In 2018, OIG investigated a potential salary kickback scheme being operated by the management of a sub-recipient of two Global Fund HIV grants. Our investigation revealed that US$166,930 of Global Fund grant funds had been misappropriated.
How did the kickback scheme operate?
Employees were recruited on the basis of mutually agreed, ‘take home’ salaries that were lower than the salaries actually paid to the employees as prescribed in the Global Fund grant budget. Senior management instructed the employees to pay back the difference between the lower salary they had accepted and the higher salary they actually received. Employees were instructed to pay back in cash, each month, the difference between these two amounts after receiving their salaries.
The employees said they had reluctantly agreed, fearing dismissal, suspension, or not having their employment contracts renewed, if they refused. This fear also affected the willingness of witnesses to come forward with information about this scheme, making it a particularly challenging area to investigate. As transactions are usually cash based and ‘off the books’, a review of payroll documents alone will not reveal this scheme; therefore, witness testimony is critical to corroborating allegations.
Nearly all CHEERS employees assigned to the Global Fund grant were required to pay kickbacks. On average, the value of the payments paid by the employees represented 27% of their net salary.
The collection of kickbacks from employees is a fraudulent and abusive practice, contrary to the Global Fund’s Policy to Combat Fraud and Corruption and a violation of the Global Fund’s Code of Conduct for Recipients. You can learn more about salary kickback schemes in our animated video.
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