Aid to Africa

Zambia corruption scandal links back to Canada

(November 15, 2010) A corruption scandal in Zambia involving top officials in the Health Ministry has links to Canadian foreign aid, writes Brady Yauch.

A brewing corruption scandal involving Zambia’s Health Ministry has put foreign aid donors on high alert to government corruption, forcing many of them to pull back on their aid commitments.

According to a recent report by the Globe and Mail, Canada’s aid agency, the Canadian International Development Agency (CIDA), has not been spared involvement in the scandal.  Canadian officials at CIDA have now suspended a $14.5-million health program in Zambia after learning of the embezzlement and its connection to CIDA grants.

Internal documents obtained by Probe International show that CIDA lost $880,000 as a result of the corruption, which involved top Zambian health officials accused of embezzling around $7-million from health programs funded by foreign donors. According to the British medical journal [anotherPDF], The Lancet, another $8-million in embezzled funds are expected to be returned to donors.

To find out more about the scandal and CIDA’s involvement in it, the Canadian foreign aid watchdog, Probe International, has filed an access to information request and is awaiting a reply. (Update: Here is a link to the documents requested)

The impact of the theft on Zambia’s health care system could be severe as more than 55 percent of the country’s health budget is funded through international aid.

According to The Lancet, $137-million in grants from the Global Fund to Fight AIDS, Tuberculosis and Malaria to Zambia has been suspended because of concerns that Zambian authorities are not moving fast enough to improve internal control systems.

Sweden and the Netherlands have also suspended a total of $33-million in health aid over concerns of corruption and embezzlement.

More interesting, the aid agencies failed to detect the fraud themselves. Sweden’s minister of international development co-operation, Gunilla Carlsson, in talking about corruption in the health sector, says aid agencies weren’t aware of the misuse of their funds in the health sector until a Zambian whistle blower alerted them. This has prompted questions about the aid agencies’ own internal auditing capabilities.

“There are indications that irregularities have existed since the early 2000s,” she said. “I cannot help but ask the question: How long would it have taken before we, as donors, noticed something was awry if it hadn’t been for the whistle-blower?”

Back in Canada, confidence is also not inspired by CIDA’s piecemeal efforts to discipline Zambia’s health ministry: while CIDA has withheld $14.5-million in funds for one health program, according to the agency’s website it continues to give more than $17-million in aid [PDF] for a number of other programs, including a fund for small projects, a child health programs and, ironically, improving the delivery of aid money.

Meanwhile, as fears that corruption is rife in the Zambian government have spread, a number of donors have suspended their aid to other programs, including $65-million in aid from the European Union and Denmark for Zambia’s road system. In total—when all bilateral aid is counted—more than $237-million to all sectors has been suspended due to suspicions of corruption.

Grasping for someone else to blame, Zambia’s President Rupiah Banda responded angrily by accusing the aid agencies of “blackmail…We are very grateful for whatever help they give us, but we will not be turned into their puppets.”

This scandal reinforces the growing public opinion that Third World governments should bear responsibility for financing their own public services through transparent tax systems, rather than relying on easily-stolen foreign donations. Indeed, according to one study led by Professor Christopher Murray, Director of the Institute for Health Metrics and Evaluation, University of Washington, an increase in foreign aid funds for health programs in Sub-Saharan Africa can act as a disincentive for domestic governments who, it showed, decreased their expenditures on health initiatives.

Giving Zambian taxpayers a role in financing their country’s health systems might just be the medicine they need for better service.

Brady Yauch, Probe International, November 15, 2010

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