The Global Fund to Fight AIDS announced on Tuesday that its head Michel Kazatchkine will quit but denied media reports that it was connected to his links with French first lady Carla Bruni-Sarkozy.

Kazatchkine, a French clinician and health advocate, said in a statement he had decided to step down as executive director in March following the organisation's decision to appoint a general manager.

But the chairman of the fund's board denied a report by France's Liberation newspaper Tuesday that his decision was linked to allegations of possible irregularities involving the wife of French President Nicolas Sarkozy.

"I categorically deny the information (published on Liberation's website) saying Michel Kazatchkine reportedly resigned because of the questioning of his links with Carla Bruni-Sarkozy," Simon Bland said in a statement.

"What was written was false and without foundation and we are demanding the retraction of the article," he said in a statement to AFP.

The fund had issued a statement on January 6 describing an article in French weekly Marianne which suggested the organisation had benefitted charities linked to Bruni-Sarkozy as "inaccurate and misleading".

Kazatchkine, who was appointed executive director of the Global Fund to Fight AIDS, Tuberculosis and Malaria in 2007, said he was "immensely proud" of what the fund had achieved since it was set up in 2001.

Its board decided in November to create a new post of general manager to oversee the agency's reorganisation and on Tuesday announced the appointment of former Sovreign Bank chairman Gabriel Jaramillo.

Kazatchkine said that although he "trusts that the decision was made in the best interests of the Global Fund", he decided that he should not continue as executive director.

He said he would ensure a smooth transition while Bland paid tribute to his work, saying all the fund's successes bore his mark.

The Global Fund is the world's biggest single source of funding to tackle three of the world's greatest killer diseases, with a multi-billion dollar budget drawn from more than 100 countries and private donors.

It provides grants for projects in developing nations, allocating money provided by governments and supporters such as the Bill and Melinda Gates Foundation.

The fund announced it was to beef up its financial safeguards in February last year after auditors found that $34 million (then 25 million euros) had gone missing or been taken in four African countries before it reached needy community aid programmes, leading Germany to suspend its payments.

At the beginning of the year Marianne reported that the Global Fund had given "significant sums" to charities linked to Bruni-Sarkozy, a fund ambassador, and one of her close friends.

The fund issued a response saying that costs related to the Born HIV Free campaign, supported by the former model, "were in full compliance with Global Fund's stringent rules and procedures."

Columbian native and Brazilian citizen Jaramillo will take up the 12-month managerial post on February 1.

He said in a statement he was honoured to have been asked to pick up the challenge.

Since his retirement as Sovreign Bank CEO in January last year he has served as an advisor to the Office of the Special Envoy for Malaria of the United Nations secretary-general, the fund said. He remained chairman of the bank until June.