An investigation launched by The Global Funds has revealed massive theft of its drugs and health products at Medical Stores Limited totalling US$1.06M over a two year period.
And the Global Fund says it will ask the Zambian government to pay back the stolen funds.
The supplies stolen include 5,790 HIV test kits valued at US$416,379 and 67,967 bottles of antiretrovirals (ARVs) valued at US$423,209 and bottles of antiretrovirals (ARVs) including 11,442 artemisinin-based combination therapy packs (ACTs) valued at US$214,486 and malaria rapid diagnostic test kits (MRDTs) valued at US$10,714.
The theft was discovered after the Global Fund Secretariat based in Geneva, Switzerland in October 2016 and in April 2017 notified the Office of the Inspector General (OIG) that they had been informed by Medical Stores Limited had been stolen from their warehouse.
The Office of the Inspector General also received information that a non-governmental organisation (NGO) had bought HIV test kits in Lusaka, including some financed by the Global Fund that had been originally delivered to Medical Stores.
The ensuing OIG investigation determined that Global Fund financed health products totalling US$1.06M could not be accounted for by Medical Stores and evidence suggests that these products were stolen over a two-year period, between 2014 and 2016.
A report by the Global Funds say the case of theft of products from Medical Stores is currently being investigated by the Zambian Authorities.
The investigation also found that stock quantities recorded in Medical Stores Limited’s electronic warehouse management system were negatively adjusted to reflect missing stock identified during annual stock takes.
Staff at Medical Stores 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.
The Global Funds says these losses are noncompliant expenditure, as per the terms and conditions of the relevant Global Fund grant agreements and concluded that internal controls at Medical Stores were ineffective and resulted in multiple opportunities for theft and misappropriation of assets.
The investigation found that Medical Stores undertook only one stock count in each of the years 2014, 2015 and 2016 and no weekly stock counts were conducted which is contrary to its operating procedures and that there was no meaningful follow-up or investigation of stock variances.
Medical Stores Limited staff were not able to explain the net negative adjustments; the assistant inventory manager suggested that the stock ‘must have been stolen’.
And The Global Funds Executive Director Peter Sands said The Global Fund has zero tolerance for fraud or theft, and is committed to enhancing mitigation measures for operational risks.
“Following an alert to The Global Fund from Medical Store Limited (MSL) that donor-financed commodities had gone missing, this investigation by the Office of the Inspector General found that stock quantities recorded in an electronic warehouse management system by MSL were negatively adjusted to reflect missing stock identified during annual stock takes. Staff could not explain the stock losses and the OIG’s investigation also could not reconcile the stock adjustments with any outbound deliveries, expiries or other events. The overall loss totals US$1 million of the US$33.4 million of deliveries investigated,” Mr Sands said.
Mr. Sands said The Global Fund will take all necessary steps to recover the lost funds in Zambia.