4 July 2005:
EU ANTI-FRAUD OFFICE TO INVESTIGATE 32 NGOS

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Following several allegations of fraud, the European Union is investigating the misappropriation of aid funds provided to 32 NGOs and charities. This development follows numerous analyses conducted by NGO Monitor of EU-funded NGOs active in the Middle East with documented histories of diverting resources from humanitarian objectives to incitement and political campaigns. OLAF (the EU anti-fraud office) has - at the time of publication - not yet identified the 32 organizations under investigation. However NGO Monitor has analyzed several such groups, including the Euro-Mediterranean Human Rights Network (EMHRN), Physicians for Human Rights – Israel, and the Israeli Committee Against House Demolition (ICAHD). While the OLAF announcement marks an important development towards accountability of NGOs funded by the EU, the nature of this action, the degree of transparency, and the results will determine the impact of the investigation.

For more information on funding directed by the European Union to NGOs dealing with the Arab-Israeli conflict, go to http://www.ngo-monitor.org/issues/eu.htm.

EU targets charities in fraud inquiry
By Ambrose Evans-Pritchard
Wednesday, June 29, 2005
The Telegraph

The European Union's anti-fraud office is investigating 32 charities, non-governmental organisations and aid companies from Britain and nine other states for suspected fraud on a mass scale.

A spokesman for the anti-fraud office, known as Olaf, said there had been a widespread practice of "double-dipping" by aid agencies.

"There has been a pattern of fraud. They get project funding from the commission, but then draw money from the World Bank or the US government using two sets of invoices," he told The Daily Telegraph.

Brussels refused to release the names of the groups under investigation but said the abuses involved "a lot of money".

A nine-strong team of investigators is now combing through evidence of widespread scams of different kinds.

The inquiry was launched in 2001 but has mushroomed into a "systematic" inquiry after anti-fraud offices from all the major donor states started pooling information last year.

The EU spends €7billion a year on foreign aid, including funds for long-term projects and emergency aid for disasters.

The typical EU contract for a private NGO (non-governmental organisation) ranges from €50,000 to €400,000. Much larger grants are given to UN agencies and to the Red Cross family of philanthropic groups.

Sim Kallas, the anti-fraud commissioner, said it was now a top priority to hold the agencies and NGOs to account. "Citizens have the right to know how their own money is being spent, including that given to NGOs. Because an awful lot of money is being channelled through organisations that we hardly know in the name of 'noble causes'," he said.

Theft of EU aid funds and inflated contracts in Africa were at the heart of the corruption scandal that forced the mass resignation of the Commission under Jacques Santer in 1999.

The role of foreign aid funding has largely passed from Britain and other EU member states to Brussels under successive EU treaties.

The UK effectively hands over £700m a year in aid money for disbursement by Brussels.

Clare Short, the former International Development Secretary, said the misuse of the money was "an outrage and a disgrace", suggesting that much of the money should be returned to the British authorities.

There have been a string of fraud allegations over EU funding for the Palestinian Authority, the reconstruction of the Balkans and the infrastructure projects in the former Soviet Union.

Many of the worst abuses have involved state agencies rather than NGOs. European auditors still have no idea what happened to payments of almost €1billion in Russia over a seven-year period for cleaning up unsafe nuclear power plants.

Much of the EU's humanitarian aid programme to Zimbabwe has fallen into the hands of the Mugabe regime, since funds had to be exchanged at the vastly over-valued official exchange rate - going straight into the coffers of the central bank

More articles related to the EU anti-fraud investigation:

David Gow, “Charities in EU fraud inquiry,” The Guardian, Thursday June 30, 2005.

Lucia Kubosova, “EU investigates fraud by aid NGOs,” EU Observer, Wednesday, June 29, 2005