11/22/2013
By Courtesy of The New York Times
Global Fund Suspends 2 Mosquito Net Makers
By Donald G. McNeil Jr.
21 November 2013
The two top producers of mosquito nets for the war on malaria have been temporarily banned as suppliers by a global disease-fighting fund after admitting that they paid bribes to health officials in Cambodia.
Although the suspensions raise the possibility that the world will not get the 200 million nets it needs in 2014, a spokesman for the Global Fund to Fight AIDS, Tuberculosis and Malaria, which suspended the two net makers, said he was confident no shortage would develop.
The suspended companies, Vestergaard Frandsen of Switzerland and Sumitomo Chemical of Japan, are still fulfilling their current contracts and new suppliers are being signed up, said Seth Faison, the fund's director of communications.
Until recently, Vestergaard and Sumitomo together supplied 80 percent of all the nets the fund bought; last year, they supplied about half.
Nets impregnated with insecticide that kills or repels mosquitoes for up to five years have emerged as an important new weapon, one of the chief reasons deaths from malaria have dropped to 650,000 from one million in the last decade.
The fund hopes to have seven suppliers soon, Mr. Faison said. And purchasing has been simplified, he added; nets used to have 227 specifications to meet, and now there are 10. More suppliers also means prices have fallen to $3.05 per net; a few years ago, they were about $5.
Sumitomo and Vestergaard have admitted paying $411,000 in kickbacks to two top officials at Cambodia's National Center for Parasitology, Entomology and Malaria Control. The center received nearly $12 million in fund grants from 2006 to 2011.
Both companies cooperated with the investigation and blamed ''rogue employees'' at subsidiaries, Mr. Faison said.
A Sumitomo spokesman said two regional sales employees had left the company, ''and we are working to strengthen our compliance and governance systems so this never happens again.''
Mikkel Vestergaard Frandsen, chief executive of the company founded by his grandfather, said two employees in its India office had paid kickbacks without informing headquarters. One left the company in 2010, he said, and the other was suspended and then resigned during the company's internal investigation.
''I was as shocked as anyone else,'' he said. ''But we agree with the principle of zero tolerance.''
His company has tightened screening and training, he said.
The fund has changed procurement procedures. For countries like Cambodia, where fraud has been found, Unicef does the purchasing, Mr. Faison said.
The sanctions panel is expected to decide what penalties to impose within six months, he added.
Next month, the fund will hold a conference at which it hopes to raise $15 billion in pledges to take it through 2016, and it has been fighting to convince donors that it is a tough watchdog over the money they contribute.
Donations fell after the 2008 fiscal crisis, and allegations that grant money was being stolen in several countries made donors nervous. Germany, one of the largest, temporarily suspended its donations in 2011.
Even after suspending all new grants, the fund fell short of cash until the Bill and Melinda Gates Foundation stepped in last year, giving it $750 million to cover grants already made.
The scandals and bureaucratic infighting led to a broad management shake-up. Dr. Mark R. Dybul, the global AIDS czar of the administration of President George W. Bush, replaced Dr. Michel Kazatchkine as executive director; Martin O'Malley, a former audit chief for Standard Bank Group, which has offices across Africa, replaced John Parsons as the fund's inspector general; and many employees left.
''There's a different air about the place now,'' Mr. Vestergaard Frandsen remarked. ''More professionalism, and timeliness.''
The two top producers of mosquito nets for the war on malaria have been temporarily banned as suppliers by a global disease-fighting fund after admitting that they paid bribes to health officials in Cambodia
