EXCLUSIVE: The United Nations World Food Program in 2013 and 2014 used millions of dollars of specially designated donor trust funds as an all-purpose piggy bank, often without creating safeguards to ensure the money was used properly and as its donors had intended, according to an internal report by WFP’s Office of the Inspector General.
Furthermore, the lack of centralized management “guidance” on how to use the designated funds led to “unclear and ad hoc governance and management arrangements across the board,” the report says -- a chaotic free-for-all.
The audit makes no allegations of wrongdoing -- it wasn’t set up to do that -- but warns that a number of trust funds it sampled “evidences some instances where trust funds were used for purposes not consistent with the original intent or without corporate endorsement of its purpose and/or related commitments.”
The full amount of WFP’s so-called corporate trust funds, which were handled in such non-kosher ways, is not revealed in the report, which covers WFP activities from Jan. 1, 2013, to roughly the autumn of 2014.
Instead, it notes that as of October 2014, there were 53 such accounts in existence, with some $210 million “relating” to them.
The money itself came from donors ranging from private philanthropies to wealthy governments -- the U.S. being one --that were willing to sink extra money into “non-core” activities that extend beyond traditional WFP hunger relief.
These include contracting with local small-scale farmers to boost food production in areas hard-hit by famine or food shortages, creating cash and voucher programs as a substitute for traditional food aid and other innovations.
Some corporate trust fund activities were intended to be coordinated by WFP in a centralized fashion, even while the resources were distributed to a variety of countries and regions, according to an agency spokesman.
The food purchase effort, known as Purchase for Progress, or P4P, for example, was put into effect in some 20 countries and strongly supported by the Bill and Melinda Gates Foundation and the Warren Buffett Foundation, as well as governments including those of the U.S., Canada, France and Saudi Arabia.
The Inspector General’s report further observes that between June 2009 and December 2013 -- a period when, presumably, the same disorganized conditions prevailed -- donors handed over $592 million to WFP’s corporate trust fund coffers, including $36 million from Washington.
This year, according to a WFP spokesman, the U.N.’s flagship anti-hunger agency expects to get $35 million in additional income for such corporate trust funds.
According to the audit, however, the records of the funds’ operations, management, goals -- and sometimes, adherence to the wishes of donors -- have been a fairly spectacular mess.
“The trust fund mechanism had been used in a range of ways, from funding non-core activities to being an accounting mechanism to allow the programming of funds regardless of the activities,” the report declared. Trust funds “were also used to fund core activities, not satisfying WFP’s own definition of the uses for this mechanism.”
The same sloppiness about end-uses also apparently extended to how the funds were managed and supervised -- and even to who was managing them.
In some cases, the report says, the names of WFP managers who are supposed to be handling some of the trust funds were still not known when the audit was published -- and some of them “could not be identified.”
Overall management procedures and safeguards also were apparently something of a mystery.
“There is a different accountability required for trust funds since there are donor specific objectives, activities, use of funds, reporting requirements and timelines,” the inspectors observed.
But the information needed to meet those “monitoring and analysis requirements” had “not been specified,” the auditors concluded, nor had responsibilities for monitoring been “allocated.”
Indeed, WFP does not even have an official corporate repository for the information and, at the time the audit was completed, “the custodian of such a repository had not been assigned.”
Did the sloppiness, lack of coherent record-keeping, unknown management and unassigned accountability lead to any outright waste or theft of funds?
The inspectors do not say -- because their report specifically was tasked to “evaluate and test the adequacy and effectiveness of the processes associated with the governance” of the trust funds, not what happened to the money afterward.
But the report did not rule out such bad possibilities. “The assignment did not seek to audit specific trust funds, and as such it does not provide assurance with regards to any specific trust fund,” it warns.
How did such a mess occur? According to WFP, the problem has largely had to do with a surge in global demand for food relief and the resulting surge of money as the food agency struggled to find new ways to cope with the situation.
(Last year, WFP pulled in some $5.6 billion in donations for its work. This year, the budget is only about $4 billion, and WFP has so far collected less than half, about $1.96 billion.)
“WFP and its operating environment have changed over the last few years, but the policies, procedures and corporate monitoring have not sufficiently evolved,” says a WFP spokesman. “The quantity, value and variety of trust funds have also changed.”
Another way of putting it is that WFP spent first and thought about it afterward. But even that does not quite cover the fact that trust funds are just that -- money hedged with legal restrictions to be spent for specific purposes.
WFP top managers are scrambling now to create a comprehensive inventory of all the types of trust funds under their control and how they were specifically created, managed and run -- a list that they have promised to complete by the end of next month. That inventory is on track, according to the agency spokesman.
What WFP will do next to set things right is going to take longer.
Once the inventory is completed, WFP top management will spend the rest of the year strengthening “corporate understanding of trust funds” and develop a new “comprehensive policy addressing the defining factors and future use of trust funds,” according to management’s formal comments on the report.
In other words, write new rules for the game.
Only then will the agency write new standards of behavior for trust fund managers and “further clarify corporate requirements” in the vital business of monitoring.
Expected arrival date: March 31, 2016.
The agency then intends to come up with a new communications program that hails the “substantive achievements” of its trust fund spending -- which have “not been captured systematically as there are no corporate systems to record the results and achievements of the trust fund activities.”
That new round of self-promotion is supposed to happen by June 30, 2016 -- just one full year after the WFP finally collects the information on what it has been doing with all that money so far, and who is doing it.