On November 3, 2021, the Israeli Registrar of Non-Profits petitioned the Jerusalem District Court to dissolve an Israeli non-profit organization belonging to the international aid agency, World Vision (וורלד ויזון in Hebrew).  As justification for the request and following a multi-year investigation, the Registrar alleges that the local non-profit did not implement humanitarian projects as it claimed to and conducted financial transactions for purposes other than its stated goals – including providing funds to Hamas.  Moreover, the Registrar charges that the non-profit’s executive and oversight frameworks were non-functional and ineffective.

These evidence-based findings are particularly significant in light of the ongoing trial against Mohammad El-Halabi, manager of World Vision’s Gaza operations, over his alleged diversion of $50 million in aid materials to Hamas. Responding to his arrest and trial, World Vision officials in Australia, who funded this operation, have repeatedly insisted that local finances were managed competently, and that the allegations could not possibly be true. Although they claimed that a full audit was conducted after Halabi’s arrest, in fact, no report has been made public.

In contrast, the Registrar’s conclusions, based on an independent audit conducted by the Schmidt, Ben-Tsvi, and Perlstein accounting firm, [on file with NGO Monitor] confirm concerns revealed by previous NGO Monitor analyses of World Vision financial reports.  (For more on the financial inconsistencies and irregularities discovered by NGO Monitor, see “World Vision’s Operations in Israel, the West Bank, and Gaza” and “World Vision Finances in Jerusalem, the West Bank, and Gaza”.)

The following primer summarizes the Registrar’s assertions – as well as World Vision’s responses – on a series of issues

• Terror funding
• Financial and organizational mismanagement
• Funds not utilized to achieve the non-profits goal
• Unclear financial transactions
• Salary payments
• Cash withdrawals
• Multiplicity of bank accounts

Terror funding

In establishing the diversion of the non-profit’s assets to Hamas, the Registrar highlighted the criminal proceedings against Halabi – referred to as a “regional manager at the non-profit” – as well as $1,200 in checks belonging to the non-profit found in the possession of Hamas operatives.  According to the Registrar, the best case scenario is that the non-profit was negligent regarding its finances.

According to the independent audit, “It appears that the non-profit provides funds to unknown individuals or to individuals regarding whom there is information identifying them as terror operatives, and for whom it is clear that their activity does not match the non-profit’s goals.  Moreover, it appears that a former employee of the non-profit [Mohammed El-Halabi], transferred funds from the non-profit to a terrorist organization [Hamas], and that these payments were also made using the non-profit’s checks, as described above.  Even if we accept the non-profit’s claim that it was unaware of these payments and was not party to them, it is still clear that the non-profit’s [governing and oversight] bodies are not performing their duty to over the use of the non-profit’s funds, for the sole purpose of advancing the non-profit’s goals.”

Mismanagement

The audit also cites a series of problems with the Israeli non-profit’s internal mechanisms and governing bodies.  In particular, the evidence cited the fact that the board “does not track the implementation of the budget and does not monitor the non-profit’s expenses” (emphasis added).

Moreover, “throughout the audit period, there was no direct or indirect communication with the board members. Board members did not appear at the first meeting at the non-profit with the auditors.  Additionally, requests [by the auditors] to contact them via telephone were met by the non-profit’s refusal to provide their contact information.  The board’s chairman was present at the second meeting with the auditors, but could not answer provide answers to the auditors regarding the non-profit’s activities” (emphasis added).

The Registrar noted the following management and financial failures by World Vision:

Funds not utilized to achieve the non-profit’s goals

Registrar’s assertion (para. 1-2)

“No information was transferred to the auditors regarding the non-profit’s actual activities furthering its approved goals, despite the auditors demands to the non-profit’s management to receive documents that indicate this activity, and despite the fact that specific questions were posed to the non-profit’s management [on this issue].  Moreover, during the audit, it was discovered that none of the non-profit’s office holder were familiar with the non-profit’s activities.  In the course of two meetings with representatives of the non-profit, during which they were given the opportunity to provide details regarding its activities and employees, no materials indicating the non-profit’s activities were provided, nor were any details provided regarding employee positions…Additionally, one cannot learn about the non-profit’s activities from its financial reports.”

“Moreover, insufficient detail was payed to the auditors’ requests for documentation regarding the transfer of NIS 3,294,000 by the non-profit, and no answer was given as to if and how these funds advanced the non-profit’s stated goals.”

Regarding these funds, the auditors wrote that “[The non-profit] did not present documents that indicate the non-profit’s activity.  Likewise, it did not provide a sufficient response to the auditors request to produce receipts in connection with NIS 3,294,000 of financial transfers made by the non-profit, and no sufficient explanation was provided as to if, and how these funds advanced the non-profit’s goals.”

Additionally, it found that “The non-profit did not provide any invoices or documents whatsoever that prove that these funds were indeed used to implement and cover the costs of the activities run by the non-profit, and only provided entries  from the [non-profit’s] bookkeeping system for payments totaling NIS 3,175,000.”

Regarding two of the alleged expenses referenced in this context, the audit concludes, “it appears that NIS 1,410,000 (119,474 + 1,291,070) are additional journal entries that were listed for the financial report, in order to balance the account.”

Non-profit’s response (para. 3)

“The non-profit replied, inter alia, that in the years 2010-2019 it carried out activities for children, families and communities in the fields of education, child protection, agriculture and livelihood, health, and more, in a large number of centers and offices. It was further alleged that in meetings with the auditors, only general questions were asked, with the exception of the activity in Gaza, which could not be addressed in detail in light of court proceedings.

The non-profit noted that the members of the board of directors during 2011-2013 no longer serve in the NGO and therefore those present at the meeting had less information regarding that period. The non-profit had difficulty providing detailed information due to the huge scope of the projects and responded with documentation regarding projects it has managed, from which it can be seen that it is working to achieve its goals.

The non-profit further argued that the criticism is based on the assumption that all the allegations in the indictment against the association’s former employee, Mr. Halabi, have been proven. The non-profit further claimed that the financial statements include notes as required in accordance with generally accepted accounting standards and procedures; that it provided an explanation of the non-profit’s activities, structure and employee roles. In addition, the non-profit attached to the response references regarding the transfer of the funds in the amount of NIS 3,294,000 and the use made of them to further the non-profit’s  goals.”

Registrar’s conclusion (para. 4)

“The audit found that the non-profit’s response was insufficient to alter the audit’s findings.  The questions raised in the meeting regarding the non-profit’s activities and employees did not pertain only to the years of the audit.  Several requests were made to the non-profit during the audit to receive information regarding the non-profit’s activities and employees, however the non-profit did not provide the relevant information and did not provide sufficient documentation.

The audit also found that the non-profit’s written filings did not describe activities that had been carried out, and that the project information in the non-profit’s financial reports that were provided [to the auditors] do not align with the figures of the non-profit’s bookkeeper.

Additionally, it was found that the non-profit did not provide documentation proving that the NIS 3,294,000 was used to advance the non-profit’s goals.”

Unclear financial transactions

Registrar’s assertion (para. 5)

“A review of a representative sample of bank statements reveals that most of the [non-profit’s] bank activity was significant transactions from one bank account to another of the non-profit’s bank accounts.  Despite repeated requests from the auditors, no materials were produced to indicate that these funds were used for the non-profit’s activities.  The auditors request to receive cooperation agreements with bodies that received the funds was only acceded to in one instance – [the non-profit] produced a May 1, 2010 agreement with UAWC.”¹

Non-profit’s response (para. 6)

“The non-profit responded that the criminal proceedings against its former employee impede their ability to discuss projects implemented in the West Bank and in Israel.  The non-profit provided an MOU and details of transactions for these projects.”

Registrar’s conclusion (para. 7)

“The audit found that the non-profit provided a number of additional cooperation agreements that it apparently concluded with a number of charities in the Palestinian Authority, however the agreements do not include details of the activities and [the non-profit] did not provide auditors with documentation indicating that these projects were implemented.

Additionally, it found that that [the non-profit’s] bookkeeping data could not be reviewed to see if there were payments made to other bodies due to the use of unclear, internal [accounting] codes.”

Salary Payments

Registrar’s assertion (para. 8)

“The audit found that the non-profit transferred funds, labeled as salary payments, on a scope much greater than the [available] salary details [of its employees] or the number of employees.”

Non-profit’s response (para. 9)

“The non-profit’s response claims that since it operates both in Israel and in the Palestinian Authority, it employs Israeli workers for projects carried out in Israel and Palestinian workers for projects carried out in the Palestinian Authority, and Form 126 includes only the employees employed in Israel.  However, the salary payments are for all the non-profit’s employees and are made from the bank’s accounts in Israel and therefore, there is no meaning to cross-referencing the number of employees listed in Form 126 with the monthly salary transfers. In addition, the non-profit attached the details of employees in the Palestinian Authority, including bank account details and salary amounts transferred to them.”

Registrar’s conclusion (para. 10)

“The audit rejected the non-profit’s explanations, and found that the number of the non-profit’s listed salaried employees is identical to the number of employees that appear on Form 126, and if the non-profit had employed additional workers from the Palestinian Authority, the non-profit’s payroll would have reflected this.”

Withdrawals

Registrar’s assertion (para. 11)

“The audit found that the non-profit has made cash withdrawals from its bank accounts, using checks belonging to the non-profit.  Despite the auditors demands, no explanations or documentation were provided explaining the purpose of these withdrawals.”

Non-profit’s response (para 12.)

“The non-profit’s response argued that these are not cash withdrawals, but transactions that are paid through checks that are described on the bank’s pages as cash withdrawals. In addition, the non-profit attached a list with the check number and description of the transaction and noted that the response also includes documents supporting its answer.”

Registrar’s conclusion (para. 13)

“The audit found that the non-profit did not provide copies of the bank checks and did not provide documentation about the purpose of these funds or the reason for their being withdrawn in this manner.  Additionally, it found that one cannot learn from the description of the transactions whether the funds were used for advancing the non-profit’s goals.”

Multiple bank accounts                      

Registrar’s assertion (para. 20)

The audit found that, in 2011-2013, the non-profit maintained and used eight separate bank accounts, making it more challenging to track the non-profit’s funds.

Non-profit’s response (para. 21)

“The non-profit’s response stated that the number of bank accounts were necessary in light of the non-profit’s structure and financial operations that required a ‘diffuse’ structure and that as of 2016 the non-profit coordinated financial activities through a central finance department in Jerusalem, serving all branches. Accordingly, all but two bank accounts were closed. The non-profit noted that in any case there were also adequate internal audits that allowed close monitoring of the bank’s accounts on an ongoing and full basis as well as an audit of the annual financial statements made by an external company.”

Registrar’s conclusion (para. 22)

“The audit found that the non-profit did not provide documentation indicating the closure of the bank accounts, nor did it provide documentation of the internal oversight over the bank accounts.  Additionally, the audit found that the non-profit did not explain why in the past it was necessary for each branch to have its own bank accounts.”