Cases
© Peter Høvring

Current cases

April 2017: Irregularities in Cash Distribution Programme

Content of the complaint: In April 2017 DCA was made aware of alleged fraud connected to a pilot cash transfer project that is being implemented by one of our partners. They make use of DCA systems, but the fraud involved is not affecting DCA funding. It was identified that 17 undistributed cards were found to have been spent without ever being delivered to the hands of beneficiaries. The total loss incurred to the programme is relatively small and totals 3.500 DKK. These costs will be covered by the partners own funds.

What did we do: DCA initiated an internal investigation together with the head of finance in the partner organisation. A thorough investigation was done on site and concluded that fraud had indeed been taking place, though the exact scenario could not be established.

Senior management from both DCA and the partner organisation has made a number of clear recommendations to be followed up by the partner organisation in relation to the programme. With the new procedures in place the partner will have better control, and potential attempts of misuse will therefore be discovered immediately. Staff has been informed that future misuse will not be tolerated. This will be reported to the police and will also have contractual consequences.

What did we learn: The investigation report contains a number of important lessons learned in relation to cash transfer programming, which is valuable for DCAs future work. It has therefore been shared with relevant stakeholders to ensure that the learning is informing upcoming programmes.

January 2017: Two Members of Staff in Partner Organisation Dismissed for Fraudulent Activities

Content of the complaint: in January 2017 DCA became aware, that a partner organisation in Malawi had dismissed two members of staff on the grounds of suspected fraud. The two members of staff had allegedly committed fraud by inflating salary rates of employees. The fraud did not afffect DCAs activities with the partner organisation, and has not incurred any loss on DCA projects.  

What did we do: The partner agreed with DCA to get an in-depth financial review to ascertain their capacity through a review of their systems and human resource capacity. Moreover, the partner hired a ‘quality and risk management officer’ to prevent future similar incidences. The financial review was carried out as an independent audit. It didn’t find anything alarming, and DCA has so far decided to continue the partnership and has a very good dialogue with the management of the organisation. DCA will of course follow the developments and improvements closely.

What did we learn: It is important that DCA continue supporting partners with financial and procurement capacities to be able to identify potential fraudulent activities. Our ongoing monitoring was able to pick some suspicious activities and this is a good practice that adds value to our relationship.

January 2017: Suspected Misuse of 35.000 DKK with Partner in Malawi

Content of the complaint: The case started because a donor to DCA and the partner in question asked DCA to help them in a dialogue around some ineligible costs that had caused the donor to suspect misuse by the partner organization. The process made DCA decide to stop all payments to the partner until we could establish confidence in their financial management.

What did we do: A routine financial monitoring visit was carried out by DCAs finance officer in early February 2017. The monitoring visit was a good way to look for red flags or indications of misuse related to DCAs projects. The conclusion was, that the partner had very weak systems for financial management and that they had spent approximately DKK 35.000 without DCA’s authorization – thereby making the expenditure ineligible.
DCA has now asked the partner to repay the funds, and suspended the partnership until that has happened. Whether the partnership can be revived depends on findings from an ongoing audit, as well as the organizations proved commitment to act on the weaknesses they have in their system.

What did we learn: Partners sometimes do not take seriously provisions made in the project agreements and may fell short of seeking clarification. Again, we learned that strong systems are instrumental to effectively deliver on project outcomes. By supporting partners through our capacity building and mentoring interventions, we seek to build strong systems. We therefore continue to engage our partners in dialogue and strengthening their system capacities.

December 2016: Suspected Corruption Related to Construction Work

Content of the complaint: DanChurchAid is self-implementing a project in Uganda in connection to which suspicion of irregularities or corruption was reported to the complaints handling mechanism in late 2016. The suspicion of irregularities is connected to a tender process around the construction of a big tent with cement floor (for trainings), 1 smaller tent and two latrines. 

While the contracting job was undertaken as planned and the buildings erected, the process of hiring the contractor did not follow standard procedures in procurement, and regrettably happened without the relevant paperwork being done – purchase requests, approvals and other documents had not been completed. This gave reason to suspect, that the three quotations where not genuine, and that the contractor that was awarded the assignment based on unfair parameters.

What did we do: The relevant coordinator in DCA Uganda has done an investigation of the case and concluded with an internal report, which has been shared with senior management in Copenhagen. Based on the report and investigation, the following actions has been taken:

  1. dotA new procurement officer has been hired, and this person will be tightening procurement procedures.
  2. dotThe Country Director has communicated to all staffs in Uganda what the consequences of inadequate procurement processes are.

Based on the above, DCA considers the case as closed. The funds utilised to undertake the construction will be covered by DCA’s funds.

What did we learn: It is a well-known fact, that procurement is a vulnerable process in situations of urgency, and where there is scarcity in supply. This is something we take very seriously and address by, for example, sending extra support to our local procurement teams in times of extra pressure. A case like this, only underlines the importance of continuously focusing on training and capacity building in procurement practices.

July 2016: Suspected Fraud in Programme Supported by DanChurchAid

Content of the complaint: DanChurchAid I co-financing a programme in Sudan which is being implemented by an act alliance partner organization. The financial report for 2015 from the auditor included a management letter mentioning significant risk of fraud related to procurement of fuel. This was picked up by the financial controller and is now being followed up on.

What did we do: As a funder for the programme, DCA has asked the implementing partner to elaborate on their actions and steps to follow up on the risk of fraud.

What did we learn: Learnings will be gathered when the case is concluded.

February 2016: Harrassment and Extortion of DCA Staff in DRC

Content of the complaint: In the Port of Goma, Dem. Rep. Congo, An international member of staff with double citizenship is on his way to Bukavu to finish a field mission. In DRC and other African countries, expatriate staffs of African origin are more frequently subject to harassment by the authorities than Western expats. Since his foreign travel documents have previously caused unnecessary complications at the migration authorities, the DCA staff preferred using his Congolese ID as much as possible, in particular a document known as “Carte d’électeur”. According to the migration authorities at the port of Goma, that piece of ID that the DCA staff is carrying is a counterfeit document, although it was issues by government authorities and has been used since 2011 without any problems. Fortunately, the DCA staff had other ID documents, including a Congolese passport, to support the veracity of his Congolese citizenship, and this ultimately convinced the migration authorities. However, the authorities maintained their position on requesting the DCA staff to pay a fine for procession of counterfeit ID, which is a serious infringement. After lengthy discussions, the staff member was fined to pay 300 USD, but did not get any receipt although he insisted.

What did we do: Follow up The following day, staff member managed to get the document back from the migration authorities. DCA intends to contact all relevant authorities to get a formal explanation and hopefully an official receipt for the fine and an authentic version of the “Carte d’électeur”.

What did we learn: the incident will be reported to the local INGO community encouraging the focal point to discuss this issue with the national authorities so that expatriate staff of African origin (or any other staff members) do not get harassed and accused for being spies or the like. Further lessons learned can be reported once the case is closed.

January 2016: Fraud in Uganda Land Alliance Results In Termination Of Partnership

Content of the complaint: DCA was notified of suspected irregularities in Uganda Land Alliance (ULA). The suspicion concerned nepotism, embezzlement, forgery and other forms of corruption conducted by several people in the organisation.

What did we do: The first step DCA took was to give the independent auditors a notice about this in connection with their routine audit. This resulted in further indications of fraud and also showed, that other donors’ projects with ULA could be affected. As a result, a joint forensic audit was thus commissioned. The forensic audit clearly documented fraud and corruption, and hence all collaboration with ULA has been terminated and they have been asked to pay back the lost funds. The Danish Embassy in Uganda is now running the case centrally on behalf of the group of donors that where part of the forensic audit, and hence DCA is not directly involved in the follow-up actions vis a vis ULA.
The case had implications on another partnership in Uganda, since the executive director in ULA was also chairing another of DCA’s partner organisations. DCA informed the other partner, that the partnership would be suspended until they had replaced their chairman. That was followed up by prompt action by the board of the partner organisation, who replaced the chairman, after which the partnership could continue.

What did we learn: DCA has learned that the ‘art of fraud and corruption’ is not easily detectable even with solid procedures and monitoring of partner activities, particularly when senior management of the partner is involved. Hence, DCA is also reliable on its good whistle-blowing system (complaint handling mechanism) in order to detect such cases. That said, DCA will increase spot checks and unannounced monitoring visits – both a field level and at partner headquarter level.

January 2016: Corruption resulted in termination of partnership

Content of the complaint: In January 2016 DCA received a complaint on a partner organisation in one of our partner countries. The complainer claims that the organisation is corrupt and misuses funds received by DCA and other donors. The allegations included nepotism, embezzlement, fraud and sexual harassment.

What did we do: DCA initially onset an internal investigation of the partner organisation and immediately froze all transfers to the organisation. The internal investigation led to further suspicion of fraud. In collaboration with a sister organisation, DCA then initiated a special audit of the partner, which provided proof of corruption. The partnership with the organisation was immediately terminated, and DCA ensured that the project could continue through other channels. DCA has asked the organisation to pay back the lost funds within a reasonable timeline. The case is very sensitive and hence DCA is doing everything it can to protect the whistle-blower and the people under allegation by treating it with the highest degree of confidentiality.

What did we learn: The case has highlighted the strength and importance not only of financial monitoring and control systems, but also of a trusting relationship with staff and colleagues, which accommodate whistleblowers to step forward and inform us when something is not right.