Financial Crime World

Title: OIG Uncovers Millions in Fraudulent Transactions in Sierra Leone’s Health Ministry

Background

The Office of the Inspector General (OIG) of Sierra Leone identified major financial control deficiencies and indications of fraud in grants executed by the Ministry of Health and Sanitation (MOHS) in a damning audit in 2019. Over $2 million in transactions were classified as non-compliant and fraudulent, including cases of bid-rigging, falsified documents, illegal payments, and per-diem fraud [1]. Following the audit, corrective actions were taken.

Recent Findings

In December 2020, the OIG discovered potential fraud and manipulation in procurements of catering and hall rental services carried out by staff within the Integrated Health Project Administration Unit (IHPAU) of the MOHS. The Local Fund Agent, Pricewaterhouse Coopers (PwC), and the Audit Services of Sierra Leone collaborated on the investigation in four of the country’s 16 districts.

Investigation Results

First Finding: Malaria Mosquito Net Distribution and Health Management Information System Training

  • The OIG identified $415,148 in non-compliant expenditures related to the malaria mosquito net distribution training campaign and health management information system training [2]
  • Recommendation: Re recovery of nearly $200,000 of grant funds spent on these activities
  • The OIG identified $28,582 as a recoverable amount
  • The Global Fund Secretariat will work to recover this amount from all responsible entities

Second Finding: Procurement Oversight

  • Following the 2020 OIG investigation, the Fiscal Agent and MOHS began identifying and validating suitable suppliers
  • Successful service delivery led to delays in detecting fraudulent practices at IHPAU

To minimize related risks, the Fiscal Agent will:

  1. Review request for quotation procurement documents valued over $2,500 before IHPAU signs the local purchase order
  2. Add this requirement to the upcoming IHPAU Operations Manual
  3. Caterers may now only be used in exceptional circumstances, and with approval from the Global Fund Country Team
  4. Instead, training participants are paid an allowance for lunch and refreshments through mobile money

Conclusion

This investigation further exposes the presence of fraudulent and collusive practices within IHPAU’s procurement of catering suppliers. Despite efforts to strengthen IHPAU’s procurement capacity [3], these fraudulent activities occurred, emphasizing the need to increase oversight and assurance over procurement in Sierra Leone.

Commentary

The Fiscal Agent’s handling of these transactions raises concerns, as under the terms of its contract with the Global Fund, it is required to review and verify supporting documentation for expenditures and conduct periodic fraud spot checks for high-risk transactions. The persistence of fraudulent and collusive practices in Sierra Leone may warrant a reassessment of whether the Additional Safeguard Policy should be applied to the country.

[1] Background Information Source [2] OIG Report on Fraudulent and Collusive Procurement by Staff Members of the IHPAU [3] Efforts to Strengthen IHPAU’s Procurement Capacity Source