Canada has suspended a $14.5-million aid program to Zambia's Health Ministry after learning that embezzlers have stolen millions of dollars from foreign donors, including the Canadian government.
Several other donors, including Sweden and the Netherlands, have also suspended aid to Zambia as a result of the corruption scandal, which began last year when a whistle-blower revealed that Zambian officials were stealing aid money. Auditors confirmed that about $7-million was stolen, mostly from foreign donors.
Canada's aid agency, the Canadian International Development Agency, lost about $880,000 as a result of the embezzlement, The Globe and Mail has learned. The Canadian aid agency spent more than $30-million on programs in Zambia last year.
Zambia's president, Rupiah Banda, has accused the donors of "blackmail" and "interference" for their decision to suspend their aid payments.
More than half of Zambia's health budget is provided by foreign donors, and the suspension of aid payments has badly hurt its AIDS and malaria patients, reports say. Many patients in remote areas are no longer receiving AIDS medicine because of the suspended aid, according to Zambian reports.
The British medical journal, The Lancet, has estimated that foreign donors have postponed or cancelled $273-million (U.S.) in aid to Zambia because of corruption allegations over the past 18 months. This does not include the Canadian suspension.
Canada's four-year aid program to the Zambian Health Ministry was intended to help in training and recruiting more staff for its hospitals and health programs.
A spokesman for CIDA said the Zambian government has reimbursed most of the embezzled money by putting an equivalent amount into the health programs that Canada was assisting. But 18 months after the embezzlement was discovered and the suspension began, CIDA has still not resumed its aid to the health ministry.
"CIDA took swift action once allegations surfaced about the improper use of Canadian funds," spokesman Scott Cantin said.
"This cessation of aid continues until CIDA sees further progress on internal reforms agreed to under the Zambia Ministry of Health's Governance Action Plan," he said.
The Global Fund to Fight AIDS, Tuberculosis and Malaria - the biggest donor for HIV/AIDS programs in Africa - has suspended more than $100-million in aid to Zambia because of further evidence of fraud and irregularities at the same ministry. Canada is a major contributor to the Global Fund, and about $280,000 in CIDA's losses in Zambia were due to fraud at the Global Fund.
Sweden's minister of international development co-operation, Gunilla Carlsson, described the Zambian corruption case as "a major scandal." At least nine officials in the Health Ministry were charged with fraudulent use of donor funds.
In a public statement last year, Ms. Carlsson promised "continuous checks" to prevent further corruption in Zambia. "There are indications that irregularities have existed since the early 2000s," she said. "I cannot help but ask the question: How long would it have taken before we, as donors, noticed something was awry if it hadn't been for the whistle-blower?"
The Zambian government has promised to introduce tighter accounting measures at the Health Ministry to prevent such fraud in the future.
After the Global Fund announced its aid suspension and the European Union halted aid for road construction because of further corruption allegations this year, there was a furious reaction from Zambia's president, Mr. Banda.
"We must not allow donors to feel they can interfere in the internal affairs of this country, because it is a sovereign and independent state," he said.
"We did not ask anyone to fund the road sector or the health sector, so they must not use that as blackmail…. We are very grateful for whatever help they give us, but we will not be turned into their puppets."