MAR 12 - At the end of February, Sushil Babu Pant, chairperson of the Blue Diamond Society (BDS), an NGO dedicated to the welfare of the third gender, is reported to have refunded nearly Rs 1 million to the government. He had drawn this money as salary in his capacity as a member of the dissolved Constituent Assembly (CA) for eleven months. On the surface, this news gives an impression of Pant’s honesty and generosity. However, reality tells a different story. Pant was forced to refund the money as the District Administration Office refused to renew BDS as an NGO as it had recently been accused of corruption. Going by the news, the conclusion is that Pant was “double dipping”-drawing a salary from the donor-funded BDS while at the same time, drawing another salary as a CA member. Pant cannot resolve himself of corruption charges by simply refunding his salary.
BDS’ case is not the first time an NGO has been accused of corruption in Nepal. NGOs are routinely accused of corruption, waste, inefficiency and mismanagement. Although, they are not accountable to anyone, except their donors. NGOs in Nepal have been accused of euphemistic charges like promoting a ‘Pajero-culture’ and engaging in ‘dollar-farming’.
NGOs are more vulnerable to corruption due to their flexible in-house rules and regulations and disbursed operations. This is more so in Nepal as corruption inside NGOs do not come under the purview of anti-corruption agencies like the Commission for the Investigation of Abuse of Authority (CIAA) and the National Vigilance Centre (NVC). Hence, there is no accountability mechanism for NGOs. Given the current state of weak governance in Nepal and lacking a single mechanism to implement development programmes, the scale of corruption inside NGOs must have increased sharply.
According to publications from the U4 Anti-Corruption Resource Centre, key forms of corruption inside NGOs include: (1) Fictitious NGOs, established solely to generate income for executives or Board Members; (2) Double-dipping, or seeking or accepting funds from more than one donor for (parts of) the same project; (3) Financial irregularities such as inflated, duplicate, or fictional invoices for goods and services procured for a project; (4) Kickback arrangements in procurement of goods or services, in hiring of project staff, or in distribution of goods and services; (5) Extortion of bribes or other benefits (including sexual favours) from beneficiaries in order to include them on goods/services distribution lists; and (6) Ghost employees, participants or beneficiaries that inflate the costs of project activities.
In Nepal, corruption inside NGOs can be often be traced to donors themselves. Donor funding is primarily a one-way practice. Many donors do not have refund procedures or ways to collect surplus funds. They have elaborate mechanisms only to disburse funds, not to collect them. This puts NGOs in a superior position. As the funded money cannot be recollected, this gives NGOs added incentive to spend rather than to save. Donors often come with a concept to match funds, meaning local NGOs have to share some proportion of the cost. This is to give them a feeling of ownership. Donors are increasing calling local NGOs ‘partner organisations’ when, in fact, the local NGOs see themselves as ‘recipient organisations’. The very idea of having a compulsory matching fund or some contributions by local NGOs makes them susceptible to corruption from the very beginning. To collect matching funds, NGOs start to cook books. There is a widespread belief, real or apparent, in the local NGO world that bribing donors is the only way to secure projects in Nepal. Elaborate processes in selecting and approving Concept Notes, including the lack of a review mechanism for non-selection, makes donors susceptible to corruption. For example, Helvetas Nepal recently took eight months to decide on a project spanning twelve months. To add insult to injury, the project concerned establishing “social accountability” mechanisms in Nepal. Helvetas was forced to take a decision only after applicants raised questions over accountability. Shamelessly, they still call their appraisal process “rigorous and time consuming”.
Another significant problem associated with donor funding is language and cultural barriers. As most donors do not have first-hand access to the Nepali language, they seek project proposals in the English language, which makes NGOs from rural areas vulnerable to English speaking Kathmandu-centric urban NGOs. These urban NGOs act as an additional layer of “commission agents” in the donor-driven development process. Additionally, donors themselves are often reluctant to disclose corruption charges simply because it might damage their image and reputation.
A study on best donor practices towards NGOs in Nepal (2007) highlights two mounting tensions in donor-NGO interrelations. The first is that donors seek a separation of the Board and Management functions within NGOs. This is to avoid conflicts of interest arising from a single person wearing two hats-as both a board member and a paid staff member. Donors’ push for internal governance of NGOs has often led to overt conflicts within NGOs or the stuffing of board members or key management positions (chief executive, administrator, accountant, procurement officer, advisors) with close relatives and friends. This practice has all but nullified donors’ efforts to reform internal governance structures.
The second tension concerns NGOs generating “internal funds” through the adoption of institutionalised practices of deducting a certain percentage
from staff salaries, termed ‘voluntary donations’ or ‘contributions’. The practice is almost universal in Nepal. NGOs need money to cover their overhead expenses and to survive beyond the short life of donor-funded projects. Unless the structural problems associated with this issue are addressed, no degree of donor reform or control can help eliminate them.
In order to find a way out of this problem, instead of looking at it as a crime, donors need to understand the root cause. As mentioned above, some malpractices are rooted in donor practices while others are in NGO attitudes and practices. The corruption problem in NGOs can be looked at from the perspective of capacity development of NGOs. There is now a website designed to help combat corruption in NGOs (www.mango.org.uk). Instead of making NGOs accountable to donors (upward accountability), it is better if they are made accountable to the people who they are intended to serve (downward accountability). Instead of donors, let people take control of NGOs.
Posted on: 2013-03-13 09:20
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