How do you keep one person from diverting funds and causing a front-page fiasco for your charity? World Vision illustration.

Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

How do you keep one person from creating a public relations fiasco or, even worse, damaging the reputation of your entire organization? How do you keep a manager from illegally diverting a huge amount of resources?

What controls and procedures do you have in place to prevent something like this in your organization?

Let’s start with a FBI agent who pled guilty to charges of passing sensitive and classified information to a Chinese government official and businesses in China.

8/1 – ABC News – FBI Employee Arrested for Allegedly Acting as Secret Chinese Agent – According to the story, we can drop the word ‘allegedly.’ This week he entered a guilty plea to one felony charge. The government claims he was gathering sensitive and classified material based on instructions from his handler.

He was born in China and was naturalized in 1985 at age 16.

So, the FBI with all its investigative powers and intentional counter-intelligence operations was not able to prevent this man from being an agent of the Chinese government.

So what chance does a nonprofit charity have of filtering out people who want to do bad stuff? That is something to consider as we grieve the following story.

This week the story broke that a manager of the Gaza office of World Vision allegedly diverted a lot of money to Hamas for use in terrorist activities. At this point the story consists of allegations, but allegations from the Israeli security service after a few weeks of interrogation are extremely serious.

8/4 – Hareetz – Top Official in Christian Aid Group Charged With Funneling Funds to Hamas – The security service, Shin Bet, arrested the director of the Gaza branch office on June 16. He was indicted Thursday.

Shin Bet accuses the manager of joining an armed wing of Hamas in 2004 and being sent to infiltrate a western aid organization a year later.

In 2005 he was hired by World Vision and in 2010 was promoted to director of the Gaza branch.

His attorney says armed Hamas soldiers showed up at the World Vision office, demanding and taking whatever they wanted. Shin Bet alleges funds were intentionally diverted to Hamas with the knowledge of a few other WV staffers but without the knowledge of any of his supervisors.

Shin Bet claims that the manager offered up lots of details on how he diverted money, including payments to soldiers, buying equipment for digging tunnels, funding greenhouses which were covers for tunnel entrances, and buying equipment for the Hamas navy instead of instead of fishermen.

Comments from a Shin Bet representative go out of the way to make it clear World Vision was not being investigated directly, but only because Hamas is allegedly tied up in the situation. The representative is letting WV leadership off the hook for responsibility, blaming what is identified as weak internal controls for the manager being able to pull this off without other WV management knowing anything about it.

8/4 – Times of Israel – World Vision says Gaza aid is audited, doubts Hamas pocketed millions – World Vision released a statement saying the funds are

subject to regular internal and independent audits, independent evaluations, and a broad range of internal controls aimed at ensuring that assets reach their intended beneficiaries and are used in compliance with applicable laws and donor requirements

WV said they have no reason to believe the accusations are true but will take appropriate action based on any evidence presented to them.

Article says a Hamas official denies any relationship between the manager and Hamas.

This article is a bit more slanted that the article above. The Israeli UN Ambassador is quoted as calling for more UN oversight of funding recipients saying

An organization which received UN support was caught funding terrorism.

The Public Security Minister is cited as thinking that WV knew about the diversions and

… turned a blind eye.

The dollars involved are significant. The article says Shin Bet says that of $1.5M funding for civilian projects, 40% went to Hamas. That would be $600K a year. In addition, the accusations include giving to Hamas around $4M a year intended for the needy.

For a more balanced and nuanced report that summarizes and rewrites the above articles, check out the following:

8/5 – Christianity Today – Israel Accuses World Vision’s Gaza Leader of Giving Millions to Hamas – The security service alleges that something in the range of 60% of the funds in the Gaza office were directed to Hamas. This is in the range of millions of dollars a year.

Article summarizes the different types of alleged diversion schemes.

The full statement from World Vision is provided as well.

Question to ponder

The evidence will be presented at trial. Obviously the security people have not shown evidence to the public yet.

Thus, we don’t know if all of this is true, or even if any of it is true.

Let’s leave that aside for the moment. The Israeli courts will sort it all out.

Here is the question for you to ponder as a leader of a charity:

  • What procedures, systems, and controls do you have in place to prevent a diversion like this from happening in your programs? (Keep in mind the FBI wasn’t able to prevent a mole from operating inside the FBI.)
  • If one of your program managers pulled off a scheme like this (assuming it actually happened), how could your programs detect the problem before the security agencies do?
  • What could you do to reduce the risk of a similar fiasco from diverting scarce funds desperately needed by the poor and devastating your charity’s reputation?

 

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