VZCZCXRO0339
OO RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0945/01 2951044
ZNR UUUUU ZZH
O 211044Z OCT 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3590
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHDS/AMEMBASSY ADDIS ABABA 2485
RUEAIIA/CIA WASHDC
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/EUCOM POLAD VAIHINGEN GE
RHEFDIA/DIA WASHDC
RUEHGV/USMISSION GENEVA 1634
RHEHAAA/NSC WASHDC

UNCLAS SECTION 01 OF 02 HARARE 000945 
 
SENSITIVE 
SIPDIS 
 
USAID/W FOR KENT HILL, GH/AA; HOPE SUKIN, AFR/SD; 
GH/HIV-AIDS, MARK DYBUL, S/DAC; HHS/NIH/FIC; 
SADENIYI-JONES, HHS/OS/OGHA 
 
E.O. 12958: N/A 
TAGS: EAID KHIV KSCA OSCI PGOV PREL TBIO TSPL ZI
SUBJECT: ZIMBABWE GLOBAL FUND AUDIT 
 
REF: HARARE 579 
 
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SUMMARY 
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¶1.  (SBU) Late last year, the Global Fund (GF) deposited 
approximately USD 8 million in the Reserve Bank of Zimbabwe 
(RBZ) to fund HIV/AIDS programs through nongovernmental 
partners in Zimbabwe.  Post became aware in the ensuing 
months that these funds were not being disbursed.  In July, 
RBZ governor Gideon Gono told the Ambassador that the funds 
had been diverted for other purposes.  The Office of the 
Global AIDS Coordinator (OGAC) subsequently urged GF to 
conduct an audit.  This audit is now being conducted. 
Zimbabwe's Round 8 application has been provisionally 
approved after technical review and will now go the GF Board 
for review.  Post suggests that OGAC carefully monitor the 
Round 8 process and oppose approval until after the audit has 
been completed and mechanisms put in place for is proper 
disbursement of funds and accountability.  END SUMMARY. 
 
---------------- 
Growing Concerns 
---------------- 
 
¶2.  (SBU) Subsequent to the deposit last year by GF of 
approximately USD 8 million in the RBZ for HIV/AIDS programs 
to be administered by the Zimbabwe Association of Church 
Hospitals and nongovernmental sub-grantees, the USG PEPFAR 
team and other donor representatives became aware that the 
RBZ was not disbursing GF monies for these programs.  In a 
July 1 meeting with the Ambassador, Gono admitted that GF 
monies had been diverted for other purposes.  (COMMENT:  The 
period from January until July was politically turbulent. 
Elections took place in March and June, and in the period 
between elections, ZANU-PF spent large amounts of money both 
in electioneering and in orchestrating violence against the 
opposition.  It is logical to conclude that GF monies were 
used for these purposes.  END COMMENT.) 
 
¶3.  (SBU) In July, Post brought this information to the 
attention of OGAC and the DHHS Office of Global Health 
Affairs (OGHA).  OGAC and OGHA wrote to GF on July 21 
expressing concern about the GOZ's processing of GF funds and 
requesting an immediate audit. 
 
----------------------------------------- 
The Audit and Donor Concerns Regarding GF 
----------------------------------------- 
 
¶4.  (SBU) On September 25, OIG/GF conducted a preparatory 
video conference with U.S., DFID, and EC representatives in 
Harare.  The audit will be led by Inspector General John 
Parsons; inspector Anne Rwego arrived in Harare a week after 
the videoconference.  Field work was anticipated to last 
three weeks.  The audit report will likely be released in 
early November. 
 
¶5.  (SBU) At an October 7 meeting with Rwego, donors 
expressed concerns about GF processes and results: 
 
a) Poor communication--PEPFAR team and other donor 
representatives sit on the Zimbabwean Country Coordinating 
Mechanism (CCM).  The CCM Secretariat has been an ineffective 
conduit of information between the GF Portfolio Manager in 
Geneva and CCM members.  Donor representatives have 
repeatedly requested that the Portfolio Manager communicate 
directly with them, but this has not occurred.  As a result, 
donors have limited financial information about GF activities 
in Zimbabwe. 
 
b) Ineffective and misguided financial disbursement 
process--Hyperinflation, regulations for currency exchange, 
and limitations imposed on NGOs' access to foreign currency 
have made Zimbabwe an extremely difficult operating 
environment.  The Portfolio Manager has not accepted 
suggestions by donors to improve management of GF monies in 
this environment. 
 
 
HARARE 00000945  002 OF 002 
 
 
c) Delayed Implementation for Rounds 1 and 5--Because of the 
economic situation in Zimbabwe and a several-month government 
ban on NGO activities, the implementation of GF programs, 
particularly for TB and Round 5, has been delayed.  Not only 
are the Zimbabwean people not being served, but benchmarks 
are not being achieved.  This negatively affects future 
programming which depends on demonstration of past progress. 
 
¶6. (SBU) Rwego indicated concern about areas described by 
donors and lack of transparency.  She was particularly 
concerned about reports that funds were diverted for "other 
national priorities." 
 
--------------------------------------- 
Concerns about Round 8...and Suggestions 
--------------------------------------- 
 
¶7.  (SBU) Zimbabwe's Round 8 application for USD 500 million 
funding over five years has received technical approval and 
will now go to the GF Board for review.  Post and other 
donors are concerned that without transparent and 
well-structured GOZ mechanisms for the distribution of funds, 
funds will be misused and NGOs will have difficulty in 
accessing and using funds.  We suggest urging GF not to make 
any decisions on Round 8 until after the release of the 
ongoing audit and further discussion with donors.  If a 
decision is ultimately made to award additional funds, we 
suggest urging GF to place a resident manager in Harare to 
monitor the disbursal of funds and to ensure accountability. 
The Ambassador made this suggestion to the Portfolio Manager 
in a recent meeting. 
 
MCGEE