NGO part 3 – Corruption

Last year Israel kicked World Vision out of their country for alleged corruption. They claimed a World Vision staff had syphoned off millions of US dollars to a terrorist organisation. Whether this was true or not, the naivety (or dishonesty) of World Vision’s response was staggering. Their leaders seemed to claim that their organisation was free of corruption. Their Australian CEO Tim Costello even said “We have nothing to do with fraud”. You’re joking!

How could an NGO work in an unstable, corrupt country like Palestine without some of their money being stolen? Its impossible. It comes with the territory, part of the business. In parts of the world where corruption is a way of life, its also a way of life within NGOs. A better response from World Vision would have been “There’s bound to be some corruption within our organisation, especially in an unstable area like Palestine, but we do everything we can to minimise that”. Internal and external audits need to be done, but achieve little. The books can be perfect, yet huge amounts of money can still be stolen.

I work for ‘GuluHealth’, the Dicoese of Northern Uganda Health department. We are an amazingly effective (no bias of course), Christian organisation who manage 12 permanent Health Centers in villages. In the 2 years I’ve worked here, I’ve discovered all kinds of corruption. Nurses steal drugs. Staff overcharge patients and pocket the balance. Once a staff member forged a signature to try and steal 10,000 US dollars, but luckily the bank called us before they gave him the money! Nearly everyone I’ve talked to who works for an NGO here has multiple stories of corruption in their organisation. Its part of life. It happens.

Despite all this, I believe our organisation is far less corrupt then big NGOs operating in our area. For a start due to a sharp nose, I think we discover corruption much earlier than NGOs and we provide few opportunities for money to be stolen.

So how does NGO corruption work in ‘real life’? How do you steal money given generously by donors, intended to help the poorest people in the world? Let me take you on a journey into our world! Your auditor won’t pick any of this up I’m afraid.

1) Bribes “If you help me with something small, I will get your Health Centers onto our project”. Simple as that. I was only surprised it was that blatent. Thankfully this NGO responded well when I contacted their British Management, and eventually included some of our facilities on merit rather then on bribes. Unfortunately that corrupt guy is still working for the NGO and still on his merry way raking in bribes. The opportunities for bribes are endless. A substandard building company pays an NGO worker to win a big building contract. An underskilled job applicant bribes the interviewer. Apparently already discredited NGO staff even try to bribe government officials to keep operating in the area! makes NGOs much less effective, as shoddy work or no work gets done when decisions are based on the highest bidder rather than merit.

2) Fake Reports. A good friend working for a large, reputable NGO shared their heartache at having to write a shiny report for work that never even started. Their boss told him to quickly churn out a report for a farming project which the NGO “hadn’t got around” to doing. That’s right, they received the money, did nothing and wrote a wonderful report (with pictures). The donor will never know. Their accounts still showed that staff got paid, vehicles went to ‘the field’ and the report was written, but they did nothing. Just because you hear a wonderful story about Josephine’s life being transformed through a new Ox-plow, doesn’t mean it actually happened.

3)  Fake Receipts. When I ask for a receipt, people often ask if I want it blank, or how much money they should write on it. Receipts are meaningless pieces of paper in this part of the world, and should be treated as such. A white NGO pickup (what else) is “bought for 15,000 US dollars according to the receipt, but only 10,000 was actually paid – the other 5000 is kept by the NGO worker. A fuel receipt is written for 50 litres, but only 30 litres was put into the car.

4) “Legitimised” Corruption (as I like to call it). Bloated accommodation and travel allowances are paid, well in excess of actual costs. Massive budgets are written for trainings, well in excess of what is necessary. Everything possible is written into the budget which benefits the NGO staff, not the people who the money should be helping.

5) Skimming money off the top. Our friend worked for a NGO for 500US dollars a month. A visitor came from England, and asked how much he earned. When he told her, she looked surprised. A week later, he was told he would be backpaid 2500US dollars in unpaid salary for the previous year. He was supposed to be paid 750US dollars a month the whole time, 50% more than the salary he’d been told. Someone stole that money, syphoned into another account. Not many visitors would ask these kind of probing questions. She did well.

We can’t solve the problem 100%, but we can do much better


Solutions

1) Open the can of worms. Be honest that there is corruption in your NGO. Corruption is embedded in the working culture of Northern Uganda, Palestine and much of the developing world. There’s no organisation free of corruption. ‘Danish Church Aid’ has a public record of all corruption investigations, and it hasn’t hurt their donations at all.

2) Stop using receipts as accountability. Find out the actual cost of an good or service, then give work that much money to buy it. Forget about the receipt, keep it for your auditors only! If it’s a big ticket item like a car, involve multiple people in the purchase, which makes stealing money that much harder.

3) Put money through in-country foreign workers. This is an unfortunate, but pragmatic solution. They don’t have to be American or British, they could be Kenyan or Indian or whatever – just people from another context, with no family or cultural ties to the area. As a local manager in big NGO projects, the pressure is enormous to help your family with jobs and money, and dish up as much money as possible money to staff down the chain. Its not fair to expect local people to manage huge amounts of money without stealing some of it to fulfil these cultural expectations. Help both local staff and your beneficiaries by putting the money through a foreign worker.

Patronage is one of the strongest cultural norms in Uganda and elsewhere in the developing world. The President dishes out lucrative government jobs and money to consolidate power. Rich people are expected to pay school fees for poorer relatives, and in return expect unfailing loyalty. It staggers me that USAID runs 100 million dollar projects in Uganda with no Americans on the in-country management team. I believe this was a major reason why two recent USAID Health projects collapsed under the weight of corruption. Lacor hospital is a perfect example of this approach done well. Local Staff run the hospital and make all the decisions. The hospital employs 400 local full time staff, and only one foreigner. What is their job? All the money goes through them. They check money goes to the right places, and clamp down on small scale stealing as it happens to ensure things don’t get out of hand. Brilliant.

4) Value Character above Qualification when you hire workers. Even if other candidated are more qualified or even potentially better at the job, good character will help your NGO more in the end.

5) Look Harder…

Don’t rely on audits and ‘good processes’. Talk to the actual people who are supposed to benefit to see if they actually received any help. Check the rates of cheap local hotels. Count the drugs you have left and check it against the drugs you gave out. Ask people if they actually received their allowances.


6) Zero Tolerance
for thieves when (not if) you find them. I know this sounds obvious, but you’d be surprised how many people don’t get fired when they steal from NGOs. Staff have to know they will at the very least fired, and hopefully arrested when they are caught stealing. In my organisation, I’m not allowed to take thieves to the police, which is frustrating. Firing people you loved and trusted is hard. I’ve broken my own rule and not fired thieves because I didn’t want to fire my friends. At the end of the day though it only ended up hurting the poor, sick people we serve.

7) Open communication channels between in-country staff where the money is being used, and donors and other staff in other countries. Be open about it rather than hush-hush and ashamed. If you find corruption in your organisation it means you’ve done well, not that your project has failed, or your NGO is going down.

If you found this third installment useful, check out my first and second blogs on my keyboard warrior’s mission to make the NGO world a better place 😀

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9 Responses to NGO part 3 – Corruption

  1. Anthony says:

    Very good blog post again. I agree agree agree. Except on one point. When you mentioned all the money going through foreigners but decisions going through locals, such as at that hospital. If real change is ever going to happen, you have to start building trust and helping people to take responsibility for money, and exercising self control and honesty by resisting temptation. In the short term, funneling all money through a foreigner may protect the money from theft and misuse, but it does not build the capacity, honesty, and dignity of the local people, which should be the long term goal. Saying that all of the money should go through foreigners ends up being a form of paternalism and keeping people in dependency. When we trust people who live in a corrupt culture, we will get burned and have disappointments. But things will never improve if we don’t give people a chance and help them to learn how to manage money responsibly. Then at the end of the day (or decades later) people can stand on their own doing things the right way.

    • ntlaing says:

      Yeah its a really interesting point, I’m still thinking hard about that . The question is can you afford to, and is it even moral to allow millions of dollars intended for poor people to be stolen by the rich for a potential long term benefit for society? Lacor for example serve hundreds of thousands of people. If they had a major corruption problem, they would lose donors and thousands of people would die as a result. I also think good modelling can build capacity, honest and dignity of course with the risk of paternalism and disempowerment. I think the solution is for Jesus to truly transform people’s hearts, and I’m not sure trial and error while continuously getting burned will actually make things much better.

  2. Anthony says:

    Further, I think there are plenty of foreign expats who are corrupt too, especially government officials from other countries who bribe other government officials or business people to get what they want

    • ntlaing says:

      Yeah 100%. I didn’t even touch on government corruption, as for me that’s a given. I wanted to also make the point that NGOs should never give money to government organisations because they are the wost perpetrators, but the blog was already long!

  3. arowhenua says:

    How does UNICEF stack up? I worked for them in NZ for a while. I know at one stage they withdrew money from the government in Uganda due to projects not being completed, and they do declare and have guidelines for working against fraud. In the national committee I worked for they took a lot of care to ensure everything was legit even down to making sure what was offered in terms of ‘buy pencils for a child’ could be matched with what was dispatched and donors informed of what countries the items went to. The projects overseen in-house by NZ National committee, largely in the pacific are visited, monitored, and reported on by some-one based in the kiwi office.

    We used to get a lot of flack from people saying too much was spent on administration etc etc, and even letters saying when shouldn’t need to buy computers (for the office) : ) ….

  4. ntlaing says:

    Hi Arowhenua, I’ve got no idea how UNICEF stacks up in general, since you worked for them I’m sure you’d know much better than me. I’m sure its highly variable from Country to county and even from project to project. What happens with Unicef here in Uganda, could bear little relationship to what happens in the pacific I do think its much better though when you can monitor things closely like aid from New Zealand to Pacific. If you were visiting often, that’s the best thing you can do. Although it may have been a National Party ruse to decrease the amount of Aid we give, I think the plan of the New Zealand Government to focus on Aid in the Pacific is excellent, because its much easier to see what happens with the money than say here in Africa. If projects are visited often, you can see directly the good that is happening, especially if they are ‘surprise’ visits, without the knowledge of the in-country team. If you tell someone you are coming on such and such a day then for sure everything will be prepared and you’ll get an unrealistic picture. We always surprise our health centers when we visit them so we are more likely to find issues, and are even more impressed when they are doing a great job! I think your right that minimising admin is important, but not wasting the money that is actually sent is even more important.

    • arowhenua says:

      Thanks for the reply : ) …. yes the wasting money on admin is a bit of an old wives tale in some respect, maybe back in the day but things are under a lot more scrutiny now with transparency in accounts etc. The UNICEF NZ project focus on the Pacific and Asia has more to do with locality than government policy although some projects will have contributions from NZAID – but mostly ones relating to disasters. Definitely some regions are more prone to corruption than others!

      UNICEF does operate a bit differently because although part of the UN it is not funded by it. Also, it tends to carry out things such as national immunisation days etc, emergency response, and working with governments (which is where some corruption may possibly creep in ha ha).

      Oh well all the best for your campaign to reduce fraud. I can see the double edge sword. When people in a country are living on the margins themselves the temptation is large.

      Go Well

  5. Pingback: NGO part 4 – Give your money well | Ugandapanda

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