Criminal investigators hired by charities as pressure mounts over fraud

Wed Sep 2, 2015 7:10pm EDT
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By Tom Esslemont

LONDON (Thomson Reuters Foundation) - Rising mistrust of international charities and a public push for greater transparency on spending in corruption-prone crisis zones are compelling some non-government organizations (NGOs) to hire a new recruit - the criminal investigator.

In a bid to prevent as well as report fraudulent activity, Plan International, Oxfam GB, Americares and International Medical Corps are among those to have appointed trained counter-fraud directors at their head offices.

Others, such as Medicins Sans Frontieres, Handicap International and Action Against Hunger use auditors and finance officers to handle cases of fraud.

The growing trend to hire criminal investigators comes after the NGO sector has doubled in size in the past decade with a Thomson Reuters Foundation survey finding 50 of the world's biggest humanitarian NGOs spent $18 billion in 2013-14.

This rapid growth has fueled concerns over a lack of accountability with the annual Edelman Trust Barometer finding NGOs were the most trusted of four institutions but trust slipped in the past year with a perception they had become too money focused.

One forensic expert said the lack of experienced investigators can be a barrier to financial probity as NGOs faced a unique set of issues such as ghost employees, fictitious invoices, kickback arrangements and "double-dipping" to get funds from more than one donor for a project.

"External auditors, unlike [counter-fraud] officers, are not necessarily looking for evidence of fictitious receipts or inappropriate spending in the field," said Matthias Kiener, Zurich-based forensic officer with the consultancy, KPMG.

"Sometimes the due diligence is not done. That might be because many charities are founded on the principle of trust. An NGO might be reluctant to ask tough questions of some of those it employs," said Kiener, whose clients include large humanitarian organizations.   Continued...

People walk past an Oxfam store in Dalston in east London November 28, 2008. FINANCIAL/BRITAIN-CHARITIES