©Peter Høvring

March 2017: Misuse of funds by partner - Partnership terminated

What happened: A thorough financial review of a partner organisation in Zimbabwe concluded, that the partner organisation did not live up to the minimum standards for financial management. DCA found that the organisation couldn’t account for an amount around 160.000 DKK.

What we did:  The partnership with the organisation was terminated and the project activities transferred to another partner. In terms of recovering the lost funds, DCA spend almost a year staying in continuous dialogue with the management of the organisation. Eventually the funds where repaid by the partner in January 2018.

What we learned: The case stresses the importance of doing regular thorough financial monitoring to uncover misuse and mismanagement. Moreover, a continuous dialogue with the previous partner organisation led to the recovering of the funds, which is of course a success.

March 2017: DCA staff extorted by security guards

What happened: In the process of moving offices, DCA staff was followed by two men from the national security, who upon arrival at the new compound asked for documentation on the two generators that DCA was moving from one premise to the other. Because this was in the middle of a moving process, the staff was only able to present the guards with documentation on one of the generators, but agreed to come with the other documentation the following day. Unfortunately, the situation developed in a way that made the staff member feel threatened, and the security guard was clearly looking for a payment, and was not interested in offering documentation or receipt in return. Our staff refused numerous times, and made great effort in negotiating and discussing with the guards, but eventually had to pay small amount to escape the situation, as they were fearing for their safety.

What we did: Subsequently, the DCA staff reported the incidence to the complaints mechanism at head office level, in line with policies and procedures. They were asked to write a sworn statement, describing the incidence in detail, which was then discussed by an ad hoc anti-corruption committee representing both anti-corruption advisor and senior management.  

What did we learn: This incidence again illustrates the very difficult security situation that DCA operates under in South Sudan, and in terms of learning from this event, it underlined the importance of having all documentation ready for presentation at all times.

March 2017: DCA staff extorted when exchanging money

What happened: DCA staff were exchanging money but got falsely accused by the national security to have presented false dollar notes. The officers threatened to take the DCA staff to jail. Clearly under threat, the staff had to pay the fine presented by the officers, which is according to DCAs guidelines on how to act when under threat on life, limb or liberty.

What we did: Subsequently, the DCA staff reported the incidence to the complaints mechanism at head office level, in line with policies and procedures. They were asked to write a sworn statement, describing the incidence in detail, which was then discussed by an ad hoc anti-corruption committee representing both anti-corruption advisor and senior management.  

What did we learn: This incidence again illustrates the very difficult security situation that DCA operates under in South Sudan. There is nothing much DCA can do to prevent situations like this in a context as the one in South Sudan. However, it is always important that staff knows how to act and how to protect themselves.  

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.