Missing Stock Cover-Up

30.03.2018

This case study is related to:

Product issues | Fraud

An OIG investigation revealed systemic theft of health products financed by the Global Fund and other donors from a central warehouse. Stock levels were manually adjusted in the computer system to cover up the missing products.

The OIG was first alerted to missing stock by the Global Fund Secretariat who had received reports of a stolen pallet of HIV test kits. The ensuing OIG investigation found that, as well as HIV test kits, antiretrovirals to treat HIV, artemisinin-based combination therapy packs to treat malaria, and malaria rapid diagnostic test kits could not be accounted for in the main warehouse of the country.

 

The investigators found that stocks recorded in the electronic warehouse management system had been adjusted downwards to cover up the missing stock.

 

In parallel, the OIG also received information that HIV test kits had been sold to a local non-governmental organization (NGO) in the capital. The investigation determined that the test kits that had been sold to the NGO were the same as those missing from the warehouse.

The OIG concluded that internal controls at the warehouse were ineffective, resulting in multiple opportunities for theft. Management staff were not following warehouse procedures that require biannual stock takes and weekly counts in randomly selected locations.

As a result of the OIG investigation, a national task force, made up of drug enforcement and police authorities, was set up. The task force uncovered an organized cross-border crime network leading to arrests and prosecution. Stock controls and security arrangements were also strengthened and new management brought into the warehouse to prevent reoccurrence.

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