Spanish NGO faces fraud claims

Spain’s fast-growing non-governmental sector was thrown into turmoil over Easter after it emerged that Fundación Intervida, one of Spain’s largest charities, was under investigation for the alleged embezzlement of €45m ($60m) meant for poor children in developing countries.

The probe comes only weeks after the arrest in Bilbao of José Luis Gamarra, chairman of Anesvad, a non-governmental organisation dedicated to the eradication of leprosy in Asia, on charges of embezzlement. Anesvad, which has 160,000 members and an annual budget of €35m, says it is co-operating with the authorities.

The inquiries have triggered a crisis of confidence in the workings of Spanish NGOs, which have expanded on the back of Spain’s booming economy. According to Congde, an association of NGOs, the not-for-profit sector raised €538m in Spain in 2005, a 20 per cent increase over the previous year.

Spaniards are generous donors, and almost 400,000 families contributed €21 a month to Intervida to “sponsor” a child in a developing country. Intervida managed an annual budget of €88m, according to its 2005 accounts, delivering school meals and textbooks to 775,500 children in 10 countries. It also rebuilt dilapidated schools and provided health services to rural communities.

But according to the attorney-general’s office in Barcelona, Intervida established a number of subsidiaries in Latin America to carry out its projects “without the knowledge or approval of Intervida’s board of trustees”. The attorney-general’s office is investigating whether funds transferred to these subsidiaries were siphoned off by Intervida directors.

Intervida said in a statement that its accounts were in order. It said independent auditors revised its accounts annually. It said it was common practice in the NGO sector to establish subsidiaries to carry out projects.

“The attorney-general’s office in Barcelona is only evaluating whether the use of social corporations by Fundación Intervida is the best option for assigning resources for micro-finance, the building of schools or the provision of drinking water systems.”

Nevertheless, Intervida lost four managers in 2005 after they clashed with Eduardo Castellón, Intervida’s founder, over the lack of information about the financial links between Intervida and its “social corporations” in Latin America. Intervida also severed links with Fundación Lealtad – an organisation that reviews the corporate governance of NGOs – following a critical report in 2003.

Many donors have contacted the Spanish media to air their grievances. News from their “sponsored” children was intermittent, they said, and in some cases, the drawings and notes received each year were either replicated, or did not appear to come from the same child. Some sponsors said they had cancelled their donations to Intervida as a result.

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