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

By Myke Uzendu and Ralph Christopher, with Agency Reports

An international firm domiciled in Nigeria, Zenith Carex, has been blacklisted by the Global Fund for an alleged $3 million fraud.

Zenix Carex was accused of “systematically inflating invoices for the distribution of health commodities to warehouses and health facilities throughout Nigeria”.

In its latest report published on 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 adds to previous yearly reports by the OIG accusing Nigerian companies and government agencies of abusing millions of dollars in aid provided by the Global Fund.

Nigeria responded to some of the allegations over the years by ordering probes by anti-graft agencies, EFCC and ICPC.

However, the Nigerian authorities after a review of some of the cases, faulted the findings of the OIG, and recommended the setting up of an independent committee to review the reports.

These allegations, however, could result in an indefinite termination of such donations to Nigeria if left unchecked, anti-corruption campaigners said.

Global Fund is a funding mechanism that pools the world’s largest financial donations for the prevention, treatment and care of AIDS, Tuberculosis, and malaria.

Giving that Nigeria has the highest malaria burden in the world (one in four cases globally), the world’s fourth-largest tuberculosis burden, and about two million people living with HIV, funding programmes to stem the tide of these grim indices became a central focus for Global Fund.

Since 2003, the Global Fund has disbursed over $2 billion in Nigeria, but the country is still dogged by disturbing health statistics partly because corrupt and incompetent officials undercut progress in health management, health experts say.

The report detailed how Zenith, a sub-contractor of Chemonics International (Chemonics), which 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.

According to the OIG report, Chemonics approved and paid “Zenith’s fraudulent invoices for over two years. Combined with Chemonics’ percentage-based contract management fees, the fraud resulted in over $3.4 million in non-compliant expenditures charged to the Global Fund.”

“Chemonics’ controls were poorly implemented by negligent staff who missed key red flags when reviewing Zenith’s invoices.

“Inadequate financial monitoring in the local office and US-based Headquarters, combined with potential collusion between Chemonics and Zenith staff, allowed the fraud to remain undetected, despite significant budget overruns in the Global Fund contract, as well as a 75% contract ceiling increase for Zenith,” the report said.

The issues that led to the investigation started in April 2019, involving over $20 million in third-party logistics charges to the Global Fund from 2017 to 2019, for six key logistics providers including Zenith.

Zenith, the primary vendor of cold chain commodities, according to the report, provided low volume items such as HIV testing reagents to 400 health facilities across Nigeria which led to the fraudulent overruns, preliminary findings by the OIG revealed.

It noted that 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 OIG recommends the Secretariat recovers US$3,155,514, and will evaluate the referral of the investigation findings to Nigerian law enforcement authorities. Due to the findings of this report, the Secretariat has ensured Zenith is no longer providing any service to Global Fund supported programs in Nigeria,” the report stated.

Two years before the 2018 report was released, Nigerian officials were accused of stealing funds meant for HIV/AIDS campaign by misrepresenting or inflating the amounts paid to hotel venues and other expenditures.

Nigeria’s Auditor-General at the time had reprimanded the National Agency for the Control AIDS (NACA), managing the HIV fund, for refusing to shed light on how the fund was used.

According to a Daily Trust Newspaper report dated May 12, 2016, NACA faulted the OIG report noting that the EFCC was notified of the alleged fraud even before the publication of the findings by OIG, adding that the commission had since swung into action.

The EFCC has yet to make its report public, neither did the EFCC spokesperson then, Wilson Uwajuren, react to media inquiries on the matter.

Following the development, the ICPC vowed to probe the NGOs, but nothing was heard of that probe since then.

Azuka Ogugwa, the ICPC spokesperson, is also prevaricating on the matter even after several messages had been sent to her on the matter.

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