Health Ministry Deflects Blame For Massive Corruption

The Ministry of Health on Sunday denied any knowledge that former staff implicated in a new report had compromised more than $12 million in health sector grants or taken hundreds of thousands of dollars in bribes, and said all parties involved in the contracts were responsible—except the ministry itself.

On Friday, the Global Fund to Fight AIDS, Tuberculosis and Malaria released the damning results of a monthslong investigation implicating unnamed health officials in taking more than $400,000 in bribes to manipulate lucrative contracts, most of them for mosquito nets.

Though the report does not name the officials, it identifies one as the previous director of the Health Ministry’s National Center for Parasitology, Entomology and Malaria Control (CNM), Duong Socheat. The others are a former CNM deputy director and a past procurement officer at the ministry’s National Center for HIV/AIDS, Dermatology and STD Control (NCHADS).

In an unsigned statement released Sunday, the Health Ministry said it was “not aware/informed of any individual acts in relation to the matter raised in the [Global Fund] report during the course of grants implementation even though there [was] a strict system to regularly check/verify by independent bodies including [the local fund agent].”

The local fund agent—which oversees, verifies and reports on the Global Fund’s grants in each country—was KPMG, one of the largest financial services firms in Cambodia, until 2008, and is now the Swiss Tropical and Public Health Institution.

The Health Ministry—which oversees both CNM and NCHADS, the grants’ principal recipients—said it was not responsible for the corruption.

“Based on the structure of the [Global Fund], [the Health Ministry] does not have any authority to select [principal recipients] and/or [sub-recipients] for being accountable and responsible in managing/implementing Global Fund grants, and all program grant agreements were signed directly between selected [principal recipients] and the [Global Fund] under acknowledgment by country coordinating committee… and civil society organizations.”

The country coordinating committee includes representatives from the Health Ministry, World Health Organization and NGOs. It puts together grant proposals and also bears some responsibility for tracking how the money gets spent.

All these parties, the Health Ministry says in its statement, “and suppliers/contractors/companies [whose] names appeared in the [Global Fund] report shall take full responsibility in dealing with this matter.”

The statement adds, “We may not agree with all of the [Global Fund] findings and their interpretation,” but does not elaborate.

The Global Fund accuses former CNM director Mr. Socheat and one of his deputies of taking a combined $410,000 in bribes and $20,000 in gifts to secure multimillion dollar contracts for Swiss firm Vestergaard Frandsen and Sumitomo Chemical Singapore to supply Cambodia with mosquito nets. It accuses an NCHADS procurement officer of directing another $317,000 worth of grants to firms that agreed to pay him kickbacks of up to 15 percent.

Health Minister Mam Bunheng and Mr. Socheat, who retired in 2011, could not be reached for comment.

In a statement issued Friday, current CNM director Char Meng Chour maintained that the bribes, while illegal, “have not influenced improperly the bidding,” because there was no indication that the nets were bought for more than their market value.

Tia Phalla, deputy director of the government’s National Aids Authority and chair of the country coordinating committee for Global Fund grants, also downplayed the significance of the alleged bribes. He questioned the Global Fund’s claims of how big those bribes were, but declined to offer an alternative figure.

“I think the problem is not so serious,” Mr. Phalla said.

“It’s the way that one defines the damage…and how you compare to the overall funding” from the Global Fund, which added up to $220 million between 2003 and 2010, he said. “To some extent we have some reservations of the way of the calculation of the total damage…. This needs to be done again.”

Mr. Phalla conceded that “wrongdoing” had occurred, and that the coordinating committee bore some responsibility.

“We have the responsibility to work with the [principal recipients], with the Ministry of Health; we are all responsible for the problems that happened. But some tricks escaped from our routine…and some suppliers played some tricks also,” he said.

Mr. Phalla identified the CNM deputy director implicated in the Global Fund report as Kheng Sim. According to the report, Ms. Sim was removed from her post in September as a direct result of the investigation. She could not be reached for comment.

He said he did not know the identity of the NCHADS procurement officer, however. According to the Global Fund report, the officer, a man, left his post last year.

In a message accompanying the report, Global Fund executive director Mark Dybul said the group was taking steps to recover the relevant funds, but did not elaborate.

Mr. Phalla said he knew nothing about this, but supported the idea of a local investigation of the former health officials.

“If there is evidence, if it is true…it’s the way to enhance good governance in Cambodia. We have the ACU,” he said, referring to the government’s Anti-Corruption Unit. “We have the law enforcement agency to take action on the allegations.”

Sau Phan, an undersecretary of state at the Ministry of Interior, said the Global Fund report was under review.

“I have received this information, but the Ministry of Interior has not taken action yet, and it’s too early to say if it will, because this report just arrived,” he said.

National Police commissioner Neth Savoeun and Anti-Corruption Unit spokesman Keo Remy declined to comment.

In a statement of its own, Vestergaard Frandsen, one of the two mosquito net providers, blamed the bribes on two employees out of its India office.

“This was not known or approved by our management in Switzerland,” it said. “Nevertheless, Vestergaard is ultimately responsible for the company and actions in any of its subsidiaries. We have implemented corrective actions that include improved controls and procedures in all our operations. We’re committed to operating under the highest ethical and business practices.”

The other mosquito net provider, Sumitomo Chemical Singapore, has not replied to a request for comment.

The Global Fund says it has suspended all contracts with both firms. In 2011, it handed responsibility for disbursing current and future grants to Cambodia to the U.N. Office for Project Services.

(Additional reporting by Denise Hruby)

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