Kazakhstan’s public health officials in charge of the fight against HIV/AIDS and tuberculosis have conned a flagship global project out of over $5 million by using “smokescreen companies” to rig bids and overcharge for goods and services, the Global Fund to Fight AIDS, Tuberculosis and Malaria has said.
A probe by the Office of the Inspector General (OIG), the Switzerland-based fund’s oversight arm, “found evidence of systematic collusive, fraudulent, and corrupt practices by local vendors and other parties” involving a total of 76 contracts worth some $16.5 million, it said in a January 28 statement.
As a result of the contracts, awarded by two health centers under the remit of the Ministry of Health, the Global Fund was swindled out of at least $5.4 million through “systematic overpricing for printing, office equipment, health products and food parcels,” the OIG claimed.
There was no evidence that the goods – which included “condoms and a whole range of other goods and services for patients with HIV and/or tuberculosis” – had not been delivered, however.
The OIG is urging the Global Fund to take measures to recover at least $5.4 million, although it described that figure as a conservative estimate of what it had been conned out of by Kazakhstan’s Republican Center for Prophylactics and Control of AIDS (RCAIDS) and National Center of Tuberculosis Problems (NCTP).
Four individuals – called the “Ring Leaders” in the report and identified only as Alpha, Beta, Gamma, and Delta – were allegedly the main beneficiaries of the con, involving 17 companies which were part of an interlinked web colluding with each other. Other public healthcare officials were aware of the scheme, the OIG alleged.
It concluded “that a significant number of the contracts were part of one widespread scheme which involved four individuals who submitted fake bids from smokescreen companies and colluded with each other to create the impression of fair competition.”
Alpha, Beta, Gamma, and Delta “either (i) themselves submitted bids on behalf of more than one vendor (often for the same procurement), and/or (ii) coordinated with other vendors submitting fake bids to simulate competition, and/or (iii) engaged with various entities in order to obtain contracts on a single source basis.”
“All 17 selected vendors, along with 10 losing bidders, engaged in a systematic bid rigging scheme and collusive and/or fraudulent practices.”
The Global Fund did not immediately respond to a request for clarification of the identities of the four “Ring Leaders” e-mailed on January 28.
The NCTP had no immediate comment because it had not seen the report, deputy director Elmira Berikova, told EurasiaNet.org by telephone on January 29, referring queries back to the Global Fund.
An official at RCAIDS said on January 29 that the center could not respond to telephone inquiries on the matter, and the center did not immediately respond to an emailed request for comment.
This is not the first time the Global Fund – which is supported by the Bill and Melinda Gates Foundation and has to date dispersed $128 million to Kazakhstan to fight HIV/AIDS and TB – has been conned out of cash in the corruption-ridden country: Last year $105,227 used to purchase antiretroviral drugs was paid back after it was found to have been misused, the report said.
Corruption implicating health officials involved in the fight against HIV/AIDS sparked a major scandal in 2006, when some 150 children were infected with the disease in the city of Shymkent through tainted blood transfusions.