Gates Injects $750 Million in Troubled Global Fund

DAVOS, 26 January 2012 (Associated Press) — Bill Gates rode to the rescue of a beleaguered health fund Thursday by pledging $750 million to fight three of world's killer diseases.

The Microsoft founder says the Bill & Melinda Gates Foundation's donation to the Geneva-based Global Fund to Fight AIDS, Tuberculosis and Malaria comes on top of $650 million it contributed to the fund over the past decade.

Mr. Gates said his pledge at the World Economic Forum — a magnet for the world's business elite — is meant to encourage other potential donors. "These are tough economic times, but that is no excuse for cutting aid to the world's poorest," he said at the forum.

A donor backlash over Associated Press reports about poor financial monitoring and tens of millions of dollars of losses at the $23 billion fund prompted the organization last year to cancel more than $1 billion in new spending. The fund's executive director, Dr. Michel Kazatchkine, this week announced his resignation.

"I think we can't be more transparent than we have been. We're by far the most transparent organization in development," Dr. Kazatchkine said at Davos. "Fighting corruption, yes, of course, and I have repeatedly said zero tolerance for corruption. Yet we also have to recognize that this business is not without risk. And risk, or the sense of risk, can also paralyze action."

Bill Gates tells WSJ's Gautam Naik about the progress his foundation has made in fighting dangerous diseases in the developing world and argues that economic slowdown is no excuse for governments to reduce their commitment towards global health.

Mr. Gates said the promissory note was designed so the fund "can immediately use the money and save lives."

He downplayed the fund's reported losses of tens of millions of dollars to corruption, misuse and undocumented spending. He said he was lending his "credibility" to the fund so others would feel reassured.

"The internal checks and balances have worked in every case," Mr. Gates told reporters, adding it was "disappointing" to see how people have focused on a "small misuse of funds."

"If you're going to do business in Africa, you're going to have some losses," he said. The public-private fund has helped change the fortunes of many of the world's poor through its prevention and treatment programs among 150 countries, Mr. Gates said.

The fund says it has provided antiretroviral treatment to 3.3 million people, detected and treated 8.2 million people with tuberculosis and given 230 million bed nets to families to prevent malaria over its 10-year existence.

Japan's former prime minister, Naoto Kan, told the news conference that his nation has contributed $1.3 billion to the fund. Mr. Kan also said the fund's "transparency" must be maintained — which includes uncovering and publicizing its own losses — as the fund goes through a series of reforms launched last year.

"The European debt crisis is shaking the world economy, which in turn seriously affects the fortunes of the Global Fund. But it doesn't mean the significance of the Global Fund is less," Mr. Kan said. "The corruption exists. It's regrettable, but that's reality."

Global Fund board chairman Simon Bland said the fund is "transforming the way we do business" by streamlining the organization and will continue to "hold ourselves accountable" for what it spends.

"There will be no shying away from that transparency," Mr. Bland said.

Mr. Kazatchkine, who has been at odds with the office that has been uncovering the losses, resigned after the board decided to create a new position of general manager to chart a new direction.

"I believe it is untenable that there are two heads in an organization and that's why I decided to leave," he told AP.

Mr. Bland said he had hired the London accounting firm RSM Tenon Group to look into internal fund allegations that Mr. Kazatchkine, a French immunologist, paid several million dollars to benefit charity activities of France's first lady, Carla Bruni-Sarkozy, and firms run by her close friend.

Bland said the firm has produced a confidential report that he intends to make public which lends little support to the allegations. France is the second-largest contributor to the fund behind the U.S. and Ms. Bruni-Sarkozy serves as one of its ambassadors.

Source: The Wall Street Journal