6 Million Dollar Red Cross Heist

Have you given to the Red Cross recently? Your money was stolen. Nearly 6 million US dollars of it. Stolen by rich, well connected thieves – hundreds of Red Cross staff. How do you feel about that?

First, I deeply respect Red Cross for both investigating and apologising. Recently I haven’t given to Red Cross (as they seemed like a big, inefficient NGO), but this humble and honest announcement has made me reconsider. Uncovering “overpriced supplies, salaries for non-existent aid workers and fake customs bills” is not easy, nor is admitting this kind of painful situation to the world. What happened to them, happens to every NGO operating in tough contexts. The only difference is that Red Cross talked about it.

Second, the five million discovered will only be the tip of the iceberg. If they found evidence for 6 million stolen (5% of the 120 million donated), the actual loss will be much higher. Perhaps 20 million, maybe more. They only found the sloppy thievery. Corruption done well is untraceable.

3 Lessons from the Red Cross Heist

1) Most NGOs hide theft. Red cross didn’t. One survey showed that 3 out of 4 fraud cases in large NGOs don’t get reported to the public. A year ago Israel accused a World Vision Staff member of stealing millions of dollars to give to ‘terrorist group’ Hamas. Although this particular allegation is unproven, theft Is guaranteed in an NGO working on a huge scale, in a difficult unstable region like Palestine. Even if World Vision are doing an great job, there will still be theft. World Vision leadership told the world that they didn’t think there was corruption going on in that project. “Our own ongoing audit has not uncovered any diversion of funds” they said. A zero theft scenario isn’t possible. World Vision are either hopelessly naïve or lying through their teeth. Either way, World Vision are hiding theft. Red Cross made the unusual decision to both investigate properly, and not to hide it. Well done. One report estimated that around 2 billion dollars was lost by NGOs to fraud in the UK alone in 2016. Did we hear about it?

2) Many (if not most) NGO workers steal money in corrupt countries. Its not just 1 or 2 bad eggs. There was theft in all 3 countries, through a variety of mechanisms. Hundreds, if not thousands of workers were involved. Unfortunately stealing money from the most vulnerable is part of NGO culture. Here in Northern Uganda even good people will steal if they feel there’s a decent chance they won’t get caught. I’ve seen it in my local church, higher church leadership, individual health centers I manage, NGOs, local government, central government, everywhere. I’m not saying people here are bad people. Stealing money where you can is just the behavioural norm. Good people steal. Only the best people don’t.

2) Don’t automatically trust NGO leadership. In western countries, we have this idea that aid workers, or people working for NGOs are usually virtuous and want to help people. In developing countries, NGOs are like any other institution. NGO jobs are often the most lucrative jobs and everyone knows there is ripe opportunity for extra “allowances” or just straight up theft. In Ugandan Institutions (and I’m sure in many developing countries), the best way to rise in an organisation, is to keep quiet when money is stolen, and buy patronage (paying people around you to keep them happy and quiet). If a superior steals money in Uganda, if you speak out you are gone, and other NGOs won’t hire you. Workers higher in the organisation are MORE likely to steal money than people lower down. First they have more opportunity, and second that may be they got to the high position in the first place. Trust needs to be earned, slowly and carefully.

4 Things Red Cross (and other NGOS) can do better next time

1. Be honest with the public about corruption in our organisation. Red cross have made a great start with this announcement. Its like giving up alcohol or cigarettes – you have to acknowledge you have a problem before you can do anything about it. Most NGOs don’t. Add a “loss to corruption” line in your budget. Report all theft to the public. Address the problem, don’t ignore i

2. Lock up the thieves. There needs to be a disincentive to steal. Right now there isn’t. In Northern Uganda, NGO workers caught stealing only get sacked. Often the rest of their contract gets paid out too, which is madness. In my organisation, we’re not allowed to take thieves to court – only fire them. In the last few years I’ve heard of at least 50 rich NGO workers caught red handed stealing money intended for the poor and vulnerable, and no one has gone to jail. NGOs need policies that anyone caught stealing WILL be taken to court with no exception. Yes the corrupt police and court system makes this difficult, but try your best. Its great that Red Cross say they will “hold their workers to account”, but I doubt any will end up in prison.

3. Play hardball with corrupt Governments. NGOs are slow to learn this lesson, and often bow to the will of corrupt, mega-rich government officials. You’ve got power, use it. As corrupt as NGOs can be, government officials are much, much worse. Why are the Red Cross paying customs duty on anything? They are there to help the country out of an Ebola epidemic, a crisis. The Red Cross and other NGOs should insist on their donations and equipment being exempt from government fees like customs duty in a crisis. If there are no customs bills, there can be no fake customs bills.

4. Pay locally appropriate salaries. I’ve said this before, and this stuck record will continue. As soon as staff have an inflated salary (especially in short term jobs), they see the job less as a real job, and more as an opportunity to grab as much money as possible before the magical money fountain stops flowing. They are blinded by dollar signs in their eyes. Paradoxically, your workers will steal less, be more satisfied and get better work done on a fair salary than a bloated one.

5. Put foreigners in charge of the money. I don’t mean white people, I mean foreigners. Keep control of the money outside of the corrupt local systems. It’s an Ebola Epidemic. You are not there to grow local capacity, you’re there to save lives. If qualified and experienced Nigerians and Kenyans managed this money, there would have been much less corruption. Foreigners don’t have the local connections to leverage with government officials. They don’t have the family pressure to feed out money. They have the incentive of ongoing work in the organisation if they do well. Keep the control of your millions outside of the corrupt in-country systems.

I hope this fantastic announcement by Red cross continues the growing awareness around the world of the real situation. We need Red Cross to continue saving lives in crisis situations, with all the dollars we gave them, every last million.

Red cross cracked.gif

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2 Responses to 6 Million Dollar Red Cross Heist

  1. Dorothy Laing Bhanabhai says:

    Interesting, makes us think about what or who or how we give…. Can we draw parallels or comparisons with Judas dipping into the funds? …what of those who knew he was doing this? First world prisons have a fair share of thieves – white collar included. Is it the scale that makes us feel a repulsion? Really appreciate what you are doing for humanity.

    • ntlaing says:

      Wow those are really good points. With Judas the church had corruption before it was even the church :D. Its also amazing with Judas how close all the disciples were with each other, and they must have trusted him completely yet he still took the money. Or maybe if any of the other disciples had been given that responsibility and that temptation the same thing would have happened? Perhaps the corruption culture of East Africa might have been similar to the first century in Israel? And yeah its the world over with white collar crime. I think the difference is here, that theft is rife at every level. In New Zealand the opportunities are often not there. I can’t even remember a situation in my casual, or proffessional working life there where there was even a realistic opportunity to steal money.

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