ZIMBABWE GLOBAL FUND AUDIT

UNCLAS SECTION 01 OF 02 HARARE 000945

SENSITIVE
SIPDIS

USAID/W FOR KENT HILL, GH/AA; HOPE SUKIN, AFR/SD;
GH/HIV-AIDS, MARK DYBUL, S/DAC; HHS/NIH/FIC;
SADENIYI-JONES, HHS/OS/OGHA

E.O. 12958: N/A
TAGS: EAID KHIV KSCA OSCI PGOV PREL TBIO TSPL ZI
SUBJECT: ZIMBABWE GLOBAL FUND AUDIT

REF: HARARE 579

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SUMMARY
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1. (SBU) Late last year, the Global Fund (GF) deposited
approximately USD 8 million in the Reserve Bank of Zimbabwe
(RBZ) to fund HIV/AIDS programs through nongovernmental
partners in Zimbabwe. Post became aware in the ensuing
months that these funds were not being disbursed. In July,
RBZ governor Gideon Gono told the Ambassador that the funds
had been diverted for other purposes. The Office of the
Global AIDS Coordinator (OGAC) subsequently urged GF to
conduct an audit. This audit is now being conducted.
Zimbabwe's Round 8 application has been provisionally
approved after technical review and will now go the GF Board
for review. Post suggests that OGAC carefully monitor the
Round 8 process and oppose approval until after the audit has
been completed and mechanisms put in place for is proper
disbursement of funds and accountability. END SUMMARY.

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Growing Concerns
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2. (SBU) Subsequent to the deposit last year by GF of
approximately USD 8 million in the RBZ for HIV/AIDS programs
to be administered by the Zimbabwe Association of Church
Hospitals and nongovernmental sub-grantees, the USG PEPFAR
team and other donor representatives became aware that the
RBZ was not disbursing GF monies for these programs. In a
July 1 meeting with the Ambassador, Gono admitted that GF
monies had been diverted for other purposes. (COMMENT: The
period from January until July was politically turbulent.
Elections took place in March and June, and in the period
between elections, ZANU-PF spent large amounts of money both
in electioneering and in orchestrating violence against the
opposition. It is logical to conclude that GF monies were
used for these purposes. END COMMENT.)


3. (SBU) In July, Post brought this information to the
attention of OGAC and the DHHS Office of Global Health
Affairs (OGHA). OGAC and OGHA wrote to GF on July 21
expressing concern about the GOZ's processing of GF funds and
requesting an immediate audit.

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The Audit and Donor Concerns Regarding GF
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4. (SBU) On September 25, OIG/GF conducted a preparatory
video conference with U.S., DFID, and EC representatives in
Harare. The audit will be led by Inspector General John
Parsons; inspector Anne Rwego arrived in Harare a week after
the videoconference. Field work was anticipated to last
three weeks. The audit report will likely be released in
early November.


5. (SBU) At an October 7 meeting with Rwego, donors
expressed concerns about GF processes and results:

a) Poor communication--PEPFAR team and other donor
representatives sit on the Zimbabwean Country Coordinating
Mechanism (CCM). The CCM Secretariat has been an ineffective
conduit of information between the GF Portfolio Manager in
Geneva and CCM members. Donor representatives have
repeatedly requested that the Portfolio Manager communicate
directly with them, but this has not occurred. As a result,
donors have limited financial information about GF activities
in Zimbabwe.

b) Ineffective and misguided financial disbursement
process--Hyperinflation, regulations for currency exchange,
and limitations imposed on NGOs' access to foreign currency
have made Zimbabwe an extremely difficult operating
environment. The Portfolio Manager has not accepted
suggestions by donors to improve management of GF monies in
this environment.


HARARE 00000945 002 OF 002


c) Delayed Implementation for Rounds 1 and 5--Because of the
economic situation in Zimbabwe and a several-month government
ban on NGO activities, the implementation of GF programs,
particularly for TB and Round 5, has been delayed. Not only
are the Zimbabwean people not being served, but benchmarks
are not being achieved. This negatively affects future
programming which depends on demonstration of past progress.


6. (SBU) Rwego indicated concern about areas described by
donors and lack of transparency. She was particularly
concerned about reports that funds were diverted for "other
national priorities."

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Concerns about Round 8...and Suggestions
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7. (SBU) Zimbabwe's Round 8 application for USD 500 million
funding over five years has received technical approval and
will now go to the GF Board for review. Post and other
donors are concerned that without transparent and
well-structured GOZ mechanisms for the distribution of funds,
funds will be misused and NGOs will have difficulty in
accessing and using funds. We suggest urging GF not to make
any decisions on Round 8 until after the release of the
ongoing audit and further discussion with donors. If a
decision is ultimately made to award additional funds, we
suggest urging GF to place a resident manager in Harare to
monitor the disbursal of funds and to ensure accountability.
The Ambassador made this suggestion to the Portfolio Manager
in a recent meeting.

MCGEE