Global Fund indicts, blacklists Nigerian firm over alleged $3m fraud

A Nigerian firm, Zenith Carex, has been blacklisted by Global Fund for an alleged $3 million fraud.
The firm was alleged to have systematically inflated invoices for the distribution of health commodities to warehouses and health facilities throughout Nigeria.
In its latest report published March 9, the Office of the Inspector General (OIG) of the Global Fund said Zenith Carex committed the fraud within a period of two years between 2017 and 2019.
The revelation builds on previous yearly reports by the OIG accusing Nigerian companies and government agencies of abusing millions of dollars of the Global Fund aid.
Nigeria responded to some of the allegations over the years by ordering probes by the antigraft agencies, EFCC and ICPC. Nigerian authorities in some instances faulted the findings of the OIG, noting the need for the setting up of an independent committee to review its reports.
These allegations, however, could result in an indefinite termination of such donations to Nigeria if left unchecked, anti-corruption campaigners said.
Latest report detailed how Zenith, a sub-contractor of Chemonics International (Chemonics), who managed an integrated supply chain for Global Fund Principal Recipients in Nigeria and the United States Agency for International Development (USAID), allegedly inflated distribution invoices up to ten-fold and misrepresented the services executed, resulting in a $3 million overcharge.
Chemonics, a global development firm based in Washington, has worked with the Global Fund on technical assistance and logistics projects in 12 countries.
In Nigeria, via third parties such as Zenith Carex, Chemonics manages central and regional warehouses, Long-Haul distribution between warehouses, and Last Mile Distribution to 16,000 health facilities, for both pharmaceutical and cold chain commodities.
In April 2019, the Global Fund Nigeria Country Team alerted the OIG after Chemonics made a retroactive request for additional funds and forecast multi-million-dollar budget overruns on their fixed-price Global Fund contracts.
The OIG said it reviewed over $20 million in third-party logistics provider charges to the Global Fund from 2017 to 2019, reviewing documentation for six key logistics providers including Zenith. It said it analysed invoices and proofs of delivery.
Zenith, the primary vendor of cold chain commodities – specialized, low volume items such as HIV testing reagents – to 400 health facilities across Nigeria was at the centre of the fraudulent overruns, preliminary findings by the OIG revealed.
About US$3,429,253 of distribution costs invoiced by Zenith, inclusive of Chemonics’ associated management fees, were fraudulent and non-compliant, the OIG investigation found.
The invoice scheme, according to the OIG, started from the first invoice Zenith submitted to Chemonics in August 2017, which charged $33,953 for transporting 60,000 kilogrammes of materials from Abuja to Jos.
The alleged fraud by Zenith appeared to follow a similar pattern by companies, NGOs, government contractors and agencies that have managed Global Fund donations in several other African countries.
The EFCC has yet to make its report public. The EFCC spokesperson, Wilson Uwajuren, did not respond to calls and a text message sent on Sunday.
Even before that, Sahara Reporters in 2012 published a report detailing how seven NGOs misused funds from 15 grants, amounting to $682,149,515, provided between 2003 and 2009 to the country. This, the report said, put Nigeria in danger of not getting subsequent grants from the Global Fund.
Following the development, the ICPC vowed to probe the NGOs but nothing was heard of that probe since then.
Azuka Ogugwa, the ICPC spokesperson, could not be reached on phone Sunday afternoon. He has yet to respond to text messages seeking an update on the probe the commission said it commenced in 2012.
Even though African governments indicted of fraud have not made any notable progress in bringing culprits to book, Global Fund appears to be appeased once refunds of misused funds are made. The refunds are made by the governments where the fraud occurred. Amidst allegation of abuse of TB grant detailed in the 2018 audit which is still unclear how it was resolved, Nigeria has continued to receive fresh grants from Global Funds.
The Global Fund is a financing mechanism rather than an implementing agency. It is a pool where countries, public and private institutions donate money for disbursement according to HIV, TB and malaria burden of countries.
Between 2001 and 2016, the largest contributor by far was the United States, followed by France, UK, Germany, and Japan.

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