Fraud and Corruption in the Not for Profit during Covid times
Specialized in the fight against corruption in the aid sector, Malika is an International speaker, Investigator, EuroCompliance ISO 37001 Auditor, Vice-Chair of the UNHCR ‘Independent Audit and Oversight Committee’ and member of the ILO ‘Independent Oversight Advisory Committee’. She is also , Frequent Visiting Faculty at the International Anti-Corruption Academy (Austria), and Faculty Member of the Rule of Law and Anti-Corruption Centre, Geneva. Chair of the ICRC -IFRC Joint Statutes Commission, she also acts as expert for the INGO Compliance network.
As humanitarian actor, Malika started as volunteer at the French Red Cross mid 80’, and worked at the International Federation of the Red Cross and Red Crescent Societies (1995-2016) in different capacities including Head of Operations in Middle-East North Africa, Chief of Staff for three successive Secretary Generals and also Under-Secretary General.
The disruptive times due to Covid 19 did not slow down the fraud and corruption risks.
The lockdown imposed on number of humanitarian stakeholders reduced the deployment of effective control mechanisms. Humanitarian workers could observe an increase of fraud and corruption schemes. Indeed, the huge influx of financial flows into the pandemic disaster’s response setting created fecund ground for corruption. Among the most frequently observed schemes, one can list : bribes to ‘speed up access to healthcare’ or on the other side, denial to access to health resources; diversion of resources, ‘expedited procedures’ in procurement processes with reduced control mechanism or segregation of duties; ‘ghost lists’; extortion; nepotism in the selection of beneficiaries,…
Hopefully, NGOs integrated in their Business Continuity Plan some specific crisis-driven adjustments to their existing key processes (e.g. IT, Internal Control…) ensuring also, that their ‘crisis management’ did integrate the risk management component. New approaches had to be considered. For instance, the UN Migration agency (IOM) decided to enter in Tik Tok (a social media based on shared videos largely used by young people) to combat fake news impacting on the youngest generations.
Of course, most of the field audits and field investigations had to be postponed, while whistleblower help lines have been maintained.
Learning lessons from past pandemic such as Ebola Outbreak have been largely shared (e.g. U4 Help Desk Answer publication ). Unfortunately, as we all know, ‘information sharing’ is far to be enough and ‘good will’ is not a firewall against bad behaviour and misconduct. The most effective actors were certainly those who got effective ‘fraud and corruption, prevention and control’ policies in place. This requires an active implementation of the entire cycle ‘prevent, detect, deter, sanction’. A policy on its own, is indeed a good start. An effective implementation mechanism is better. Getting staff trained and prepared is the most powerful defence, especially when it is combined to active internal control mechanisms.
I led a research on ‘The role of compliance in the fight against corruption in aid and in particular in the humanitarian sector’ for which I interviewed several humanitarian workers, deployed in different fields of operations. To my big surprise, most of them, did not ‘know/understand’ that they were ‘the first line of defence’. Does it mean that they did not contribute to the prevention and control of ‘fraud and corruption’? May be not. But for sure, it gives some insights on the overall coherence of the ‘fraud and corruption, prevention and control’ in this specific industry.
Most of the NGOs consulted at that time did not get an ‘organised compliance portfolio’. The culture of institutional peer reviews, combined to self-assessments, developed along specific standards is still extraordinarily strong (e.g. The Sphere Handbook, Core Humanitarian Standard on Quality and Accountability). Most of the ‘acting compliance officers’ I met with, were in fact, ‘legal department’ staff acting on ‘compliance portfolio’. None of the 30+ NGOs knew about ISO 37001.
Of course, any single of them knew about ‘Setting the tone from the Top’, ‘getting the right audit control, ethics portfolio, investigation mechanism, governance set up and series of interrelated policies (‘Fraud and corruption, prevention and control’ policies; ‘Staff code of conduct’; ‘Prevention of Sexual Exploitation and Abuse’ policies; ‘Anti-Harassment’ policies; ‘Conflict of interest’ policies; ‘Gift’ policies; ‘Data protection’ policies…). While the business context requires new set of skills and competencies, staff are trained to get update, upgrade, or shift of their competencies. The necessary business shift must be applicable as well to the governing bodies constituted often by elected personalities. Their business profile and competencies must be aligned as well to the new business requirements.
There is still a long way to go for the Non For Profit sector, when it comes to embrace a culture of ‘compliance’ and ‘risk management’. Huge efforts have been deployed on the front of Integrity (in the 90s), Accountability (decade 2000), Transparency (decade 2010). The 2010 decade ended with a syndrome of Hyper Transparency. Guess what will come for the 2020 decade? Most probably Compliance and Ethics with ISO 37001 in its centre.
 ‘The cost of corruption during humanitarian crises, and mitigation strategies for development agencies’, U4 Helpdesk Answer, CMI-U4_TI, 19 April 2020
 ‘The role of compliance in the fight against corruption in aid and in particular in the humanitarian sector’, MAMP, IACA, October 2018
 ‘The Sphere Handbook’, Sphere Association, Fourth Edition, 2018
 Core Humanitarian Standard on Quality and Accountability, see CHS Alliance