FEEDBACK -The Foundation’s Talks and Debates: the issue of fraud and corruption within NGOs

Posted by: on Jun 23, 2017 | No Comments

In June 2017, Handicap International Foundation invited Malika Aït-Mohamed Parent, an international independent anti-corruption expert, to talk at HI’s headquarters on the need to tackle corruption, as not even fields like the ones of emergency relief and development are being left untouched by this scourge.


 

In May 2016, the World Humanitarian Summit tackled key issues affecting the humanitarian sector. On this occasion, twenty initiatives were launched, among which the Charter on Inclusion of Persons with Disabilities in Humanitarian Action initiated by Handicap International and several partner organizations, or the Grand Bargain, a series of fifty-two changes in the working practices of donors and aid organizations that should deliver an extra billion dollars over five years for people in need of humanitarian aid.

However, of all the topics addressed during the World Humanitarian Summit, sadly corruption in the humanitarian sector was not one of them. Yet, even the fields of emergency relief and development are concerned by fraud and corruption and like any other issues, it needs to be addressed.

Ending a taboo : to acknowledge and fight fraud and corruption in the humanitarian sector

In 2015, according to the annual Global Humanitarian Assistance report, 21.8 billions of dollars were allocated to emergency relief, and according to IRIN, 156 billions of dollars were allocated to both emergency relief and development aid that very same year.

On July 2012, Ban Ki-Moon, then the Secretary General of the United Nations, gave the closing remarks at the High-Level Panel on Accountability, Transparency and Sustainable Development. On this occasion, he announced that in 2011, corruption prevented 30 per cent of all development assistance from reaching its final destination. There are no recent figures for the year 2015 but one can imagine that this number has not drastically change …

Hence, a lot of money is lost every year due to fraud and corruption. Thanks to Mrs. Aït-Mohamed Parent, we were able to raise Handicap International staff members’ awareness of this scourge, as she pointed out the fraud and corruption techniques humanitarian NGOs are more likely to face.

The face of fraud and corruption within humanitarian NGOs

Corruption, in general, can hardly be defined. For instance, the United Nations Convention against Corruption (UNCAC) does not even provide a definition. Economists, on the other hands, define corruption as en equation, which states that a monopolistic situation, plus a discretionary situation, minus an accountability framework, equals a great risk of fraud or corruption.

But what is the difference between fraud and corruption?

According to the World Bank, fraud is “any act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation”; on the other hand, corruption is defined as “the offering, giving, receiving or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party.” In other words, fraud is a deceitful practice made by someone whereas corruption requires the involvement of a third party.

And how does it affect humanitarian NGOs?

NGOs are prone to fraud and corruption like any other entities. Common risks can be found in the procurement process, whenever there are cash transactions or currency manipulation. One ought to be also careful about insurance fraud, customs clearance, bribe and pay-offs or not to launder the money of suspicious donators.

There are also risks which are specific to the humanitarian sectors and which must be addressed. For instance, NGOs can be confronted with ‘ghost lists’: non-existent beneficiaries who yet receive aid, non-existent staff members who receive a pay check or non-existent programs which are financed. There is also a phenomenon called ‘double-dipping’, a loophole which allows a company to make two deductions for a single expense. One also has to be careful about ‘sextortion’ cases, nepotism, or a lack of a due diligence process. Finally, dubious facilitation payments at checkpoints or the use of local partners which lack proper reporting processes are other risk factors for NGOs.

Florence Daunis sitting asks a question to Malika Aït-Mohamed Parent, standing.

Malika Aït-Mohamed Parent and Florence Daunis, HI’s Head of Operations, interact during the Foundation’s Talk and Debate © Sonia Zdorovtzoff / Handicap International

After her presentation, Malika Aït-Mohamed Parent encouraged HI’s staff members to remain vigilant, insisting once again that not even NGOs are immune to fraud and corruption. She invited everyone to take note of HI’s internal policy against fraud and corruption and encouraged them to follow the MOOC developed by HI using that very same policy.

For those of you who do not have access to HI’s internal material, please, feel free to read: