Tsunami funds lay idle in bank for three years
Errors at Red Cross left €162,000 untouched
Published 12/12/2010 | 05:00
A trawl of Bank of Ireland Red Cross accounts around the country led to the uncovering of 49 unreported accounts holding €214,000, an internal review has found.
And the investigation into how €162,000 of that money collected for the Asian tsunami lay untouched for over three years in a Tipperary bank account found that there were serious administrative failures in the management of some of the money collected for the disaster.
The report, which was carried out by an independent accounting firm appointed by the Red Cross to look into the issue, shows that there was no misappropriation or mis-allocation of funds collected for the 2005 appeal.
The review recommends that other banks and the credit unions should now be asked what accounts they hold "to ensure that no further situations like Tipperary exist".
The formal existence of the Tipperary account was only discovered due to the Bank of Ireland trawl after three-and-and-a-half years, in 2008. The report said that while it was evident that no monies were missing and that there was no evidence of any movement in the account from 2005 to 2008 when it was closed, it was a cause of concern that there was no official report to Red Cross HQ concerning the account.
It said the explanation of the delay by the Tipperary branch -- that the tsunami money would be spent over a five-year period by the Red Cross -- was understandable, but added that for the money to remain untransferred for three-and-a-half years was "excessive".
It adds: "The fact that no returns were submitted to Red Cross HQ by Tipperary branch for 2005 and 2006 is, in our view, a more serious governance issue for HQ then the late transfer of the tsunami monies. This is compounded by the fact that the submitted 2007 late returns from Tipperary branch did not feature the tsunami account.
"Our investigation led us to believe that again there was no attempt to hide or retain the money, [and] that there is a commonly held view that returns were only ever required in respect of branch current accounts, not accounts held in trust for a Red Cross HQ appeal.
"The Tipperary branch points out correctly that since there was no place on the returns form for such non-local designated accounts at that time to be recorded, their position is supported."
But the report said it was unacceptable that no reference was made to the existence of the account.
The investigation, carried out by accountant Angela Coen, Liam O'Dwyer, CEO of the Catholic Institute for Deaf People, and planning consultant Michael Halligan, said the Red Cross did not have sufficient staff or management controls in place to deal with the huge response to the tsunami appeal.
The society collected over €32m in the appeal but the Tipperary account was a particular cause for concern.
The report also highlights concerns about the capacity of the Red Cross chiefs to manage the administration and finances of the organisation and refers to a leadership gap when the secretary general left. It was "an organisation operating in an outdated manner, with poor systems and under-resourced and demotivated staff".
One of the critical issues raised by the society's auditors was their inability to produce consolidated accounts due to the unreliability of the systems and some of the information received in HQ.
Chairman of the Irish Red Cross, David O'Callaghan, admitted: "The report shows serious deficiencies in our accounting procedures.
"We have already implemented procedures to avoid a recurrence of these events."
He added: "We are also well advanced in strengthening new financial procedures. I propose to implement the recommendations in the report as a matter of urgency. Finally, I am happy to say that every cent of the monies donated for areas affected by the Tsunami has been and will go to relief projects in these areas."