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SPAIN: Activists Support Investigation of NGOs for Embezzlement

Alicia Fraerman

MADRID, Apr 17 2007 (IPS) - Activists are worried about the impact of investigations of two non-governmental organisations in Spain for embezzlement, but want immediate and in-depth inquiries into any suspicions of mishandling of donor funds. They also underline that such cases are an exception.

“We want light to be shed on this and any other suspicion of irregularities, which are unusual and highly exceptional,” Pilar Orenes, vice president of CONGDE, a Spanish umbrella group of NGOs, told IPS.

“There should be in-depth investigations of the suspicions, and if they are confirmed, I hope the proper measures, both judicial and administrative, are taken, because this has a very strong negative impact on NGOs, the great majority of which act with probity,” she added.

One of the NGOs under investigation, the Fundación Intervida, invites people to “sponsor” a child in a poor country. The organisation is based in Barcelona and is active in Bolivia, Ecuador, El Salvador, Guatemala, Nicaragua, Peru, Mali, Bangladesh, India and the Philippines.

The other NGO, Anesvad, works on sanitation and social development projects in Africa, Asia and Latin America. Based in the northern Spanish city of Bilbao, it was founded in 1970 by Spanish priest Javier Olazábal to fight leprosy and other diseases in developing countries.

The current president of Anesvad (an acronym that stands for “we serve our sick, with our eyes on God” in Spanish), José Luís Gamarra, was arrested on Apr. 5 after employees of the organisation accused him of misappropriating funds.

Anesvad has set up a commission to provisionally run the organisation. The employees, who stress that they had nothing to do with Gamarra’s behaviour, plan to continue their development aid work while cooperating with the authorities in the investigation.

But this is not the first legal inquiry to focus on Anesvad. In 2005, two other managers of the NGO were investigated for embezzling a large sum of money. However, they were not taken to court because they returned the funds and were fired.

With respect to the Intervida Foundation, meanwhile, the anticorruption prosecutor’s office says the group’s directors embezzled 45 million euros (58 million dollars), disguising the money as expenses that went towards sponsoring children.

The funds were transferred to companies like El Roure Construcciones, Argentia Inmobiliaria, Asociación Solaris Perú, Edpyme Raiz, Genéricos Farma-ahorro and Enriquecidos Lácteos, whose executives are the directors of Intervida in Peru, Guatemala, Bolivia, Ecuador and El Salvador.

Given the lack of clear explanations by the directors of Intervida with regard to the legal inquiry launched by the prosecutor’s office of Catalonia – the northern Spanish region where the NGO is based – writer and academic Francisco Carrillo announced Saturday that he was stepping down as spokesman for the foundation’s board of directors.

>From Paris, Carrillo said in a statement that his resignation was prompted by “the surprising lack of a reaction by the directors of Intervida in terms of informing the members of the board, with complete transparency,” about what is happening.

Nevertheless, the writer said that “the supposed irregularities in the administration of the organisation have yet to be proven.” He added that “for the good of the children that are under the protection of Intervida.I trust and hope that the courts will reach the conclusion that the organisation did not commit any crime.”

Intervida, which carries out publicity campaigns, has the support of over 350,000 people, who pay 21 euros (28.5 dollars) a month to sponsor a child, which brings the NGO annual revenues of around 90 million euros (117 million dollars).

In a letter to the prosecutor’s office, Intervida employees reported that they had witnessed the arrival of the back-up copy of a fax transfer of 16 million dollars (12 million euros) from Intervida Guatemala to an account in Bancafé International, in the tax haven of Barbados.

Bancafé has been registered as a Colombian bank, with its headquarters in Miami, since 1987.

Intervida failed a previous audit, for financial years 1998, 1999 and 2000, carried out by Fundación Lealtad, which analyses the practices and financial records of NGOs and reports on whether they meet transparency and best practice standards. Review and certification by Fundación Lealtad is voluntary, and is intended to foster donor confidence in NGOs.

When Fundación Lealtad reported that during those three years the public information Intervida provided to donors had not been transparent enough, and “did not reflect the reality of fund management in the subsidiaries in the South,” the NGO rejected the report, broke off relations with Fundación Lealtad and did not use its auditing services again.

The same thing occurred with Anesvad, according to Patricia de Roda, the head of Fundación Lealtad.

In response to public alarm caused by these accusations, the head of Catalonia’s Cooperation for Development and Humanitarian Action, David Minoves, said they should prompt donors to humanitarian agencies to think about their own responsibility.

“Just as the public administration requires NGOs to account for their actions to a certain minimum level of rigour, donors should ask the same of the organisations they support with their money,” he said.

Juan Pablo de Laiglesia, secretary general of the Spanish Agency for International Cooperation (AECI), told IPS that the legal framework for NGOs was “so strict that possible irregularities can be detected and corrected.” That was why he had “total confidence in the law and in the justice system, which should be allowed to act and reach a decision.”

Finally, and in agreement with CONGDE, de Laiglesia said that the cases of Anesvad and Intervida were exceptions within a group of organisations “that shine for their effectiveness, efficiency and integrity, so what has happened should not affect society’s appreciation and support for NGOs and their acts of solidarity, which are very important.”

However, the head of the Association of Small and Medium NGOs, Rafael Jariod, complained that CONGDE was discriminating against smaller organisations. He said that what was happening with Intervida and Anesvad “was something of a witch hunt, because they have done a lot of good things, although, like anyone else, they may make mistakes.”

But Intervida can hardly be considered a “small NGO,” given the number of its offices in different countries and its annual budget, derived from donations.

Meanwhile, the fears of activists and NGO employees are already beginning to come true.

Sources at Intervida acknowledged that as soon as the investigation of the organisation became public knowledge, some 10,000 donors cancelled their subscriptions. The sources said they believed that more of the 356,198 sponsors they had before the scandal broke out may follow suit.

Prosecutor Carmen Marín Aragón travelled to Peru last week to take statements from Intervida employees there.

CONGDE’s Orenes said it is necessary to wait for the court decision, but that in the meantime, “all NGOs should be encouraged to submit to audits and to produce clear and exhaustive minutes and reports, because the misdeeds of the few should not affect the majority. The quantity and quality of our development aid is at stake,” she said.