The leaking begging bowl

Ottawa spends some $5 billion on foreign aid every year. Countless numbers of people also give millions in personal donations to global relief efforts.

It's no wonder generous Canadians want to know where their money goes. 

A spate of recent news stories has cast doubt on the accountability and transparency of humanitarian aid.

A recent BBC report suggests 95 per cent of $100 million in Live Aid funds meant for Ethiopian famine victims went to weapons; an army investigation is being launched in the U.K. over millions in Afghan aid cash going to Taliban, drug lords and profiteers; and a U.N. study suggesting as much as half the food aid meant for Somalia ends up in the hands of corrupt contractors, Islamic militants and even United Nations staff.

Money sent in the aftermath of the 2005 tsunami also went missing in corruption-prone Sri Lanka and Indonesia.

Fifty years ago, some theorized corruption was not a problem. But recent research suggests otherwise: Countries with more corruption have less investment, and each investment dollar has less impact on growth, that bad governance has direct and negative effects on long-term concerns like infant mortality and education.

Corruption also has a ripple effect. New research out of Georgia State University suggests Americans who live in states with more corruption not only lose trust in public officials, but the general public as well, creating a systematic corrosive effect on civil society.

George Ayittey, president of the Free Africa Foundation, claims corruption alone costs the continent and estimated $148 billion each year. 

"Helping Africa is noble," he said during a blistering speech on the current African at recent TED Talks. "But helping Africa has been turned into a theatre of the absurd. It's like the blind leading the clueless. There are certain things that we need to recognize. Africa's begging-bowl leaks."

So how much aid money is actually being funnelled into private interests? 

“Nobody has a clue,” admits the director of the Feinstein International Center at Tufts University, Peter Walker. 

He recently co-authored a report on how to prevent corruption in humanitarian assistance (often a response to humanitarian crises, as opposed to development aid for longer term projects). It suggests food aid, medicine and especially construction materials are at the highest risk for being diverted. 

“Why should Indonesia or Sudan be any different from Quebec?” asked Walker, referring to this province's own rumours swirling around its construction industry. 

(The construction industry, noted Walker, runs “the usual scams in every country” regardless of the country's overall ranking on corruption indexes.) 

Interestingly, our own desire to help – and help quickly – may exacerbate the problem. Aid is ramped up quickly following a disaster, flooding cash-poor regions with dollars. After severe humanitarian disasters, per beneficiary aid can reach as high as seven times the country's annual per capita gross national income.

“Overnight, spending gets out of whack,” said Walker. “In a sense, you're almost setting up the temptation. Haiti is a case in point. There's no way Haiti can spend that kind of money at that speed.” 

Canadians gave over $110 million in the wake of the earthquake in the Caribbean country. In January, The Guardian newspaper estimated a world total of $2,422,202,996 was spent in aid to Haiti post-tremor. More has been pledged since. 

Walker said aid agencies need to be clear when they solicit funds that they intend to save any extra money for later development work. And donors should be made aware their dollars could be spent for both short-term aid and long-term reconstruction.  

NGOs also need to resist the push for the money to be spent based on the emotional ties of individual donors or the budget or election cycles of world governments, Walker said. As well, aid agencies are often pressured to have low administration costs to ensure the highest possible percentage of funds goes directly to the needy.  

But, said Walker, low administrative costs mean less oversight. 

“You can't have your cake and eat it too,” he said. 

In recent years, agencies have become more open to facing the challenges. But Walker said their scope is too narrow, often focusing solely on financial fraud. Corruption – the abuse of entrusted power for private gain – ranges from financial fraud, kickbacks, nepotism and other abuse of human resources, sexual abuse, intimidation and outright theft.

Walker suggests they go a step further and incorporate anti-corruption methods already being used outside the field – by the World Bank, for example. He also insists that, despite the negative news stories, humanitarian assistance has helped millions of people. Even with the sheer desperation of those receiving aid, the money often went where it was supposed to go. 

“I was surprised,” he said, “by how little opportunism there actually was.”