Financial Crime World

Guinea’s Fraud Woes: OIG Investigation Exposes Millions in Misappropriated and Falsified Grant Funds

Overview of Fraudulent Activities in Guinea’s Grant Administration

The Office of the Inspector General (OIG) has released a report detailing the extensive investigation into the administration of the US$ 29.7 million USAID-funded Partnerships for the New Generation of Schools and Social Protection Project (PNGSP) grant in Guinea. The findings shed light on the pervasive fraudulent activities that led to the misappropriation and embezzlement of millions in grant funds.

Damning Results of the OIG Investigation

  • Fraudulent Transactions in Over Half of 26 Suspect Sub-sub-recipients: The investigation revealed that over half of the 26 sub-sub-recipients had serious issues, with misappropriation and falsification of records.
  • Estimated Misappropriation and Fraudulent Transactions: The report identified a total of US$ 416,183 in misappropriated and fraudulent transactions.
  • Case of Fictitious NGOs: A PNPCSP staff member established four fictitious NGOs, misappropriating US$ 26,023.
  • Unaccounted Funds: Nine other sub-sub-recipients had not executed any grant activities with the funds they received, leaving US$ 60,953 in unrecovered funds.
  • Falsified Invoices and Documentation: Instances of falsified invoices and documentation totaling US$ 78,355 were uncovered.
  • Unsupported Expenditures: US$ 250,852 in unsupported expenditures were made by PNPCSP.

USAID’s Response: The Additional Safeguards Policy (ASP)

In response to the pervasive issues, the USAID Secretariat invoked the Additional Safeguards Policy (ASP) in July 2012. The following changes have been made:

  • Consolidation of Grants: The treatment component of the Round 10 HIV grant was consolidated with the Health Systems Strengthening grant, and the National AIDS Council (NAC) became the Principal Recipient.
  • Principal Recipients and Fiscal Agents: PNPCSP is now a Sub-recipient operating under a zero cash policy with no sub-sub-recipients. Population Services International (PSI) replaced the National Tuberculosis Program as the Principal Recipient of Phase 2 of the Round 9 Tuberculosis grant, with the National Malaria Program acting as a sub-recipient under a zero cash policy. An international fiscal agent and a zero cash policy were also implemented since 2013.
  • Engagement of a Fiscal Agent: Cardno, an international fiscal agent, observes all non-health related procurements and verifies and co-signs on all payments to ensure transparency and effective controls.

Conclusion: Moving Forward

The OIG’s report highlights the need to strengthen financial management systems, improve internal controls, and enhance the roles of Principal Recipients and fiscal agents in monitoring grant activities. The global community is tasked with ensuring these lessons are learned and the necessary steps are taken to restore accountability and trust in the management of international aid in Guinea.