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The Associated Press January 26, 2011, 10:19AM ET

Germany suspends payments to global health fund

Germany's development ministry said Wednesday it will halt all payments to a $21.7 billion global health fund until it gets answers about corruption allegations raised in articles by The Associated Press.

The ministry said its pledge of euro200 million ($270 million) will be withheld from the Global Fund to Fight AIDS, Tuberculosis and Malaria pending a full investigation by Germany into the corruption that the fund's own investigators are turning up.

"We obviously look very closely at the (donated) money now. It's the money of German taxpayers, so we have to make sure that it was rightly used," a ministry spokesman told the AP, speaking on condition of anonymity in line with German government policy.

The spokesman said it was demanding that the fund shed more light on the $34 million in losses due to forged documents, improper bookkeeping and other widespread fraud and has summoned a Global Fund representative to discuss the reports.

The AP reported Sunday that the fund's new investigative unit found high percentages of contract money eaten up by corruption. Germany is the fund's third largest government donor behind the U.S. and France, having pledged euro600 million for 2011-13.

The Global Fund's chief spokesman did not immediately respond to requests for comment Wednesday.

Germany's Development Minister Dirk Niebel said in a statement late Tuesday that the serious questions raised in two AP articles on Sunday and Monday require a thorough investigation.

Niebel, of Germany's pro-business Free Democrats, has been known to be less enthusiastic about the Global Fund than his Social Democratic predecessor Heidemarie Wieczorek-Zeul, from whom he took over in fall 2009.

Germany's parliament has approved euro200 million for the fund in 2011, meant to be the first portion of the euro600 million Germany pledged for 2011-13.

But Niebel, who has said the Global Fund was only one of many good programs, has not yet asked for next year's euro200 million to be set aside in his ministry's budget.

"I take the allegations of corruption and breach of trust carried by media against the Global Fund very seriously and I expect that the fund will promptly clear them up," said Niebel. "I have halted all further payments to the fund until it is fully cleared up."

The fund has been exposing corruption in its own ranks more frequently since last fall when the fund's inspector general, John Parsons, hired Robert Appleton, a highly decorated ex-U.S. federal prosecutor, to head up a newly beefed up investigative unit.

Sweden said in November it was suspending its $85 million annual donation until the fund's problems are fixed. Last week, the fund's executive director, Dr. Michel Kazatchkine, a French immunologist, flew to Stockholm to try to assure officials there the problems would be fixed.


Associated Press reporter Juergen Baetz contributed to this report from Berlin.

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