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32 Diagnosing Corruption in Ethiopia Figure 2.2 Value Chain Framework of Potential Health Sector Abuses Policy and budgets Foreign aid Financial management Regulations and inspections Procurement Drug supply Health care delivery and patients Source: Authors. Corruption type • policy capture (restricting competition and protecting monopolies) • allocating funds to favored groups or regions • allocating funds to specific projects to facilitate kickbacks, embezzlement, or theft • establishment of fraudulent implementing organizations • siphoning of funds away from intended purpose • leakage of donated drugs or commodity for resale • embezzlement • misapplication of funds • interference in setting standards or approval for drugs, equipment, and licensing • bribing inspectors or extorting funds from suppliers and providers to certify compliance • kickbacks • manipulating specifications • collusion among bidders • special access to bidding documents • expired, substandard, or counterfeit medications • theft for use in private practice • theft for resale • side payments for favored placements • absenteeism • receiving or extorting illicit payments Evidence or allegations in Ethiopia • allegations of favoritism in awarding major consulting contracts • evidence of commodities being stolen or diverted in major campaigns • lax financial reporting from community-based organizations • audits unable to determine final use of funds • mixed financial accounts preclude accountability for use of funds • alleged bribery of inspectors • performance audits show cases in which work was not done • audits reveal unverifiable expenditures • proper bidding procedures not always used in purchases of large commodities programs and in awards of construction contracts • diversion to private practice and pharmacies • existence of a black market for drugs not available in the public sector • absenteeism to serve private patients • referral of patients to private practice for additional fees • priority services provided by patronage • pilfering of equipment and other services for use in private practice
Health Sector Corruption in Ethiopia 33 Figure 2.3 Ethiopian Health System Actors and Vulnerabilities to Corruption government MOFED / OFAG PPA suppliers pharmaceutical companies, contractors, transportation firms B FMOH DACA / EHNRI / ERPA / PFSA RHBs/ BOFEDs WoHOs/ WOFEDs A F foreign aid GFATM GAVI WB bilateral agencies UN agencies vulnerabilities to corruption (A) manipulating bureaucratic procedures for personal gain or political goals; favoritism in employment (B) fraud, kickbacks, and bribing inspectors (C) absenteeism, theft of supplies, and misuse of funds (D) diverting patients to private practice (E) charging illicit fees (F) embezzlement, fraud, kickbacks, and theft C public health facilities and pharmacies E D patients and communities private health facilities and pharmacies E Note: FMOH = Ministry of Health; MOFED = Federal Ministry of Finance and Economic Development; GFATM = Global Fund to Fight AIDS, Tuberculosis and Malaria; GAVI = Global Alliance for Vaccinations and Immunisations; RHBs = Regional Health Bureaus; WoHOs = Woreda Health Offices; PPA = Public Procurement Agency; UN = United Nations; ERPA = Ethiopian Radiation Protection Authority; PFSA = Pharmaceutical Fund and Supply Agency; OFAG = Office of the Federal Auditor General. As table 2.1 showed, an estimated two-thirds of total health expenditure is financed through foreign aid. In most developing countries, this would mean that funding is governed by separate donor procurement and accounting systems. Yet a significant share of all foreign aid is channeled through the government of Ethiopia’s national procurement and financial control mechanisms (table 2.1). In 2006, Ethiopia directed about US$130 million of domestic revenues to health through the FMOH, Ministry of Education, and Ministry of Defense. Foreign agencies provided another US$475 million, of which US$264 million was channeled through MOFED or the FMOH. The funds channeled through the government were subject to normal federal procurement and financial management policies, which have been reformed with support from the World Bank and are considered acceptable by international standards (FDRE 2007a; World Bank 2007; Wolde 2009). Even in cases where foreign agencies use funds to procure pharmaceuticals and commodities, the government is trying to ensure
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DIRECTIONS IN DEVELOPMENT Public Se
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Diagnosing Corruption in Ethiopia P
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Contents Foreword Preface About the
Page 9 and 10: Contents vii Chapter 6 Construction
Page 11 and 12: Contents ix Map 3.1 Ethiopian Regio
Page 13 and 14: Contents xi 3.6 Summary of Corrupti
Page 15 and 16: Foreword The government of the Fede
Page 17 and 18: Preface Although many would argue t
Page 19: Preface xvii Goldie-Scot, Piers Cro
Page 22 and 23: xx About the Editor and Authors bil
Page 24 and 25: xxii About the Editor and Authors g
Page 26 and 27: xxiv Abbreviations GAC Governance a
Page 29 and 30: CHAPTER 1 Overview Janelle Plummer
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100 Diagnosing Corruption in Ethiop
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154 Table 4.4 Value chain area Cons
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Annex 4.1 Ethiopian RWS Borehole St
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CHAPTER 5 Justice Sector Corruption
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Justice Sector Corruption in Ethiop
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Table 5.2 Disposition of Civil and
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CHAPTER 6 Construction Sector Corru
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Construction Sector Corruption in E
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Table 6.7 Overview of Perceived Cor
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Figure 6.5 Drivers of Corruption Ri
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292 Table 7.1 Upstream Value Chain
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CHAPTER 9 Corruption in the Mining
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Corruption in the Mining Sector: Pr
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