VZCZCXRO2368
RR RUEHROV
DE RUEHKM #0523/01 1420317
ZNR UUUUU ZZH
R 220317Z MAY 09
FM AMEMBASSY KAMPALA
TO RUEHC/SECSTATE WASHDC 1431
INFO RUEAWJA/DEPT OF JUSTICE WASHDC//ICITAP
RUCNIAD/IGAD COLLECTIVE
RUEHGV/USMISSION GENEVA 1041

UNCLAS SECTION 01 OF 02 KAMPALA 000523 
 
C O R R E C T E D COPY///ADDING SENSITIVE CAPTION/// 
 
DEPARTMENT PASS TO MCC (CHAKA) 
DEPARTMENT FOR S/GAC 
DOJ FOR ICITAP (TREVILLIAN, RODERICK, BARR, AND RAUCH) 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: PGOV PHUM EAID KCOR KHIV UG
SUBJECT:  GOOD NEWS AND BAD NEWS AS THE GLOBAL FUND RETURNS TO 
UGANDA 
 
Ref:  Kampala 444 
 
KAMPALA 00000523  001.2 OF 002 
 
 
¶1.  (SBU) Summary:  The Global Fund to Fight AIDS, Tuberculosis and 
Malaria is poised to resume disbursement of funding for previously 
approved grants in Uganda that for the most part have been on a 
three-year hiatus caused by the illegal diversion of Global Fund 
monies in 2005.  The resumption of funding comes at a good time in 
that Uganda is facing, yet again, a potentially disastrous stock-out 
of life-saving drugs, including anti-retrovirals to treat HIV/AIDS. 
At the same time, we are deeply concerned about the Government of 
Uganda's passivity and inability to take the lead in fighting 
HIV/AIDS.  As donors continue to willingly shoulder most of the 
resource burden and repeatedly come to the rescue when the 
Government mismanages, we are perpetuating donor dependence and 
perversely undermining good governance and accountability in Uganda. 
 End summary. 
 
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Background:  Global Fund's Long Hiatus from Uganda 
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¶2.  (SBU) The Global Fund to Fight AIDS, Tuberculosis and Malaria 
ceased disbursing funds in Uganda in late 2005 after revelations 
that various Government of Uganda (GOU) agencies and civil society 
organizations may have diverted $1.5 million of Global Fund monies, 
either for personal gain or to finance partisan efforts to win 
approval of the referendum the previous year that eliminated 
presidential term limits.  In response, Ugandan President Yoweri 
Museveni established a Commission of Inquiry, which conducted a 
ten-month investigation into the scandal.  Although the inquiry was 
presented to President Museveni in May 2006, the Government White 
Paper on the Judicial Commission of Inquiry into the Alleged 
Mismanagement of the Global Fund was not issued until November of 
that year.  It stated that the Ministers of Health and Finance would 
not be held accountable, only technicians and it requested that 
funds be made available to the Criminal Investigation Department 
(CID) and Department of Public Prosecution (DPP) to investigate and 
prosecute.  However, the GOU did not make funds available for 
investigations until nearly two years after the inquiry was 
submitted to President Museveni, seriously diminishing the chances 
for good investigation and successful prosecution.  Nearly three 
years after the scandal broke, police investigations began, 
culminating in the recent successful prosecution of two minor 
figures in the scandal (see reftel).  Under pressure from donors, 
the Global Fund also appointed its own Inspector General (IG) to 
carry out an investigation.  Although the Global Fund created the IG 
position in 2005, the person appointed, John Parsons, did not visit 
Uganda until 2008. 
 
¶3.  (U) IG Parsons is reportedly almost ready to submit his final 
report to the Global Fund Board on the response of the GOU to the 
scandal and on the adequacy of the so-called Long Term Institutional 
Arrangements (LTIA), a complex set of interagency fiduciary 
procedures put in place after the scandal to protect the integrity 
of donor-provided funds in the health sector. 
 
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Uganda Faces Life-Threatening Drug Shortages 
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¶4.  (SBU) In a separate-but-related development, Uganda again faces 
imminent shortages of life-saving anti-retroviral and other drugs. 
The GOU has known since the end of 2008 that a potential stock-out 
of antiretroviral drugs was imminent.  This was reaffirmed at the 
end of January.  The GOU response has been at best piecemeal and we 
are unable to verify whether the Ministry of Health has sufficient 
safeguards in place to ensure a continuous supply of drugs to those 
currently enrolled.  The Ambassador and Charge d'Affaires (CDA) have 
written to the Minister of Health twice, in April and May, to convey 
the message that the USG, through PEPFAR, is no longer in a position 
to bail out GOU programs facing stock-outs given our own budget 
constraints and the need to maintain the integrity of PEPFAR 
programs and the health of their clients.  We further emphasized our 
concern about the GOU's management of ARVs in Uganda.  As it is now, 
PEPFAR funds 80% of the total effort to fight HIV/AIDS in Uganda, 
and pays for the ARVs of 95,000 of the 175,000 Ugandans who now 
receive them. 
 
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Global Fund:  We're Back! 
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¶5.  (U) In this context, the CDA met May 13 with a Global Fund team 
led by Fareed Abdullah, Global Fund Director for Africa.  Abdullah's 
team met separately in the week with the PEPFAR Coordinator and the 
Director of Improved Human Capacity at USAID/Uganda.  Abdullah told 
 
KAMPALA 00000523  002.2 OF 002 
 
 
the CDA and other donor Chiefs of Mission that there would be no 
final official decision until after his visit, but that Global Fund 
would very likely resume funding to Uganda "within weeks, not 
months."  The IG's report into the scandal is still pending 
completion of an ancillary report in the readiness of the LTIA to 
manage Global Fund monies.  Abdullah made it clear, however, that it 
was the Global Fund Secretariat's prerogative to resume funding or 
not, independent of the IG's final conclusions.  He said the 
Secretariat believes that it is time to move on, put the scandal 
behind it, and begin to alter the perception that the Global Fund is 
unwilling to provide funding to Uganda. 
 
¶6.  (SBU) Abdullah said that there will be renewed vigor and 
vigilance on the part of the Global Fund in overseeing its programs 
in Uganda and that it will continue to press the GOU hard for 
recoveries and prosecutions.  Abdullah was sanguine on preventing 
future theft, noting that a large-scale diversion of funds at the 
central level in the future is unlikely because the issues are 
isolated and are more likely to occur at the decentralized level. 
The expectation is that the Long-Term Institutional Arrangements 
will be used in the next disbursement of Round 7 resources; however, 
the IG report on the LTIA is still pending.  Given the GOU's poor 
track record in managing many of the existing systems and 
structures, it is not clear how successful the LTIA will be. 
 
¶7.  (SBU) In terms of funding, the Global Fund will turn on three 
different spigots in Uganda in the coming weeks: 
 
--  Round 6 for Tuberculosis; this is an ongoing grant, the third 
disbursement request is being planned; however, there are 
outstanding reporting issues on activities performed to date. 
 
--  Round 4 for malaria; was renewed and signed two weeks ago for 
$71 million; Global Fund is waiting for Uganda to submit a 
disbursement request. 
 
--  Round 7 for HIV/AIDS and malaria; the first tranche of Round 7 
funding will amount to $23 million for ARVs, according to Abdullah. 
This will be disbursed quickly in light of the dire shortage of ARVs 
in Uganda.  To hasten disbursement, the Global Fund plans to waive 
its requirement for the appointment of a new procurement agent, and 
instead use a procurement agent used in earlier procurements. 
 
Note:  Round 3 for HIV/AIDS ended in December 2008 with remaining 
unspent funds.  The Global Fund decided not to sign a Continuation 
of Services agreement, an emergency procedure to deliver life-saving 
services, since the previously-signed Round 7 will accomplish the 
same function. 
 
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Good News or Bad News?  Both 
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¶8.  (SBU) Other donor representative in attendance on May 13 spoke 
at length about corruption and the need to follow-up prosecutions 
and recoveries in the Global Fund scandal.  The CDA touched on the 
broader issue of ownership, noting that while the U.S. is relieved 
that the Global Fund will be able to address the ARV stock-out in 
the short-run, we are also very concerned about the GOU's 
longer-term inability and unwillingness to lead on the issues of 
proper management of donor funds, and more broadly, successful 
planning and implementation of the GOU's own strategy to fight the 
HIV/AIDS pandemic.  The GOU's recent actions (or lack thereof), he 
noted, indicate the GOU is irresponsibly ceding responsibility for 
fighting HIV/AIDS to donors like the U.S., the Global Fund, and 
others. 
 
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Comment:  Caught in Our Own Trap 
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¶9. (SBU) In theory, the Global Fund's return to Uganda is good news, 
both in the short-term because money is needed now to buy 
life-saving drugs, and in the long-term because our own programs 
like PEPFAR cannot indefinitely carry the burden of fighting 
HIV/AIDS in Uganda.  We need the Global Fund as a partner and our 
efforts are complementary.  At the same time, we remain deeply 
concerned over the lack of political will and initiative on the part 
of the GOU to lead the way and contribute meaningfully in an area 
that is so clearly a public responsibility.  In this and other 
areas, years of steadily growing donor inflows appear to be having a 
perverse impact by diminishing the need for Uganda's leadership to 
govern well and provide essential services to its citizen. 
 
HOOVER