Disease Funds May Have Gone to Home Renovations, Blood Diamonds

A $22 billion disease-fighting fund backed by Microsoft Corp. (MSFT) founder Bill Gates found that money intended for people with life-threatening illnesses was used for home renovations in India and diverted to a person linked with money laundering and so-called blood diamonds in Nigeria.

The Global Fund to Fight AIDS, Tuberculosis and Malaria is seeking to recover as much as $19.2 million from grants in eight countries, the Geneva-based organization said in a set of reports today. As much as $1.3 million was misused by the head of a non-governmental AIDS organization in India to buy a car and renovate his apartment, one report said. In Nigeria, money was siphoned to a person arrested in 2003 for money-laundering and smuggling diamonds that are mined and sold to support war.

The reports, which examined $1 billion in grants, expand the extent of fraud and misuse of money discovered by internal investigators. The organization said last year it was seeking the recovery of $44.2 million in four nations for “grave misuse of funds.” That triggered a review led by former U.S. Health Secretary Michael Leavitt, which found the Global Fund had “inadequate accountability mechanisms” and “insufficiently rigorous scrutiny of budgets.”

“The Global Fund will not tolerate misuse of funds,” Simon Bland, the organization’s chairman, said in a telephone interview today. “We’re seeing a trajectory of aggressive reclaiming of funds that are misused.” The group has recovered $19 million of misappropriated money so far, most of it in the past 12 months, Bland said.

The Global Fund has spent more than $13 billion since it was established in 2002 to fight the biggest infectious killers, and has committed to spending about $9 billion more. It’s backed by governments, charities including the Bill & Melinda Gates Foundation and corporate donors including Chevron Corp. (CVX)

At its triennial replenishment meeting in New York last year, the fund received pledges of $11.7 billion for programs from 2011 to 2013. That’s more than the $9.7 billion it had for the previous three years, and a little more than half of the $20 billion it wanted.

To contact the reporter on this story: Simeon Bennett in Geneva at sbennett9@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net