Today In History: The Global Fund scam in the health ministry is uncovered

TODAY IN HISTORY (August 24, 2005)

The Financial Times of London reported that the Geneva-based Global Fund to fight AIDS, tuberculosis and malaria uncovered evidence of "serious mismanagement" of the Fund within Uganda's health ministry.

The investigation was done by the organisation's "local fund agent" (LFA), the business services firm PwC, which presented a 200-page audit report.

Discrepancies between the exchange rate quoted and actual market exchange rates when dollar grants were converted into Ugandan shillings were found, as well as problems that involved a lack of proper accounting for funds, with some expenditures not covered by invoices or receipts. This led to the Fund's suspension of its grants to Uganda.

At the time of investigations, $10m (sh25b) was missing, although some sources put the figure at $37 (sh95.8b). The money was meant for malaria and tuberculosis drugs programmes. The scandal sucked in former health minister Jim Muhwezi and his then deputies Mike Mukula and Alex Kamugisha.

Some of the known culprits included the former director of economic affairs in the President's Office, Teddy Cheeye and former production manager of Uganda Television, Fred Kavuma, who served prison sentences in Luzira Prison over the scam.

The scandal centered on a new unit within the health ministry, known as the Project Management Unit, through which the money was siphoned to about 400 private organisations, many of which existed only on paper. Investigations revealed that PMU paid grossly inflated salaries to its 15 professionals and 20 support staff, who often doubled their take home pay with generous and largely undocumented expense allowances. 

Since its creation in 2002, the Global Fund to Fight AIDS, Tuberculosis and Malaria had committed $5.1b in grants to more than 130 countries to fight the three diseases.