Bed Net Bribery and Corruption

01.12.2015

This case study is related to:

Corruption

The Director of a national malaria center received gifts from a bed net manufacturer in exchange for tenders.

The Global Fund donates millions of dollars a year to assist countries in their fight against malaria, a deadly disease spread by mosquitos.  One of the most effective means to prevent infection is to sleep under insecticide-treated bed nets. These bed nets help to save countless lives. Governments across the world purchase these nets to protect their citizens. The Global Fund often finances the purchase of these nets as it did in this following case study.

The Director of a national malaria center attended a conference to learn more about bed nets. At this conference, he got to know the Sales Manager for a major international bed net manufacturer. The two men struck up a friendship and began communicating by email.  The Sales Manager visited the Director whenever he was in the country. During these conversations, the Director made it known to the Sales Manager that there was a lot of competition to provide bed nets to his country.

From time to time, the Sales Manager would send gifts to the Director or sponsor a corporate trip.  Whenever they met in person, it was not unusual for the Sales Manager to provide a present as a token to honor a significant event or holiday. During one visit, the Director asked the Sales Manager to bring him some medicine that was much cheaper in his country. The Sales Manager gladly fulfilled this request without any talk of reimbursement.

Two years after their initial meeting, the national malaria center announced several large upcoming procurements to buy millions of bed nets. The Director was in charge of awarding these contracts. Before the competition for contracts began, the Director spoke directly to the Sales Manager and suggested that there should be a “consultant” to facilitate these purchases for bed nets. This “consultant” would be supervised by the Director, but paid by the winning bed net manufacturer. The Director offered to find an appropriate candidate who would earn a commission of between 2% and 7% of the total value of each contract awarded. The Sales Manager’s company won multiple contracts, totaling over US$ 10 million in value, to provide bed nets through the national malaria center.  The Director provided the Sales Manager with the name and bank account details of the “consultant” so his company could wire the commission payments to that account directly.

The matter first came to the attention of the Office of the Inspector General after an audit of Global Fund grants in the country revealed a number of procurement irregularities. The audit brought to light the emails between the Director and the Sales Manager that made it clear that the commissions were incentives to win contracts. The Office of the Inspector General also learned that the “consultant” was actually a relative of the Director and that the Sales Manager from the international bed net manufacturer agreed to the consultancy arrangement despite never having met or spoken to this “consultant.”  In total, the international bed net manufacturer paid over US$ 250,000 of commissions for the contracts it won to provide 2.4 million bed nets.

The Global Fund suspended and sanctioned the international bed net supplier and required them to lead efforts to create an industry-wide anti-corruption pact.  They also were also required to donate 1 million bed nets to Global Fund programs.  The Global Fund referred this case to law enforcement and demanded recovery of all of the funds lost to the improper commissions.

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