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How to waste foreign aid money

Waste, laziness, and closing ranks: that is how your (or Bill Gates's) aid money -- $330 million -- is wasted as this short example shows. And they get away with it...

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Are they getting their aid?
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Robin Mitchinson
On 17 December 2013 14:41

This is a woeful but depressingly familiar tale of corruption in foreign aid programmes which has gone largely unreported in the Western media, perhaps on the reasoning of ‘What else is new?’

The country is Cambodia. The donor is the Global Fund, which has been hugely financed by Bill Gates. The money at risk is about $330 million.

The lid came off after an investigation into bribes to government officials to fix contracts for the supply of mosquito nets worth $20 million. The kickback was 15 percent. Two officials trousered $500,000 each. The Director of the National Malaria Centre got $351,000. The nets were useless as they had not been treated with insecticide, and had to be entirely replaced.

Other scams have been played, such as double-invoicing and false accounting. Up to two-thirds of some funds have been lost to fraud.

And how have the donors reacted? In two ways.

‘Like zombies’ says one expert. ‘Keep it quiet’ is the attitude. The donors simply plus-up the grants to take account of the money that goes walkabout on the reasoning that it would be damaging to the end-recipients, the poor and the sick, if a tougher line were to be taken. Action for recovery of stolen funds seems not to be on the donors' critical path. This makes them complicit in the crime.

And they appointed a top finance man, an Ex-Treasury mandarin. He rapidly uncovered the extent of the frauds and blew the whistle. And how was he rewarded? That’s right. In the usual tradition they shot the messenger.

The irony is that these scams are usually crudely simple and easy to detect.

There are the tenders that come in before the tender documents are published. There’s the ‘withdrawal’ scam, when all the bidders except one pull out before the opening of tenders, all the companies being owned by the same person. There are the identical arithmetical errors admitting collusion.

There’s the double invoicing trick where the supplier submits two invoices – the actual cost of the service, and the cost to be submitted for payment by the client, and splitting the profit. There are the ‘ghost’ consultants. There are the fake business accounts for siphoning-off the money.

One simple solution is for the contracts to be awarded by the donor, not by the receiving Ministry. Too easy?

Cambodia is not an isolated case. Massive fraud has been uncovered in Mali, Mauritania, Djibouti Uganda, Zimbabwe, Philippines, Ukraine and Zambia. This is charity money. Perhaps the moral is that charity really does begin at home.

Robin Mitchinson is a regular contributor to The Commentator

Read more on: foreign aid industry, the down-side of foreign aid, foreign aid to africa, is foreign aid harmful to developing countries?, Can we afford foreign Aid?, and cambodia
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