By David Brown, Washington Post Staff Writer
The Washington Post, Washington, D.C.
Saturday, January 31, 2004; Page A16

The Global Fund to Fight AIDS, Tuberculosis and Malaria has suspended payments of about $6.7 million to organizations fighting AIDS in Ukraine, saying the groups are poorly managed.

The move, announced yesterday, is the first time in its 18-month existence that the Global Fund has stopped the flow of money to a program it supports. The fund is financing 225 disease prevention and treatment programs in 121 countries.

Officials said the fund is negotiating with a nongovernmental organization to take over delivery of AIDS services it supports in Ukraine. The fund will bring in outside experts to help improve and reorganize local management of the programs.

The Global Fund, an independent entity based in Geneva, seeks to become the main conduit for moving money from rich countries to poor countries for use against the three main diseases of poverty.

"Ukraine has a very rapidly growing AIDS epidemic, and we have invested $25 million in stopping it. This money is not working at the moment," fund spokesman Jon Liden said. He said there is no evidence that money is being stolen or embezzled. Instead, the problem is that the programs are poorly managed and far behind in their scheduled work.

The Ukrainian health ministry -- the designated recipient of a grant to expand AIDS treatment -- was supposed to increase the number of people on antiretroviral therapy from less than 100 to about 4,000 in two years.

"They are nowhere near that," Liden said. He added that the transition to a new program administrator would not interrupt treatment for the relatively few people on antiretroviral therapy.

About $7 billion to $10 billion is needed each year for care and prevention of AIDS in the developing world, according to some estimates. The fund has been able to raise only a fraction of that amount. To date, it has committed itself to providing $2.1 billion to projects around the world.

Government agencies, charitable organizations and civic groups apply to the fund for grants, which are awarded on merit. They are then reviewed for performance while underway.

Some large donors -- including the United States government -- have been reluctant to give more to the fund until they see evidence the money is being put to good use. The fund is in the difficult position of needing to ensure its donations are not wasted while at the same time responding urgently to the AIDS epidemic by getting money to treatment and prevention organizations, many of which are newly created and have no track record.

Anil Soni, adviser to the fund's executive director, Richard G.A. Feachem, said yesterday's action is evidence the system is working as planned.

"From Day One, our donors and we said we will have failures. It's the consequence of having a broad portfolio," he said. "Part of being accountable is not turning your back on those cases that stall or don't succeed."

In Ukraine, the fund approved grants worth $25 million, for use over two years. About $7.5 million has been disbursed, but only about $740,000 has been spent, Liden said.

Besides the health ministry, the other two recipients of the grants are a charitable organization called the Ukrainian Fund to Fight HIV Infection and AIDS and the United Nations Development Program (UNDP).

The Ukrainian fund is supposed to create a broad public education program on AIDS prevention. The UNDP is overseeing several small organizations designing prevention programs for injection drug users, prostitutes, soldiers and other high-risk groups.