When the U.K. Department for International Development, which aid officials often refer to as the “most scrutinized department in government,” overlooks an implementer’s widely reported ties to a cultlike organization, it begs the question: Are DfID’s compliance and transparency regulations asking enough of implementers?
Last week the BBC reported that the charity Development Aid from People to People Malawi — or Dapp Malawi — which has received more than $6 million in aid from the United Kingdom since 2012, forced its staff to give a portion of their salaries to the Teachers Group, a cultlike Danish organization whose leader is wanted by Interpol. The report has led many in the U.K. development community to ask how DfID, at the forefront of open data and transparency, could have failed to notice its grantee’s historic ties to a group long-accused of fraudulent activity, and if the aid donor’s due diligence processes are up to the task of avoiding similar situations in the future.
“I understand DfID is spending large amounts of money and can’t check all details of every grant, but you’d think they’d be able to check the legitimacy of the organization,” Rupert Simons, CEO of Publish What You Fund, said. “I’m surprised, especially when even a simple Google search shows that [Dapp] is an organization many people are asking questions about, and in at least one country prosecutions have been launched.”
Since the story broke that Dapp Malawi diverted staff salaries to the Teachers Group, also known as Tvind, both DfID and UNICEF have suspended payments to Dapp Malawi, and DfID announced Tuesday it is investigating the claims.
Dapp Malawi is a founding member of the International Humana People to People Movement, a global federation of 35 independent development organizations headquartered in Zimbabwe, and whose relationship with the Teachers Group dates back to the federation’s founding in 1977. The Teachers Group has a history of influencing federation programs, and both groups’ pasts are checkered with media reports of employee abuse, money laundering, corruption and fraud, including within Dapp Malawi. DfID is now investigating the charity, which employs 750 staff working on 17 projects, for its affiliation with the alleged cult, led by Mogens Amdi Peterson, who now reportedly operates from a compound outside of Mexico City.
Leaders of the Teachers Group fled Denmark in 2006 after being arrested and subsequently cleared of fraud charges, but have since been investigated by the FBI and are currently wanted by Interpol for fraud and money laundering.
Under the radar
Public data documenting DfID’s relationship with Dapp Malawi only dates back to 2012, when DfID began requiring implementers to post contracts, budgets, memorandums of understanding and other data to the International Aid Transparency Initiative Portal.
Since that period, DfID has spent close to $6 million through Dapp Malawi, most recently through U.K. Aid Direct, DfID’s main funding mechanism for small-to-medium civil society organizations. These include two projects, one raising community awareness of tuberculosis co-infection and early detection, and another raising awareness of HIV among farmers. DfID’s Malawi office also directly funded Dapp Malawi for a WASH project, which was managed by UNICEF and which ended in 2014, a DfID spokesperson told Devex.
As Simons pointed out, these grants are “not a significant amount by DfID standards,” too small in fact to be itemized in DfID’s most recent annual reports. Making matters more complex, funds allegedly diverted to the Teachers Group from Dapp Malawi were siphoned from salary allocations, Dapp Malawi employees told the BBC, meaning that after DfID approved the salaries of Dapp staff, current checks and balances for accountability — had they been enforced — still may not have allowed DfID to trace the money with complete certainty from the charity payroll to the pockets of employees.
In response to the allegations, a DfID spokesperson said, “DfID has a zero tolerance approach to fraud and corruption — full stop. We will not hesitate to act in any situation if wrongdoing is proven. DfID welcomes any evidence and documentation that the BBC can send us in order to investigate these serious allegations.”
Even in perfect circumstances, Kate Osamor, a member of Parliament and the shadow secretary of state for international development told Devex, all industries are at risk for corruption, and development is no exception.
“While these allegations raise valid concerns about development spending, it’s important to remember that aid, just like other public finance, can be prone to abuse and mismanagement,” she told Devex.
Osamor added that “reported cases of mismanagement of resources are relatively low” among DfID projects, but that the incident should nevertheless drive DfID’s work “toward greater transparency and accountability to curb egregious abuses.”
Another DfID source speaking on background said the department maintains an anti-corruption and whistleblowing unit to address such allegations, adding that DfID has recently introduced greater use of monitoring visits, financial spot checks and forensic and other measures to ensure all funding is used for the purpose it was intended.
It is too early in the investigation to know whether the outcome will result in a change to the vetting or compliance process, the source said.
Room for improvement
Unlike Dapp’s UNICEF projects, both of Dapp’s more recent DfID projects received positive reviews from the agency, a troubling signal to Simons that aspects of the compliance process at DfID and other donors may need a rethink.
“Part of the point of open data is to make this compliance process more transparent so that you can’t have [poor] organizations going from donor to donor,” he said. “In fairness to DfID I haven't seen any allegations that the DfID-funded work actually failed, so the question here is about the integrity of the organization. Even if they’re legally compliant, is this really an organization you want to be doing business with?”
Simons also pointed out that despite DfID’s requirement that all implementers post data to the IATI portal every quarter, Dapp Malawi did not fulfill the requirement until Aug. 6, the day after DfID announced the investigation.
“It suggests to me that no one in DfID’s Malawi office is actually checking for [IATI] compliance of the organization,” Simons said, conceding that it’s possible Dapp Malawi had possibly erased an older submission, though he added, “it doesn't look like it.”
Dapp Malawi’s failure to post the data, and DfID’s failure to enforce its rule, Simons said, demonstrates why open data must be enforced and accessible with an eye not just to the donor and implementer relationship, but for public use as well.
As the open data movement grows and evolves, it remains to be seen if donors will adopt a more common sense approach, possibly with more transparent vetting of implementers and a dialogue with staff, recipients and the host community.