Brazilian Red Cross reports shady transactions of $11m

Millions of dollars earmarked for disaster relief operations are suspected of having been embezzled from Brazilian Red Cross. The suspicions, which fall on former management, emerged from an audit carried out by an international consultancy hired by the charity's board of directors. In a statement released Friday (July 25), Brazilian Red Cross reported finding unproven expenses and suspicious transactions amounting to $11.21 million.

The issues are traced to donations to conflict and drought relief efforts in Somalia; a tsunami in Japan; flooding in the mountainous region of Rio de Janeiro, and a campaign on dengue fever. Concerns were raised with the organization's regional offices in the states of Maranhão and Ceará as well as in Petrópolis, Rio de Janeiro, between 2010 and 2012.

“There are violations which may turn out to be felonies in some cases whereas others would classify as misdemeanors, while still carrying liabilities,” the organization said. The issues found in the audit include poor internal controls and undocumented deals.

Brazilian Red Cross has promised to take all necessary – including legal – steps to recover the monies and allocate them to the beneficiaries. In addition to submitting copies of the final report to the Ministry of Justice, the board of directors promised to file suit with Public Prosecution on state and federal levels.

As a result of the audit, the consultancy has also returned an account recovery plan, which Red Cross has promised to fully implement. The International Federation of Red Cross and Red Crescent Societies (IFRC) – with which the Brazilian organization is affiliated – has set up a special committee to oversee the implementation.

“The current board is implementing changes and will make every effort to find a permanent solution that can match the importance of an organization like Red Cross, renowned for its principles and relevance of its humanitarian action,” the statement went on to read.

In February last year, Brazilian Red Cross was found to owe approximately $40.36 million to public coffers and the former employees seeking labor damages. The president of the organization at the time, Nício Brasil Lacorte, put the situation down to “20 years' mismanagement”. In the course of these years, Brazilian Red Cross had several accountability issues in some administrations.

Translated by Mayra Borges