The Backroom Deal Worth $130 Million to the Global Fund

Information continues to surface showing that John Parsons, the former Inspector General at the Global Fund to Fight AIDS, Tuberculosis and Malaria, was terminated in 2012 because he was uncovering too much corruption in the organization's grants.
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Information continues to surface showing that John Parsons, the former Inspector General at the Global Fund to Fight AIDS, Tuberculosis and Malaria, was terminated in 2012 because he was uncovering too much corruption in the organization's grants. A member of the Audit and Ethics Committee (AEC), which supposedly found Parsons' work unsatisfactory, asserts that the committee chair was pressuring members to support Parsons' dismissal. He himself suffered retaliation and was forced out of the organization after he refused to acquiesce to Parsons' ouster. Two other AEC members who supported Parsons and opposed his termination are no longer with the Global Fund, either.

The process of dismissing and vilifying John Parsons and undermining the oversight office at the Global Fund is long and complex, but the real story is short and simple: when the board of the Global Fund saw his 2011 reports on widespread corruption in the grants his office investigated, board members decided to shoot the messenger (Parsons) and ignore the message (corruption).

The reason they did this is also simple: money.

The U.S. Congress conditioned 15 percent of the U.S. contribution to the Global Fund on a certification from the Secretary of State that the organization's Office of Inspector General (OIG) operated without interference. This would be a guarantee that the Global Fund grantees used funds as specified in their proposals.

Two facts are pertinent here: The U.S. is the Global Fund's largest single donor, by far, and Parsons' office -- the OIG -- is responsible for investigating allegations of corruption and auditing grants. At the time Parsons was fired, our Congress was waiting for the State Department's certification that the OIG remained autonomous, after reporting corruption as a significant problem affecting a number of grants in Africa and Southeast Asia the year before.

Documents obtained through the Freedom of Information Act (FOIA) show that in the summer of 2012, Parsons balked at certifying the autonomy of his operations. He asserted that there had been substantial interference, primarily from the AEC Chair, Graham Joscelyne, former Auditor General at the World Bank. If Parsons wouldn't sign off, his refusal could have cost the Global Fund $130 million in pending U.S. contributions. Parsons wrote to Joscelyne expressing his reservations, and the documents show that he was under substantial pressure from Joscelyne to sign.

The AEC and Joscelyne later became central to the defamation of Parsons. After firing him, the Global Fund posted a press release on its website announcing that Parsons was dismissed for unsatisfactory performance. One of the evaluations cited as definitive in determining his shortcomings was produced by AEC. This was the report to which members of the committee had objected:

The Board said it made its decision based on factors including: a performance review; an independent external peer review of the audit function; and a report to the Board by its Audit and Ethics Committee.

No one (that we know of) outside the Global Fund has ever seen the AEC report in question. Members of the committee assert that, to their knowledge, a final version does not exist. Nor has anyone seen the performance evaluation. Moreover, Richard Chambers, the President of the Institute of Internal Auditors, said that using an independent external peer review of the audit function at the Global Fund in the evaluation of a single individual's performance is inappropriate. Chambers wrote: "I have never seen a case where the EQA (External Quality Assessment) was used as a basis for dismissing a CAE (Chief Audit Executive)."

This whole process was a backroom deal, dressed up in convoluted bureaucratic procedures involving the board, the AEC, certification from the Global Fund and the State Department, signatures and legislation. The transparency is fake, the accountability is secret (and therefore meaningless), and the responsible parties got away with it, while the people who should have stopped them looked the other way.

Shortly after the AEC forced Parsons out, the Government Accountability Project (GAP) began asking questions. After all, when an inspector general finds and discloses corruption and fraud in an organization's operations and is subsequently fired, responsible oversight offices should be concerned. But they weren't. The FOIA documents show that the State Department simply proceeded with the certification after the IG was dismissed and declared to the Congress that the IG operated without interference.

GAP spoke with congressional staff members familiar with the issue and saw that they are hamstrung. If the Secretary of State is willing to attest to a falsehood, it is very difficult for them to act. The evidence, though, is piling up: a member of the AEC has now asserted in writing that he opposed Parsons' termination and was forced off the board.

Martin O'Malley replaced Parsons as IG, but he has now tendered his resignation after less than one year in office, citing personal reasons. The OIG is barely functioning. Investigations have stalled. Reports are missing. The reports released are sanitized, insiders say.

In 2013, the Global Fund got the $130 million at issue from the U.S. And last December - about a year after Parsons was fired - the U.S. pledged another $1.35 billion to the organization.


Bea Edwards is Executive & International Director of the Government Accountability Project, the nation's leading whistleblower protection organization. She is also the author of The Rise of the American Corporate Security State.

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