Investigation Report: Global Fund Grants in Ukraine, The International Charitable Foundation, "International HIV/AIDS Alliance in Ukraine”


I. Background and Scope

As of 1 July 2015, the Global Fund has made commitments to Ukraine under fifteen grants totaling US$ 486.5 million, of which US$ 429.16 million has been disbursed. Ukraine has three Principal Recipients of Global Fund grants: the International Charitable Foundation “International HIV/AIDS Alliance in Ukraine” (the Alliance Ukraine), the All-Ukrainian Network of People Living with HIV/AIDS, and the Ukraine Health Ministry’s Center for Socially Dangerous Disease Control. Each Principal Recipient is currently managing one active grant, under the Global Fund’s new funding model, covering a three-year period, from 2015-2017, to fight HIV/AIDS and tuberculosis (TB).

Ukraine has the second-highest HIV prevalence rate in Eastern Europe and also carries a high burden of multi-drug resistant tuberculosis. Ukraine is also facing significant political and financial challenges amid a recent armed conflict within its borders and a fragile economic backdrop. Despite this, the country is working hard to reduce the prevalence of HIV and TB.

The Alliance Ukraine has been a Principal Recipient of Global Fund grants since March 2004. Under Grant UKR-011-G08-H, which was active from 1 January 2012 to 31 December 2014, the Global Fund disbursed US$ 64.7 million to the Alliance Ukraine.

In April 2015, the Office of the Inspector General (the OIG) initiated an investigation into allegations of misconduct by the Finance Director of the Alliance Ukraine (the Finance Director). The OIG investigation focused on a complaint formally reported to the Executive Director of the Alliance Ukraine on 16 December 2014, which contained conflict of interest allegations against the Finance Director of the Alliance Ukraine.

The Alliance Ukraine recruited the Finance Director in December 2009. From January 2013 to February 2015, the Alliance Ukraine had a contractual relationship with Veselka LLC (Veselka), a local supplier of event management services. To fulfil the Global Fund’s requirement to procure services free of value added tax, the Alliance Ukraine also signed separate contracts with two private entrepreneurs affiliated with Veselka.1 One of the private entrepreneurs was the Finance Director’s sister and the wife of Veselka’s owner.

The OIG’s investigation also included in its scope the timing of the Alliance Ukraine’s disclosure of the complaint to the Global Fund.