An international aid agency backed by the United Nations has uncovered "serious" corruption in Cambodia where money granted for combating malaria and other life threatening diseases are being siphoned off.
The UN-backed Global Fund to fight AIDS, tuberculosis and malaria said a probe into the use of grants "uncovered credible and substantive evidence of serious financial wrongdoing, on procurement and other issues".
In a statement late Wednesday, it said it had taken swift action to tackle the graft problem. But it said it would maintain support to Cambodia so as not to derail efforts to halt the spread of drug-resistant malaria.
The mismanaged money amounts to under $1 million and was allocated to Cambodian officials to spend on anti-malaria programmes, said a source with knowledge of the investigation, speaking on condition of anonymity.
Cambodia's Health Minister Mam Bunheng told AFP he had no knowledge of the corruption claims. "I have not received information about it," he said, declining to comment further.
The Geneva-based Global Fund said it would continue giving money to Cambodia, a country on the frontline of the battle against drug-resistant malaria.
But it is expected to find a recipient other than the government's National Malaria Centre to handle the next multi-million dollar grant.
"Cutting back on anti-malaria efforts could have severe consequences," the statement added.
Malaria that is resistant to the most commonly used artemisinin treatment was found on the Thailand-Cambodia border eight years ago, and was later discovered in western Thailand, Myanmar and Vietnam.
No further details of the graft allegations were provided. A report by the fund's investigative unit will be published "in the coming weeks", the statement said.
A second probe is understood to be under way in Cambodia into the possible use of counterfeit drugs in Global Fund-sponsored programmes, according to sources in the diplomatic and health care communities in Phnom Penh.
The Global Fund is the world's biggest single source of funding to tackle three of the world's greatest killer diseases. It has raised more than $22 billion from over 150 countries and private donors in the past decade.
It vowed to improve its financial control and oversight procedures last year after $34 million went missing in four African countries. According to its website, the fund has disbursed over $280 million to Cambodia since 2003.