This is a topic which I want to develop in 2012 in Romania, applying for a Grant in order to support the research expensives. I know some facts about some NGO’s (“what people are talking”) but there was no proof. I was curious to see who is who and what are the interests and backstage games of some NGOs who are screaming loudly on public agenda about corruption and about rule of law. The grant was not approved so I did not developed the topic.
I think this topic becomes a worldwide issue and the following article was published at integritas 360 confirming the rising problem. The reseacrh and findings are from NGO’s which are dealing with international development.
Fraud and corruption continue to be a highly sensitive topic, despite the growing level of funds channelled through NGO. Médecins du Monde highlighted this a few years ago by initiating a study in an attempt to open up discussion on corruption within the humanitarian aid sector. Surprisingly, of the 17 largest French NGOs contacted for a confidential interview, 11 refused to participate.
While research available on NGO corruption is predominantly drawn from newspaper articles of fraud reported in national NGOs in the North, it represents the tip of the iceberg, as a KPMG survey has found that 77% of all fraud investigations never reach the public domain, and 54% are not even communicated internally. A 2014 survey into fraud in the Australian NGO sector presented that 54% of respondents advised that they did not report fraud to the Police because of “concerns relating to the impact of future funding opportunities, and potential damage to the organisation’s reputation”, over 90% of respondent’s viewed it as a problem for the non-profit sector as a whole and only 1 in 4 saw it as a problem for their own organisation.
Some exemples of fraud and corruption within the NGO / non-profit sector:
• A Working Paper by The Hauser Center for Nonprofit Organizations at Harvard University, found that a significant problem existed within the NGO sector, and that fraud amongst non-profit entities in the North was on the rise;
• The UK’s National Fraud Authority found that in 2012, fraud was estimated to have cost the charity sector in England, Scotland and Wales £1.1 billion annually;
• Analysing the annual returns filed between 2008 and 2012, The Washington Post published found that over 1,000 NGOs had checked the box indicating that the organisation had ‘become aware of a significant diversion of assets during the year’; attributable to theft, investment fraud, embezzlement and other unauthorised uses of funds.
International Journal of Voluntary and Nonprofit Organizations published a study of NGO corruption that reveals the fact that all of the irregularities examined involved money, were opportunistic in nature, and were motivated by self-interest (greed), perceived entitlement, or sexual fulfilment.
On the other hand, a cursory Google search of the terms ‘corruption’ and ‘development INGOs’, highlighted only four cases of actual corruption.
There are many forms of corruption, but the five most commonly documented forms of corruption identified were:
• Inflated, duplicate, or fictitious invoices for goods and services procured for a project;
• “Ghost” employees, participants or beneficiaries that inflated the cost of project activities;
• Kickback arrangements in procurement of goods or services or in hiring of project staf;
• “Double-dipping”, or seeking or accepting funds from more than one donor for (parts of) the same project;
• Fictitious NGOs, or politically connected organisations set up to win public contracts (including those setup to act as delivery partners for INGOs).
The above findings are further supported by a case study of corruption within in an NGO operating in Malawi, which not only highlighted the nature and extent of internal corruption, but indicated that NGOs and INGOs were subject to the same – or similar – types and levels of corruption confronted by the society’s in which they operated.