The Global Fund financed the procurement of 130 million condoms in an implementing country. The Ministry of Health was the Principal Recipient. After a tender process, the Principal Recipient selected a local trading company to supply the condoms. The company appeared to offer the best value and, according to the documents submitted during the process, met all the requirements. In its bid documents, the company claimed that the condoms came from a World Health Organization (WHO)-certified condom manufacturer as required by government regulations in the country.
The condoms were imported and distributed to populations at risk such as sex workers and men who have sex with men. Users complained about the quality of the condoms and the Ministry of Health tested them. It turned out that the condoms were defective and not fit for use. They were not protecting the users and ineffective in halting the spread of HIV.
Following information from the Secretariat and the Local Fund Agent in the country, the OIG investigated the case and came to the following conclusions: In its bid proposal, the supplier had submitted documents, including a manufacturer authorization form, which gave the impression that the condoms had been produced by a WHO-certified manufacturer. However, the OIG was able to prove that the manufacturer authorization form was a fake. The false statements submitted by the company masked the true origins of the products. In reality, the condoms had been produced by multiple untrustworthy companies, which were not authorized to produce condoms as they did not meet minimum quality standards. As a result, the local supplier made a large profit as its price calculations were based on the price of quality condoms. The Office of the Inspector General proved that that the supplier was acting fraudulently to make a profit.
The Ministry of Health had to recall the condoms. It recovered the profits that the supplier had made unlawfully. The Global Fund banned the supplier from any further procurements financed by Global Fund grants.