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IMF: Make Cameroon Loan Contingent on Anti-Corruption

Lack of Transparency, Corruption Allegations Mar Covid-19 Spending

CDC Cameroon Associate Director for Program and Science, Dr. Clement Ndongmo, observes Covid-19 testing procedures for passengers arriving at Nsimalen International Airport in Yaoundé.  © 2020 CDC Global, CC BY 2.0, via Flickr

(Nairobi) – The International Monetary Fund’s (IMF) Executive Board should ensure that a three-year loan sought by Cameroon is used to meet its human rights obligations and not lost to corruption, Human Rights Watch said today. It should require the government to make its spending fully transparent, conduct a comprehensive independent audit of its Covid-19 spending to date, and hold anyone responsible for corruption accountable.

“The IMF Board is voting on its third loan to Cameroon since the start of the pandemic in the midst of a Covid-19-related corruption scandal and violent crisis roiling the country’s English-speaking regions with a devastating impact on people’s right to health,” said Sarah Saadoun, senior business and human rights researcher at Human Rights Watch. “When badly-needed aid is being squandered or stolen, it would be irresponsible for the IMF to approve another loan without safeguards to ensure that the money goes where it is intended.”

On May 27, 2021, the IMF announced that it had reached a staff agreement for the loan “to mitigate the consequences of the pandemic,” among other objectives. The IMF did not specify the amount or detail any concrete measures to address corruption other than saying that “effective enforcement of the anti-corruption legal framework will also be critical.”

The IMF previously disbursed two emergency loans totaling US$382 million to Cameroon in response to the pandemic. Although the government made specific commitments to the IMF to use these funds transparently and accountably, its Covid-19 spending has been marred by secrecy and credible allegations of widespread mismanagement and corruption.

On May 19, Cameroonian media published a summary of an audit by a Supreme Court investigative body, the Chambres des Comptes. The audit detailed findings of large-scale corruption and mismanagement involving 180 billion CFA ($333 million) spent in response to Covid-19 up to December 31, 2020. It recommended “initiating 10 judicial cases regarding findings that likely violate criminal law.”

Citing the findings, as well as major corruption scandals, including one linked to the African Cup of Nations (AFCON) project that took place during a past IMF loan program and for which no one was held accountable, 20 prominent Cameroonian women urged the IMF Board not to approve any additional funding until the government accounted for prior IMF loans and held those complicit in corruption accountable.

The audit found “numerous abuses” in the use of funds. For example, it found that a single company, Mediline Medical Cameroon, was awarded a “quasi-monopoly” on government contracts for personal protective equipment (PPE), Covid-19 tests, and other medical material, despite not being active in the country before the pandemic.

Local media reports referred to it as a subsidiary of South Korea-based Mediline Medical Korea, but that company told Human Rights Watch it “has no subsidiary company or investment companies in/outside of the country.” A June 1 news release from Mediline Medical Cameroon in response to the audit report was signed by Sangki Yi, as the board chairman. Human Rights Watch was unable to find any contact information for him or his company. A Cameroon government document identified Sunguk Yoon as the company’s sole beneficial – or actual – owner. Human Rights Watch wrote him on LinkedIn, the only contact information we were able to find, but received no response.

The audit found that Mediline Medical Cameroon overcharged for its products, delivered defective or the wrong material, and that its orders lacked documentation to enable tracking and delivery confirmation. The authorities were unable to account for products they had apparently received, including 610,000 Covid-19 tests. The audit also found that the government had bought 16 ambulances from Mediline Medical Cameroon and another company for 880 million CFA ($1.6 million), yet none had been delivered by December 31.

Human Rights Watch spoke with medical and administrative staff in hospitals across the country, including in the two English-speaking regions where violence has severely disrupted access to health care, who said they received little or no additional funds or equipment during the period covered by the audit to help them respond to the virus.

One doctor said his hospital initially only received 12 masks, 20 boxes of gloves, and four full body gowns for almost 50 employees and that a nurse from a nearby hospital died from Covid-19 in June 2020. It was not until early August that the 10 health facilities in his district received a combined 10 million FCA (around $17,000), which enabled his hospital to buy some PPE. However, when Human Rights Watch spoke with him in September, he said the hospital still lacked sufficient protective gear for most staff and had no ambulance.

Mediline Medical Cameroon’s June 1 statement dismissed these allegations as part of a “disinformation campaign.” It said that as of January, the company had delivered 1.9 million out of the 3 million tests the government bought, for which it has been paid 24.5 billion CFA ($45 million) and is still owed 8.5 billion CFA ($15 million).

It said that the prices “conform to regulations,” although the amounts it cited effectively confirm the audit findings that the government paid 17,500 CFA ($32) per test, significantly more than alternative options. It also said it was still processing what it said was the purchase of 17 ambulances for 8.5 billion CFA (around $15 million), citing challenges posed by the pandemic.

The audit found that the government requisitioned 32 hotels for 1,028 people who needed to be quarantined but has not repaid about 200 million CFA ($370,000) in expenses incurred by the hotels, deepening their financial distress from the pandemic.

Human Rights Watch spoke with several people who worked at these hotels between November and December who said their pay had been reduced in part because the government hadn’t fully paid these bills. An events manager at a hotel in Douala said she had to ask her brother if her two children could stay with him because her salary had been cut and she could no longer afford to provide for them. Human Rights Watch contacted the Health Ministry about the issue in February but received no reply.

These irregularities may have been identified and addressed had the government kept its commitment to the IMF regarding timely publication of how it spent funds. Nonetheless, the IMF still approved a second emergency loan in October, and now appears poised to approve a third, larger program, without addressing this fundamental lack of transparency despite serious allegations of mismanagement and corruption.

The IMF required the government to publish some information about the contracts it awarded, including the names of all of the companies’ actual owners prior to awarding the second loan. However, that disclosure is not accessible from any government website, it has not been updated since the approval of that loan, and the quality of information is poor. For example, that document lists Sunguk Yoon as the beneficial owner of Mediline Medical Cameroon, even though media reports refer to him as a project coordinator.

Cameroonian authorities have also not yet commissioned or published an independent audit of Covid-19 spending, despite promising the IMF to do so by the December 31 end of the fiscal year. In February, media reported that the Financial Ministry had called for tenders for an independent audit and in March the IMF told Human Rights Watch that the government had shared with its staff the terms of reference for an independent audit, but it is unclear whether a firm has been hired.

The Chambre des Comptes audit is important, though it only examines spending by two of the 10 ministries that received Covid-19 funds and the government did not disclose its findings, which journalists published on social media. It is no substitute for a full independent audit.

Between March 29 and April 8, the secretary general of the presidency, Ferdinand Ngoh Ngoh, sent a series of letters on behalf of President Paul Biya to various ministries regarding investigating and restructuring Covid-19 spending. This was apparently due to pressure stemming from the government’s loan negotiations with the IMF. One letter directed the Justice Ministry to initiate proceedings against those identified in the Chambre des Comptes’ audit. A separate May 28 statement referred to the audit and said that judicial inquiries are ongoing before a special criminal tribunal.

Though investigations are useful, recent events hint at the serious difficulties with holding corrupt Cameroonian officials accountable. Between June 7 and 9, multiple government offices, including for the Tax Administration and the National Business Association, were burglarized, despite being housed in heavily guarded buildings. Media reports, citing a confidential source, said “tons of documents” were stolen, possibly complicating the justice ministry’s investigations. On June 15, police announced the arrest of someone in connection with the Tax Office break-in and released a video of the suspect, who claimed to have acted alone.

“The IMF’s attention to corruption has spurred Cameroonian officials to take small steps on transparency and accountability,” Saadoun said. “But faced with evidence of widespread mismanagement and corruption, those efforts are insufficient, and the IMF should insist on much more.”

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