Report: AIDS charity funds lost to corruption

Editor's Note: Please see correction at the bottom of this article.

GENEVA - A $21.7-billion development fund backed by celebrities and hailed as an alternative to the bureaucracy of the United Nations sees as much as two-thirds of some grants eaten up by corruption, The Associated Press has learned.

Much of the money is accounted for with forged documents or improper bookkeeping, indicating it was pocketed, according to investigators for the Global Fund to Fight AIDS, Tuberculosis and Malaria. Donated prescription drugs wind up being sold on the black market.

The fund's newly reinforced inspector general's office, which uncovered the corruption, can't give an overall accounting because it has examined only a tiny fraction of the $10 billion that the fund has spent since its creation in 2002. But the levels of corruption in the grants they have audited so far are astonishing.

A full 67 percent of money spent on an anti-AIDS program in Mauritania was misspent, the investigators told the fund's board. So was 36 percent of the money spent in Mali to fight tuberculosis and malaria, and 30 percent of grants to Djibouti.

In Zambia, where $3.5 million in spending was undocumented and $104,130 was pilfered, the fund decided the nation's health ministry simply couldn't manage the grants and put the UN in charge of them. The fund is trying to recover $7 million in "unsupported and ineligible costs" from the ministry.

The fund is pulling or suspending grants from nations where corruption is found, and demanding recipients return millions of dollars of misspent money.

To date, the U.S., EU and other major donors have pledged $21.7 billion to the fund, which has been a darling of the power set that will hold the World Economic Forum in Davos, Switzerland, this week.

It was at Davos 2006 that U2's Bono launched (Product) Red, which donates a large share of profits to the Global Fund. Other prominent backers include former UN Secretary-General Kofi Annan, French first lady Carla Bruni-Sarkozy and Microsoft founder Bill Gates, whose Bill and Melinda Gates Foundation gives $150 million a year.

CORRECTION: In a Jan. 23 story about corruption among recipients of grants from the Global Fund to Fight AIDS, Tuberculosis and Malaria, The Associated Press, relying on fund figures, erroneously reported that the U.N. Development Program manages  more than half of the fund’s spending, and that the fund has spent $10 billion since its creation in 2002. UNDP has managed about 12 percent of the $13 billion dispersed.