Bloomberg News

Top Executive Resigns From Disease-Fighting Fund Backed by Gates

January 26, 2012

Jan. 24 (Bloomberg) -- The executive director of the world’s largest disease-fighting fund said today he will resign as its board responded to reports of a misuse of money and a decline in donations.

The Global Fund to Fight AIDS, Tuberculosis and Malaria appointed Gabriel Jaramillo as general manager, a new position that will help “ensure the institution manages donor resources as efficiently and safely as possible,” the Geneva-based fund said today in a statement. Michel Kazatchkine, the executive director for five years, said he would step down in March after overseeing a transition to Jaramillo, according to the statement.

“While I remain fully committed to the Global Fund and its mission, I have concluded that I should not continue as executive director in these circumstances,” Kazatchkine said in a note to staff.

The group backed by governments, charities such as the Bill and Melinda Gates Foundation and companies including Chevron Corp. has spent or committed to spending $22 billion since 2002 on preventing and treating diseases. A committee led by former U.S. Health Secretary Michael Leavitt found in September that the organization lacked sufficient safeguards to prevent fraud. In November, the fund said it had only enough money to pay for essential services for existing programs through 2013 and canceled grants until 2014.

Board Review

The fund appointed the committee in March of last year after reporting “grave misuse of funds” in four recipient nations, prompting governments including Germany and Sweden to freeze donations. The committee’s report called it an “urgent priority” to fix the “unacceptable” working relationship between Kazatchkin and the fund’s inspector general, John Parsons, whose office is responsible for auditing grants and investigating found.

“Michel has always demonstrated the utmost personal integrity,” said Simon Bland, chairman of the fund’s board, said in today’s statement. “It is with deep respect that I accept his resignation.”

Jaramillo, who is scheduled to begin Feb. 1, is a retired executive of bank companies in Brazil, Mexico and the U.S. including serving as chairman of Banco Estado de Sao Paulo SA in Brazil. He was a member of the panel that reviewed the global fund’s financial controls.

--With assistance from Simeon Bennett in Geneva. Editor: Andrew Pollack, Angela Zimm

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net;

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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