Reputation vs. Counter-Corruption
A case study on how means of financing affect aid organisations’
response to corruption allegations
Klara Edenmo Sandmark
Uppsala University, Department of Government Bachelor thesis in Development Studies, 15 ECTS Spring 2021
Supervisor: Kajsa Hallberg Adu
Abstract
This study aims to investigate how aid organisations with different means of financing respond to corruption allegations, and how the perceived risk of reputational loss affects that response.
The method used to answer the research question was a collective case study where three different aid organisations, Oxfam GB, UNDP and SIDA, which all have different funding mechanisms, were compared in their response to corruption allegations - before and after the public gained knowledge of those allegations. The analysis shows that there is a difference in the response to corruption allegations between the cases, namely that Oxfam GB and UNDP developed their response to a large extent when the public learnt of the allegations, SIDA on the other hand did not change their response at all. However, donor pressure seems to be more important for this induced change rather than the perceived risk of reputational loss.
Keywords: corruption, aid organisations, funding mechanisms, reputation
Table of Contents
Abstract 1
List of Abbreviations 3
1. Introduction 4
1.1 Aim of study and Research Question 5
2. Previous research 6
2.1 Corruption in the aid sector 6
2.2 Measuring corruption in the aid sector 8
2.3 The taboo of acknowledging corruption and the importance of a good reputation 9
2.4 Transparency 10
2.5 Combating corruption in the aid sector 11
2.6 Aid organisations’ means of financing 11
3. Theoretical framework 12
3.1 Definitions 12
3.1.1 Corruption 12
3.1.2 Fraud 12
3.1.3 Safeguarding 13
3.2 Theoretical framework 13
4. Research Methodology 14
4.1 Selection of cases 15
4.2 Material and primary sources 16
4.2.1 Bias 16
4.3 Method of Analysis 17
4.4 Limitations 17
5. Analysis 17
5.1 Oxfam GB 18
5.2 SIDA 21
5.3 UNDP 23
6. Discussion 24
6.1 Interpretation of the findings 26
6.1.1 Reputational management 26
6.1.2 Ineffective counter-corruption work 27
6.1.3 Donor pressure 28
6.1.4 Alternative explanation 29
6.2 Limitations and recommendations 30
7. Conclusion 31
List of Abbreviations
DFID The British Department for International Development GEF Global Environmental Facility
ICTSD International Center for Trade and Sustainable Development NGO Non-Governmental Organisation
OGB Oxfam Great Britain
SIDA The Swedish International Development Cooperation Agency
UNDP United Nations Development Programme
1. Introduction
The goal of foreign aid is to help people in need, but how to reach that goal is still up to debate. William Easterly (2007) writes in his book The white man’s burden about how he believes the West’s aid efforts do more harm than good by ignoring local traditions and solutions and only attempting to implement western ideals. Dambisa Moyo (2009) on her hand argues in her book Dead aid that aid to Africa should be weaned off as soon as possible, stating that aid has moved the continent backwards in development. Despite this, most
wealthy nations, as well as many ordinary people, each year donate a portion of their budget to different aid organisations and projects with the hopes of making a difference.
The aid organisations on the other end of those donations, write reports on how much funding they have received and how it has been used. It is quite common to see statements that for example, 84 per cent of every dollar donated goes to making the world a better place, the rest to necessary administration costs (Oxfam, 2021). At the same time, headlines like CEO’s pocketing money for their own gain, peacekeepers sexually exploiting the people they are meant to protect and shady contractors distributing aid without following any guidelines are not uncommon to see in a newspaper.
When it comes to corruption and fraud, the aid industry does not seem to be fairing off any better than other sectors despite their will to help or the ‘do no harm’-principle. Furthermore, projects being implemented in places where corruption practices are common and monitoring are difficult make the risk of corruption in the sector high. Additionally, just a decade ago there was not even a certainty that aid organisations had a counter-corruption unit. However, since donors during the last few years have increasingly begun to make demands on
transparency and corruption prevention this has fortunately changed for the better. Most aid organisations now have programmes to tackle corruption, fraud and safeguarding (May, 2016b).
Nevertheless, still many aid organisations fail to acknowledge the seriousness of the problem
and truly invest in prevention work. One of the reasons is the fact that aid organisations
heavily rely on their reputation for funding, and detecting fraud and corruption tends to lower
the public’s opinion of the work the organisation does (May, 2016b). So, the need for funding
aid organisations. It does however appear as if the importance of reputation management can vary depending on whether or not the aid organisation is a charity. While charities face the risk of quickly losing donors if their reputation is tarnished, multi-donor trust funds or international development banks seem to receive a different treatment (Strand, 2020).
1.1 Aim of study and Research Question
This study aims to contribute to the knowledge of how aid organisations respond to
corruption allegations, and how different means of financing affects that response. The study will pay special attention to the way counter-corruption work in aid organisations are affected by their concern for preserving a good reputation.
The correlation between foreign aid and corruption has been a focal point for many studies in recent years (see for example Easterly, 2007; Moyo, 2009; Sundsten 2016). How foreign aid contributes to corruption in the countries receiving the aid, or how foreign aid works with reducing the corruption in the recipient countries by implementing so-called anti-corruption strategies and working for good governance has all been highly scrutinised by researchers, and the verdict seems still to be out. There has however been less research on corruption within the aid organisations themselves. The subject is relevant from the perspective that the organisations do not own the money they receive to do with whatever they please, they are entrusted to transfer the money from donors to recipients (May, 2016a). Donors should therefore have access to information about mismanagement and corruption allegations. Most research also focuses strictly on NGOs, leaving a gap of information on other aid
organisations.
The research question is thus: Do organisations with different means of financing respond differently to corruption allegations depending on their perceived risk of reputational loss?
The reputational loss will be studied through media exposure on corruption allegations
against different aid organisations. The organisations will have different funding mechanisms
where the need for fundraising will vary.
2. Previous research
In this section, previous studies on the subject of corruption in the aid sector, as well as aid organisations' means of financing, will be presented. The section will be divided into six subsections discussing different aspects of the issues.
Some of the sources presented in this section only apply their research on NGOs, for example, May’s book Fighting Fraud and Corruption in the Humanitarian and Global
Development Sector. This study’s focus, however, lies on all aid organisations and both NGOs and non-NGOs, for example, government agencies, are addressed. Regarding the information in this section, this study argues that it applies to the entirety of the sector unless stated otherwise. Throughout the course of conducting this study, very little information has given the impression that the risks of corruption the sector faces, and the taboo towards discussing the subject, are different between aid organisations with different funding mechanisms.
2.1 Corruption in the aid sector
Business theorist Marvin Bower wrote in 1966 about the concept of ‘company philosophy’.
He states that “As the term is most commonly used, it seems to stand for the basic beliefs that people in the business are expected to hold and be guided by—informal, unwritten guidelines on how people should perform and conduct themselves.” The company philosophy is simply the expected behaviour of the people working at a said company (Bower, 2003). While researching this study one thing is clear - corruption is somewhat taboo within the aid sector.
The expected behaviour of people working with aid is to help others in need, not to steal money or in other ways abuse their power. Due to this conception of the behaviour of aid workers, corruption is therefore not seen as a problem for the sector, and consequently not worth spending a lot of funds on. However, researchers and quite a few workers in the sector, state the exact opposite.
The former head of Oxfam’s counter-fraud unit Oliver May (2016a) writes in his book Fighting Fraud and Corruption in the Humanitarian and Global Development sector about the need for the organisations in the aid sector to truly increase their resilience to corruption.
Not only is it the right thing to do to ensure that the aid is delivered to the people in need but
were some years ago. May states that many organisations still do not publish their detected losses to fraud and corruption for the public’s eyes to see and that there is a need to improve transparency.
Corruption is however not only a financial problem. The definition is by many considered to be ‘abuse of power’ which therefore can contain a wide array of misconducts. Two common corruption allegations are for example nepotism and sexual exploitation (Hendry, 2020;
ReliefWeb, 2021; Transparency International, 2017). Transparency International writes that sexual extortion, or sextortion as it is also called, has “long been a silent form of corruption”
where victims rarely get justice. In the aid industry recipients of aid are sometimes asked for sexual favours in return for the aid, and a UN report found that a third of the sextortion allegations against their personnel involve minors (Feigenblatt, 2020).
What is it then, in this sector, that increases the risk of corruption? May (2016a) brings up several enablers which he argues occur in the aid sector. These are:
1. Monitoring is often difficult and aid organisation rely a lot on a ‘culture of trust’
2. There is a hierarchy of values where it can be seen as more important to deliver aid than to follow anti-corruption policies
3. Projects may take place in an environment with weak local governance which can lead to devolved responsibilities in aid organisations
4. Aid organisations work in a very dynamic and unstable reality 5. Many projects are directed to places with widespread corruption
6. The focus of the funding lies on projects and not organisational infrastructure which leads to underdeveloped counter-corruption units
7. When delivering the aid to the recipients, parts of the delivery is often outsourced to other actors
Aid organisations, therefore, have some sector-specific conditions which make them perceptible to corruption - many regarding the often unstable working environment, the difficulties with monitoring and keeping workers accountable as well as an under-financed organisational infrastructure. All these enablers create the need for an effective
counter-corruption unit, but can also stand in the way for one (May, 2016a).
Like all types of organisations, aid organisations need an organisational infrastructure to function properly. It seems however to be a problem for organisations dealing with the delivery of aid to spend enough money on this part of their budget. Aid organisations’ goal is to help as many people as possible, and it is perhaps understandable that they spend most of their funding on development and humanitarian projects since this is what the donors expect.
When a person donates 10 dollars, or an institution donates millions of dollars, it is with the perception that almost all of that money goes to people in need. This is an unrealistic expectation since even if aid organisations often are non-profitable they among other things still have salaries to pay, workers to train and financial systems to upkeep. If the donors want aid to be as efficient as possible, they must come to realise that it will cost them a part of their donations (Goggins Gregory & Howard, 2009). The risk of ‘starvation’ of the aid
organisations infrastructure also affects the quality of their counter-corruption units (May, 2016b).
2.2 Measuring corruption in the aid sector
The aid budget in many countries have continuously increased for the past decade, at the same time as more and more information about the risks of corruption the foreign aid sector faces has come to our knowledge. Button et al (2015) argue that the first step one has to take to keep fraud and corruption to a minimum is to define the nature and size of it, but
measuring these issues has proved difficult. By design corruption and fraud are difficult to find since the illicit activities often are disguised as legal and the crimes can therefore go undetected for a long time. How much corruption is detected also depends on how effective the organisation’s policies on counter-corruption are. So for most organisations, the known cases of corruption are just the tip of the iceberg.
While corruption by design is difficult to detect, and therefore to measure, May (2016a) has
compiled and compared different estimates of the annual aid loss to corruption and found that
it is likely that between 2-5 per cent of the organisation's turnover is lost each year. In 2019
the member states of the Development Assistance Committee gave 152,8 billion USD in total
to official development assistance (OECD, 2020a). If 2-5 per cent were lost to fraud and
corruption, that is between 3,1 and 7,6 billion USD that did not reach the recipients in need.
Regarding the amount of sexual misconduct are numbers difficult to find, but it is a general opinion that sextortion is widespread in the aid sector. A British member of parliament went as far as to say that the sector was a ‘safe haven’ for abusers (Elks, 2021). Many aid
organisations have had a bigger focus on safeguarding during the last couple of years, but the pandemic is now believed to have a negative impact on that work since money is being redirected (Worley, 2020).
2.3 The taboo of acknowledging corruption and the importance of a good reputation
The aid sector is not a stranger to corruption and yet the subject is rarely talked about by the organisations themselves. May (2016a) writes that there are quite a few myths and
misconceptions circulating the sector, enhancing the view that corruption is not a big problem for aid organisations. One myth is that since relatively few cases are detected each year some believe that corruption is not a problem for the sector. Another myth is that people who work with aid and humanitarian assistance should be less likely to be corrupt compared to people in other sectors. A final misconception, according to May, is that corruption should be seen as a tax on aid and that as long as most of the funds reach the recipients that should be accepted.
These mindsets are counterproductive for an effective counter-corruption unit since it deems it unnecessary to work with anti-corruption.
One of the reasons why acknowledging corruption appears to be taboo for aid organisations is
connected to the issue of reputation. A good reputation is, as mentioned previously, very
important for aid organisations since the amount of financing they receive highly depends on
the donors’ opinion of their work. If people trust that the organisations will use their funds to
do good, they might donate some money, or support their governments to donate a part of
their tax money. If they do not, however, the organisations will receive significantly fewer
donations. Gibelman and Gelman (2001) write that it can therefore be very problematic for an
aid organisation if their public image is tarnished, for example by a newspaper writing about
a corruption scandal. In 2016 we could for example see how The British Department for
International Development [DFID] pulled out of a program focusing on empowering girls in
Ethiopia after the media heavily criticised the founders for only being after fame (Anders,
2018b). Whether or not these accusations were correct is unknown, but it proved the media’s
great influence over people’s opinions and their effect on aid organisation’s reputation. Over the last few years, the general trust towards aid organisations has somewhat fallen - partly due to the media's reporting on their work (Anders, 2018a). It can even be considered that there is a dangerous rift between the media and the aid sector, where the latter is dependent on the former both for reputation as well as news coverage of humanitarian issues which might induce donations but at the same time fails to effectively and meaningfully engage with the media. The aid organisations questioned by the media are often evasive, do not answer questions and do not even dismiss facts that they know are false. That tactic might work in the short run, but in the long run, it means that it is always the media writing the narrative, and therefore steering the public’s opinions, as well as strengthening the view among the aid organisations of the media as the enemy (Anders, 2018b).
2.4 Transparency
Regardless of the aid sector's relationship with the media, media coverage can increase aid organisations’ transparency, with or without their permission. Headlines of corruption scandals are most likely something aid organisations would like to avoid. However, at the same time as it poses a risk for the organisation's reputation, it may provide the donors with relevant information concerning their funding.
Transparency is crucial for accountability and effective feedback systems, yet aid
organisations often fail to sufficiently share information on corruption cases. Burger and Owens (2010) write that most NGOs claim to be transparent, but few “are prepared to face the risks and sacrifices associated with being transparent” (pp. 1263). Many organisations fail to provide information, or when they do it is inaccurate. Burger and Owens, similarly to other researchers, argue that the main reason for this is to not risk losing donors and funding.
However, they additionally state that the donors have unrealistic expectations of the aid
organisations performances. They also found a connection between the lack of transparency
and the perceived altruism of the NGOs work. NGOs with a strong sense of altruism might
accept some misconduct if it serves the greater good.
2.5 Combating corruption in the aid sector
There are many different views on how corruption should be countered. Many aid
organisations have adopted a zero-tolerance approach to corruption, which means that all corruption is unacceptable and that everyone who is involved in these practices should be held responsible. Political scientist Arne Strand (2020) argues that this is a noble stance to take but might be harder to apply in practice. An example of how aid organisations are trying to honour this practice is to for example freeze aid when corruption is detected, but Strand means that this could be problematic since it might harm the recipients who depend on the aid. The risk of aid being frozen if corruption is detected could also lead to a reduction of the reporting of crimes since the aid organisations want to deliver the aid. Strand proposes a more lenient approach to how donors and organisations should respond to corruption, a
step-by-step approach. Here the scale of the corruption should be assessed first and the response should be based on this. If the corruption is assessed to be a serious problem then the aid can be frozen but if it is only small-scale then other responses should be taken. Strand does however not go into detail on what sort of responses aid organisations should take unless the scale of corruption warrants freezing or altogether stopping the support, only stating that dialogue is important.
May’s (2016a) prefered way to combat corruption has a bigger focus on deterrence and prevention than Strand’s. First of all, he as well thinks aid organisations should move away from ‘zero-tolerance’ and instead aim for ‘absolute minimum’ which is both easier to interpret as well as less daunting to work with - corruption will always occur but you can make it as difficult as possible for the perpetrators to succeed. May divides his ‘holistic approach’ into four equally important parts: deterrence, prevention, detection and response.
While focusing on all four pillars May means that aid organisations can reach the root causes of the problem, not just fix the symptoms.
2.6 Aid organisations’ means of financing
While much focus on the research on aid organisations lies on NGOs and charities, there are
many other aid organisations too. Where and how aid organisations receive financing differs
between organisations. Donors range from governments to the private sector to ordinary
people, and the need for fundraising varies. NGOs receive funding from a wide range of
donors including governments, private donations and multilateral organisations like the UN and the World Bank. They often have to compete against other NGOs for the funds and fundraising are therefore important. Much of the donations to an NGO are earmarked for specific projects and come with conditions (Fajri, 2020; Saez, 2020). Government aid agencies on the other hand are financed by their national government and receive an annual budget. The money is then used to fund different projects and other aid organisations like the UN and NGOs (SIDA, 2021). Multilateral organisations are primarily funded by their
members, so for the UN organisations for example are the member states the main donors.
They receive both flexible and earmarked donations (OECD, 2020b).
3. Theoretical framework
Transparency is a value most aid organisations state is important for their work since it makes them accountable both to the donors and the recipients. On the other hand, there is a tension between being fully transparent about corruption and managing the organisation's reputation (May, 2016a).
3.1 Definitions
3.1.1 Corruption
The definition of corruption which will be referred to in this paper is the one by Transparency International (n.d.), namely that corruption is “the abuse of entrusted power for private gain”.
This is a very broad definition where corruption can take many different forms, for example, embezzlement, bribery, nepotism and “sexual exploitation of co-workers and beneficiaries”
(May, 2016a). This study considers fraud to be a part of corruption and safeguarding to be a part of counter-corruption work.
3.1.2 Fraud
For the definition of fraud this paper will use the same one as UNHCR:
“Any act or omission, including misrepresentation or concealment of a material fact, that knowingly or intentionally misleads, or attempts to mislead, a party to obtain a benefit, whether directly or indirectly, whether for oneself or for a third party.”
(UNHCR, 2013: 4)
3.1.3 Safeguarding
Safeguarding the protection of a person’s “right to live in safety, free from abuse and neglect”
(Care and support statutory guidance, 2021). For aid organisations, this in most contexts refers to protecting both recipients and staff members from sexual exploitation and abuse.
3.2 Theoretical framework
Aid organisations are often non-profit organisations that are highly dependent on receiving funds from donors, and that requires the donors to trust that the organisation can manage their money. When a corruption scandal becomes known to the public the organisations face the risk of losing donors and funds and may have difficulty with continuing their work. That risk can then lead to a reduction of the transparency on corruption allegations for the
organisations to keep their donor relations intact. Moreover, such a culture of silence surrounding corruption in the sector could simultaneously work against effective counter-corruption policies (May, 2016a).
However, donors appear to be more lenient towards multi-donor trust funds or international development banks like the UN organisations or the World Bank than they are towards NGOs. So while NGOs face more immediate repercussions in the form of losing donors when corruption scandals are brought to light, other organisations seem to fare better off.
Strand explains this by saying that for example, the UN has a legal responsibility to investigate corruption allegations, something NGOs do not (Strand, 2020).
Non-NGOs like the UN organisations and government aid agencies also have a more stable
income compared to NGOs and do not have to rely as much on fundraising. Many of their
donors are governments that annually dedicate part of their budget to these organisations
(OECD, 2020b). Reputation might therefore be more important for NGO compared to their
counterparts. However, democratic governments do only have as much power as their voters give them.
A summary of the theoretical framework for the study is that reputation management is very important for aid organisations and can affect the degree of transparency an organisation practises. Donor relations however seems to be somewhat more stable for non-NGOs and reputation management might therefore not be as much of a priority. Below a model of the theoretical framework is presented.
Figure 1. Theoretical framework
Based on Figure 1, one can assume that the results of the study will indicate that NGOs have a stronger response to corruption allegations compared to non-NGOs when the public gains knowledge of the allegations. This since NGOs would want to avoid a reputational loss to a greater extent than non-NGOs.
4. Research Methodology
A collective case study was conducted to answer the research question which aimed to describe the relationship between aid organisations’ response to corruption allegations and the organisations’ financing (Vanderstoep & Johnston, 2009). Secondary data was collected with the purpose to clarify the actors’ thought process by finding the “essential content through careful study of the different parts of the text, its entirety and the context in which it exists” (Esiasson et al., 2012: 210-211, author’s translation). The data was collected through search engines and compiled using several analysis questions. This method was chosen because it suited the research questions objective on comparing responses of the aid
organisations and the public's effect on that response. Another possible method, either on its
own or as a complementary method, would have been semi-structured interviews. The
organisations. Due to the limitations of the study, such as the time frame, and the research cases chosen this method would however have been difficult to implement and the chosen method seemed more realistic.
4.1 Selection of cases
When selecting cases for the study three different criteria were set up. The first criteria were that the chosen aid organisations should have different means of financing. The second criteria were that the aid organisations have an annual turnover of at least 1 billion USD. This since it would be a higher chance of more available information as well as a greater public interest in the allegations. The third criteria were that the aid organisations should have had knowledge about the corruption allegations before the public, as well as made the choice to not be fully transparent about them to the donors and the public. Table 1 is a summary of the criteria and the chosen cases.
Table 1. Summary of the selected cases
Aid organisation Means of financing Annual turnover Internal knowledge of the allegations before the public Oxfam International Public and
institutional fundraising
1,2 billion US dollars (Oxfam, 2019)
Yes
SIDA Tax payments 5,5 billion US
dollars (SIDA, 2021)
Yes
UNDP UN member states,
the private sector and multilateral organisations
5 billion US dollars
(UNDP, 2019) Yes
As seen in Table 1 the aid organisations which were chosen for this study were Oxfam, SIDA and UNDP. The first case was the allegations of sexual misconduct by Oxfam GB [OGB]
workers during a project in Haiti in 2011. OGB is part of the Oxfam international
confederation and is a charitable organisation that receives a majority of its funding from
public and institutional fundraising (Oxfam, n.d.). The second case was the allegations of
fraud against SIDA’s partner organisation ICTSD. SIDA is the Swedish government agency
for foreign aid which receives funding from the Swedish government (SIDA, 2021). The SIDA case differentiates itself from the other cases since it was not SIDA staff who were involved in the fraudulent activities but workers at their partner organisation. However, since SIDA always conducts its work in partnership with other actors (SIDA, n.d.) this study argues that it is part of their responsibility to monitor their projects just as closely as they would if they were SIDAs entirely. The third case chosen for the study was the allegations of fraud against a UNDP-led project in Russia. The UNs Development Programme receives its funding from the UN member states, the private sector and multilateral organizations (UNDP, n.d.).
4.2 Material and primary sources
The material used for the study was primarily secondary information mainly in the form of reports and news media. The main search engine which was used was Google and search words were for example ‘aid organisation’s name’, ‘allegation’ and ‘report’ - e.g. ‘Oxfam GB’, ‘sexual misconduct’, ‘report’. Variations of the wording of the allegations were also used especially for the OGB case, for example ‘sex scandal’ and ‘Haiti scandal’. For material on the SIDA case, the searches were conducted in Swedish. The aid organisation’s websites were also used, mainly for searches on internal reports and press releases.
4.2.1 Bias
It is a possibility that some material was biased. As established previously, reputation is important to aid organisations, and it is, therefore, a possibility that some of the information they share overemphasis the positive parts and avoid going into too much detail over the negative parts. On the other hand, the media articles could have a bias in the opposite direction and may exaggerate in their portrayal of the corruption allegations against the aid organisations. In consideration of this possible influence on the study, multiple sources were used to try and create a full picture of the events, and independent reports considered
especially useful.
4.3 Method of Analysis
To answer the research question the material will be analysed on three different levels. The first level will address the background information of the allegations. The second level will address the actions of the aid organisation after they learnt about the allegations, and the third level will address the actions of the aid organisation after the public learnt about the
allegations.
The analysis questions can be summarised as:
1. What type of corruption allegations were made?
2. Who was the wrongdoer?
3. When did the corruption occur?
4. Was there an investigation when the allegations became known to the organisation?
5. What actions were taken by the organisation before the media learnt about the allegations?
6. Was there an investigation when the allegations became known to the media and made public?
7. What actions were taken by the agency after the public learnt about the allegations?
4.4 Limitations
The main limitation of this study is that only three cases will be investigated, and only one from each different ‘funding mechanism-group’. Another limitation is that not all media coverage will be analysed, the focus of the study will be on newspapers.
5. Analysis
During this section will the selected cases be analysed using the analysis questions.
5.1 Oxfam GB
In 2018 allegations against the aid organisation OGB were made based on sexual exploitation by staff members during the effort after the earthquake in Haiti in 2010. OGB staff, among other the country director Roland van Hauwermeiren, bought sex from young prostitutes while stationed in the country, and a couple of sources state that some of the prostitutes were minors (Lifvendahl, 2018).
A confidential report on the investigation of the misconduct was released by OGB to the public shortly after the media broke the story - OGB stating that they want “to be as
transparent as possible about the decisions made during the investigation and in recognition of the breach of trust that has been caused” (Grainger, 2018). The report (Oxfam, 2011) said that OGB received an email from a member of the Oxfam Latin America and the Caribbean team in July 2011 stating that members of the Haiti team had breached the OGB code of conduct. The alleged breaches were about sexual exploitation, fraud, negligence and nepotism. The OGB decided to conduct an internal investigation and their Loss Prevention team was sent to Haiti to investigate the allegations. During interviews, the country director admitted to the allegations of hiring prostitutes and taking them to his residence which was funded by the organisation. He offered to resign which OGB accepted on the condition that he fully cooperated with the investigation. They wrote that firing the country director would have had “potentially serious implications for the programme, affiliate relationships and the rest of the investigation” and he was therefore allowed a “phased and dignified exit” (pp. 2).
Van Hauwermeiren was given one month to leave the organisation. Three other staff members were also suspected of sexual exploitation and the investigation also looked into other allegations such as bullying and intimidation after it became known that staff members had physically threatened one of the investigation’s witnesses, CV fraud and misuse of OGB property. In total four people were fired and three chose to resign.
Regarding the allegations that some of the women were minors, OBG chief executive at the
time Mark Goldring stated in 2018 that they had found no such evidence in their investigation
(Elgot & McVeigh, 2018). However, the allegations are not mentioned in the investigation
report made in 2011.
In appendix 2 in the investigation report, an action plan on how to ensure this does not happen again is presented. Actions mentioned is, for example, to conduct exercises for the employees with a focus on Oxfam’s values, embed and reinforce the Code of Conduct as well as women’s rights into the centre of each project, strengthen HR and conduct regular checks on projects as well as making it easier for whistleblowers to spread information. In total, the action plan mentions 13 lessons and 21 planned actions of which 20 were implemented within the same year (Oxfam, 2011).
After a whistleblower leaked the information about the scandal to the media at the beginning of 2018 OGB lost thousands of donors as well as celebrity ambassadors (Lifvendahl, 2018).
Following this OGB released a “comprehensive action plan to strengthen safeguarding systems across the organisation and stamp out abuse” (Grainger, 2018). This included the creation of an independent commission on sexual misconduct, accountability and culture change which had access to Oxfam’s records and would be allowed to interview staff, partners and communities where Oxfam work, as well as a larger part of Oxfam’s budget being directed to their counter-corruption work. They also met with the government of Haiti to apologise, something they had not done in 2011.
Besides apologising to the Haitian government members of the organisation also apologised to the donors and the British government. 26 other reports of sexual misconduct had been brought to OGB’s attention after the Haiti scandal broke and many donors had cancelled or paused their donations while waiting for OGB’s response. The Guardian made a poll with over 2000 people which showed that 52% of the people who donated money before the scandal said that they would be less likely to fund charities from now on. The DFID made a statement saying that the OGB scandal had lowered the reputation of the entire sector and
“undermined public support for spending money on aid” (Elgot & McVeigh, 2018). OGB also went out saying that letting country director Roland van Hauwermeiren resign with no other consequences was a mistake and that they also should have warned future employers of the people who were let go. They also regretted not being more transparent at the time (Elgot
& McVeigh, 2018).
The Charity Commission for England and Wales did however publish an independent report
in June 2019 stating that Oxfam “repeatedly fell below standards expected, had a culture of
tolerating poor behaviour, and concludes that it failed to meet promises made on
safeguarding” (Charity Commission, 2019a). The Commission had previously worked with OGB in 2017 due to reports regarding the organisations’ lack of safeguarding their staff and the people they mean to help. OGB committed to an action plan to strengthen the weaknesses found in their safeguarding system, but then the news of the Haiti scandal became known and the Commission decided to open an inquiry into the charity (Charity Commission, 2019b).
The inquiry found that there were a lot of early warning signs of staffing issues and that OGB
“missed opportunities to address the cultural and behavioural issues in Haiti at that time”
(Charity Commission, 2019b: 4). Regarding the OGB investigation of the allegations, the Commission agreed with OGB’s decision to conduct an urgent investigation but found some issues with the investigation team’s experience which mainly consisted of financial related issues. The inquiry did not think it was an appropriate approach to allow the Country Director a ‘dignified exit’ since it was considered insensitive as well as gave off the impression that senior staff was treated more lenient than junior staff. This since the organisation fired the junior staff member who was accused of the same thing as the country director (Charity Commission, 2019b).
The inquiry also argued that the OGB team did too little to investigate whether or not minors were involved in the incidents and meant that they should have taken the allegations more seriously as well as reported them to the local police. Simultaneously as OGB was
conducting their investigation in 2011 did they receive two emails from a 13-year old stating that she and her 12-year-old friend had been sexually exploited by OGB staff, and while OGB thought the emails were falsified, the allegations were not adequately followed up on (Charity Commission, 2019b).
The Commission also found that while reporting on the allegations to the donors did OGB not mention the allegations of sexual misconduct or that minors might have been involved as well as gave off the impression that the incidents had taken place between staff members and not aid recipients. The inquiry’s impression was that OGB withheld certain information to protect the organisation’s reputation and to keep their donors (Charity Commission, 2019b).
Regarding OGB’s safeguarding protocols, the inquiry was consistently unimpressed. Since
years. In 2017 the Commission's opinion was that OGB lacked protocols that were up to date, made insufficient effort to try and deliver and follow through on promises to do better and mismanaged their administration. Other problems were that the safeguarding team had limited resources and mainly worked with response and not prevention. On these issues, the Commission however saw an improvement and safeguarding incidents were seen as being regularly reported. This though seems to not have been the case before 2018 (Charity Commission, 2019b).
5.2 SIDA
SIDA found itself in the spotlight in 2019 when it became known that aid given to the Geneva-based organisation International Center for Trade and Sustainable Development [ICTSD] had ended up in the hands of the CEO instead of the intended recipients. ICTSD was founded in 1996 and SIDA early on became one of the organisation’s biggest
contributors alongside the aid agencies of Great Britain, the Netherlands and Denmark.
Before the accusations of corruption, nepotism and embezzlement against the CEO Ricardo Meléndez-Ortiz became known, SIDA had for 20 years donated around 200 million Swedish kronor to the organisation (von Hall, 2019; Brinkley, 2019). Meléndez-Ortiz had been the CEO since ICTSD was founded and gave himself a paycheck of 413,560 US dollars each year, which is close to three times
1as much as the average nonprofit CEO is paid in the USA.
He also used ICTSD resources to make non-work-related travels, used an ICTSD credit card for personal expenditures, employed his brother as a consultant without the board's
knowledge and took a big loan from the organisation to buy real-estate. ICTSD’s board did nevertheless deny all accusations stating that it was only speculation by social media and secret sources leaking confidential documents. The audit by DFID which broke the story did however find indications that the board was involved in the CEO’s wrongdoings. The board also used ICTSD’s resources for personal travels, were not particularly involved in their actual work as board members and allowed Meléndez-Ortiz to do as he pleased. They were also chosen personally by Meléndez-Ortiz for the job which could be the reason that the CEO had so much liberty (Brinkley, 2019). The DFID-audit concluded that ICTSD was highly mismanaged and had misused the donor’s money to such an extent that it bordered on crime (von Hall, 2019).
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