisingly the former American ambassador (Jimmy Kolker) informed me that he was privy to information of the suspension of the Uganda grants seven months prior to the suspension.
Karugaba: Did representation give you a (management) role (of the Global Fund) at a national level?
Muhwezi: Not really, unless when there were matters between Uganda and the Global Fund (secretariat). I was involved in policy. At operational level I wasn’t involved. If the programme was on course, I was not involved, the principal recipient (Ministry of Finance) would receive the money with the PMU and may be the PS (Muhammad Kezaala) but not me.
This was unfortunate. Our preference had been to have a forum where all stakeholders sit and discuss, like other aid money channelled through budget support. Perhaps even the issues which led to the suspension could have been resolved through this forum.
Ogoola: Once the structure (PMU) was put in place that is what was governing the operation of the fund, were you tempted to intervene?
Muhwezi: Yes at Global Fund, Geneva. We heard that in spite of the system there was an inter-ministerial committee to do the function of the forum. We tried but it didn’t work.
Karugaba: According to the Global Fund guidelines, the structures that were provided for was the Country Coordinating Mechanism and the PMU, there was no requirement for an inter-ministerial committee to meet.
Do you agree that the Global Fund structure was technically set up, it didn’t have provision for political leadership at national level!
Muhwezi: It seems there was a deliberate policy to ensure that these (Global Fund money) don’t mix with the budget, in fact they used the term additionality, that government shouldn’t have any hand in the Global Fund.
Ogoola: That’s what they meant! Is that what you understood it to mean?
Muhwezi: What they meant was opposing our position. Our position was that we have a programme for these activities but we have gaps. Our argument was (that) why don’t you give us the money to fill the gaps. But they said no. That is where there was a struggle.
Karugaba: We enter specific areas of inquiry on you involvement in operation of the Global. Can we start with a correspondence in a letter dated May 15, 2003 by you to the PS (Kezaala). The subject is the administration and management of the GFATM. I will read it:
“It has come to my knowledge that the project Manager of the Project Management Unit for the GFATM in the Ministry of Health has requisitioned for US$287,029 as first disbursement to Uganda from the GFATM account in Geneva.
I am aware that the GFATM grant to Uganda for the first two years is $36,314,882 out of which $20,751,367 is supposed to be released to Uganda in the first year.
There should be no reason why the total amount for the first year cannot be requisitioned for at once, so that the money earns interest for the government of Uganda in a local bank.
Henceforth, you as accounting officer for the GFATM funds will requisition for funds from GFATM headquarters, through the Ministry of Finance, Planning and Economic Development. You will at all times do this only after you have notified me as the political head of the Ministry of Health.
The Project management Unit for the GFATM in the ministry should not be constituted until clearance with me, after I return from the 56th World Health Assembly in Geneva. You should diligently follow these instructions.â€
I want to begin on the third paragraph which says there is no reason why the money can’t be requisitioned for at once. Can we discuss the circumstances under which this letter was written.
Muhwezi: I wrote this letter just before I went to Geneva to attend the world health assembly. While there I was going to the Global Fund Secretariat to discuss policy matters, some of which are in this letter.
Karugaba: The contest is about the amount of the requisition, the requisition was not for the entire amount.
Muhwezi: At that time Uganda was being blamed for not absorbing the money (1st quota). There was an E-mail that Uganda was among the countries that was not taking their share so I was saying why not requisition the whole amount.
Karugaba: Your position was that you wanted all the money here, doesn’t this contradict the position you just stated (in the statement) that unregulated aid inflow of the Global Fund grant would create excess liquidity and this would distort macro-economic indicators!
Muhwezi: If it came through the budget support and the sector wide approaches it would be disbursed through the Ministry of Finance, there wouldn’t be macro-economic problems because government would control circulation instead of sending it straight to the NGOs.
They wanted to send it but they were controlling it, but I was saying why don’t you send it and we control it. It could earn government interest in a local bank, instead of keeping it in Geneva.
Ogoola: You addressed this letter to the PS, not to the Global Fund. You were reducing this issue to a macro level, which is operational level!
Muhwezi: I was going to address them.
Ogoola: You were directing him to go fight your policy battles in Geneva at the PMU, weren’t you risking descending into the area of operations. Your letter is about making interest rates, this is a micro matter, not policy.
The arrangement for Global Fund was that a country opens up a dollar account. If that was the agreement my understanding is that a dollar account doesn’t earn interest.
Muhwezi: I was going to Geneva to discuss these issues, my understanding was to tell the PS who would tell the Principal Recipient (Ministry of Finance) who requisitions for funds. I thought I should tell them because indeed when we went to Geneva Uganda was accused of not taking the money, I went to the floor and defended Uganda.
Kasanya: Honourable Minister you said there was an E-mail saying Uganda is not asking for its allocation, could you help us get a copy.
Muhwezi: Yes I will arrange for that.
Kasanya: In your letter wasn’t it appropriate to state why you urgently needed the money?
Muhwezi: I didn’t think that was prudent.
Ogoola: The letter gave the impression of you being interested in the interest other than fighting local diseases.
Muhwezi: I wasn’t suggesting that the money delays on the account. What I was talking about was between Uganda and Geneva.
Ogoola: But you can’t earn interest in one day.
Muhwezi: My interest was that instead of the money staying in Geneva, it should be kept in Uganda because it’s our money.
Ogoola: Did you know that there was a bank identified to put this money.
Muhwezi: No! I was not aware.
Karugaba: The bank pays interests to depositors because it lends it out. This position is not consistent with your argument on excess liquidity as you said not all $20m would be used. Do you agree this is not consistent?
Muhwezi: I wasn’t trying to write policy.
Karugaba: What if the funds were sent to Bank of Uganda, where it would not earn interest.
Muhwezi: I would be happy. In fact I was concerned. I called the PS and the project coordinator and told them they should quickly send the money in there. However, this is when I learnt that Global Fund didn’t allow to move the money from commercial banks.
Karugaba: (Reads paragraph 4 of Muhwezi’s letter to the PS.) Can you give us the context in which you wrote this paragraph.
Muhwezi: Because of the struggles between Uganda and the Global Fund, I was still engaged in these talks with a view of changing the policy. PMU was still interim and we were still debating whether to have it or not.
Karugaba: But at this time you had already established the PMU.
Muhwezi: But it was still possible to discuss with Geneva to change.
Ogoola: With what you have explained to us, why did you want the PS to refer to you as political head.
Muhwezi: They have never been to Geneva, as political head I am the one who used to attend meetings (of the Global Fund).
Ogoola: The plain meaning is to give the directive, that until you have been informed no other should requisition for funds. This is a classic example of interference in the disbursement of the Global Fund. You put yourself as a stumbling block such that whenever the PS wants to requisition for funds they had to go through you.
Muhwezi: I don’t agree. I have said my role was between Uganda and Geneva. I said I should be informed. There was no role for minister in the operations in Uganda. I was talking about Geneva.
Ogoola: There was nothing with Geneva. This was to do with this country. This is a directive to people operating funds in Uganda that the PS will at all times requisition funds only after he has notified you.
Muhwezi: This was as far as what I was doing (in Geneva) after I failed I didn’t follow up.
Ogoola: The poor PS said he lived under perpetual fear.
Muhwezi: If he told you that he lied. I know my PS. I don’t think he said that.
Ogoola: He said that every morning when he goes to office he prays to live through the day.
Muhwezi: But he is not complaining.
Ogoola: We are the ones complaining, that here is the genesis of some of our problems. I want to put it to you honourable minister that you misread your role and injected yourself in the operations of the Fund. You should have left this to the technicians.