US embassy cable - 04RANGOON1030

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 001030 
 
SIPDIS 
 
BANGKOK FOR MATTHEW FRIEDMAN/USAID AND BANGKOK ESTH 
 
E.O. 12958: DECL: 08/09/2014 
TAGS: TBIO, SOCI, PGOV, EAID, PHUM, PREL, BM, NGO 
SUBJECT: BURMA GETS FIRST PIECE OF GLOBAL FUND PIE 
 
REF: A. RANGOON 0369 
 
     B. RANGOON 0945 
 
Classified By: CDA a.i. Ronald McMullen for Reasons 1.4 (B,D) 
 
1. (U) Summary: On August 4 the GOB Ministry of Health 
facilitated a signing ceremony in Rangoon which initiated the 
tuberculosis (TB) component of a Global Fund (GF) grant to 
Burma, the country's first tranche of funding from the GF. 
The first two-year phase of the TB component is for $6.9 
million, part of a $98.4 million grant package to combat TB, 
HIV/AIDS, and malaria in Burma.  The grant structure 
designates the UNDP as the Principle Recipient (PR) of the 
funding, KPMG as the auditor, and five local and 
international health NGOs as grant sub-recipients.  Several 
of the sub-recipients are GOB-affiliated and, to ensure 
transparency, all recipients, including UNDP, will be subject 
to stringent financial and technical auditing.  Any attempt 
by the GOB to manipulate this initial TB tranche would be 
risky business, given that over $90 million in remaining GF 
resources hang in the balance.  End Summary. 
 
2. (U) At an August 4 signing ceremony to initiate Burma's 
first tranche of an anticipated five-year, $98.4 in Global 
Fund resources to fight TB, HIV/AIDS and malaria, Minister of 
Health Dr. Kyaw Myint stated that a $6.9 million grant 
agreement to fight tuberculosis was "groundbreaking" as it 
marked the first time Burma has received Global Fund 
assistance.  He noted that the TB funding would allow for 
improved treatment and detection of the disease, hopefully 
increasing recovery rates between 70 and 85 percent.  UNDP 
resident representative (and UN resident coordinator) 
Charles Petrie also spoke and emphasized the "watershed" 
nature of the TB component given that Burma was the first 
Global Fund recipient country to put into place all GF 
requirements and that future components (HIV/AIDS and 
malaria) will be modeled on this first program.  In his 
remarks, Petrie also cautioned that there are several steps 
that still need to be taken with the TB component, such as 
finalizing a procurement plan and completing capacity 
assessment of the sub-recipients. 
 
3. (U) The TB component consists of a $4.2 million grant over 
one-year and a total of $6.9 million over the next two years. 
 The UNDP will be the Principal Recipient (PR) and 
administrator of all Global Fund resources and a Local Fund 
Agent (LFA), KPMG, will audit both financial and technical 
aspects of the grant.  The TB sub-recipients include 
Population Services International (PSI;$570,748), the Myanmar 
Red Cross Society ($20,000), the Myanmar Medical Association 
($27,000), the Myanmar Maternal and Child Welfare Association 
($230,000), and the National TB Control Programme 
($6,149,379). 
 
4. (C) P/E officers met separately with UNDP rep Petrie 
subsequent to the signing ceremony to discuss details of the 
grant.  Petrie related that the Health Minister had "gone out 
on a limb" for the program, having relinquished considerable 
financial and programmatic control to the UNDP, and had been 
extremely nervous that the grant would fall through at the 
last minute.  Petrie was pleased that he had been able to get 
what he described as "almost" concessions from the Health 
Minister in order to satisfy all the GF requirements, but he 
noted that there were further issues to resolve regarding tax 
exemption status and exchange rate issues. 
 
The Auditor: Big Brother is Watching 
 
5. (SBU) Petrie emphasized the role of the outside auditor in 
the grant, stating that KMPG would be privy to everything 
UNDP does, to the point of being intrusive.  KMPG will review 
and evaluate every UNDP report before it goes to Geneva, and 
will be responsible for both financial and technical 
reviews--audits that Petrie said were far more substantial 
than in other GF recipient countries.  Petrie stated that in 
Burma complete transparency was the goal.  There will be such 
a degree of operational scrutiny that, for example, the 
independent auditor will monitor the chain of drug 
distribution all the way from distributor to patient. 
 
Sub-Recipients: Under a Watchful Eye 
 
6.  (SBU) According to Petrie, the sub-recipient 
organizations were selected after a thorough technical review 
and would all be subject to the same accounting procedures. 
Other than small payments for travel and per diem to 
community volunteers, no funds will flow directly to 
government organizations.  UNDP will pay all fees for 
services directly, and provide procurement of all goods, 
equipment, and commodities on behalf of the sub-recipients. 
Monitoring and evaluation of program performance will be 
conducted by "technical sub-groups" including UN agency 
partners (WHO and UNAIDS), NGOs, and national 
representatives.  For the TB component, the World Health 
Program (WHO) will lead the technical sub-groups in 
implementing monitoring and evaluation processes as well as 
technical support. 
 
7.  (C) Comment:  Burma's first Global Fund tranche arrives 
after several years of difficult negotiations and a series of 
rejected GOB applications.  GF managers sought to keep funds 
out of Government of Burma control and the resulting 
compromise grants UNDP sole responsibility for program 
results and financial accountability.  The reality, however, 
is hard to ignore.  The GOB "owns" Burma's efforts to tackle 
tuberculosis, a fact that GF managers clearly realized when 
accepting an arrangement to collaborate with the GOB's 
National TB Control Program and several local NGOs that have 
close ties with the regime.   Any attempt by the GOB to 
manipulate the initial TB tranche, however, would be risky 
business given that over $90 million in remaining GF 
resources hang in the balance.  End Comment. 
McMullen