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Red Cross cash ‘wasted’ on stars
TIMES ONLINE ^ | March 05, 2006 | Marie Colvin

http://www.timesonline.co.uk/article/0,,2089-2069970,00.html

THE American Red Cross has come under fire over payments to publicists who recruited stars to add lustre to its image, even as funds ran short for victims of Hurricane Katrina. The controversy could not have come at a worse time for the charity: this Tuesday, it unveils a “celebrity cabinet” of personalities whose glamour will be exploited to attract money, volunteers and donations of blood.

Its critics are unhappy at what they call an inappropriate use of funds. “They’re hoping people will send them money on the basis of celebrity, as opposed to good works and effectiveness,” said Daniel Borochoff, president of the American Institute of Philanthropy, which monitors charities’ finances.

The Red Cross was reported last week to have paid consultants more than $500,000 (£285,000) in three years to recruit stars, pitch its name in Hollywood and promote its chief executive as the face of the charity.

A New York publicist receives $5,000 a month to lure celebrities and polish the charity’s image in Hollywood, according to documents obtained by The Washington Post.

A company in California has been paid $114,000 to get the Red Cross included in story lines for film and television, and a Texas firm of image specialists won a contract for $127,000 to boost the profile of Marsha J Evans, the chief executive, a year before she left with a $780,000 severance package.

The Red Cross defends its spending, insisting monthly payments to the publicist Paul Freundlich have been cost-effective. “His efforts have made a huge impact on the American public in terms of increasing financial donations, volunteers and blood donations,” said Julie Thurmond Whitmer, head of the charity’s Washington office.

The row follows a censure by Congress for diverting contributions for the September 11 emergency to other uses and criticism last week from the Senate finance committee, which is investigating the charity’s slow response to Katrina.

Some of the media sniping seems disingenuous, however. How many news organisations would really have sent reporters to cover the Red Cross’s campaign to vaccinate 13m children in Kenya? They did when Jane Seymour, the actress, went along.

Red Cross Sifting Internal Charges Over Katrina Aid

By STEPHANIE STROM NY TIMES March 24, 2006

The accusations include improper diversion of relief supplies, and officials said some of the actions might have been criminal.

http://www.calnurses.org/media-center/in-the-news/2006/march/page.jsp?itemID=27601341

The American Red Cross, the largest recipient of donations after Hurricane Katrina, is investigating wide ranging accusations of impropriety among volunteers after the disaster.

John F. McGuire, the interim president and chief executive of the Red Cross, and Senator Charles E. Grassley, the Iowa Republican who is chairman of the Senate Finance Committee, said some of the actions might have been criminal.

The accusations include improper diversion of relief supplies, failure to follow required Red Cross procedures in tracking and distributing supplies, and use of felons as volunteers in the disaster area in violation of Red Cross rules.

There are no known official estimates of the cash or the value of supplies that might have been misappropriated, but volunteers who have come forward with accusations said the amount was in the millions of dollars. The Red Cross received roughly 60 percent of the $3.6 billion that Americans donated for hurricane relief. Mr. McGuire said the investigation started "a number of weeks ago" and was continuing.

"We're in the middle of this, and we're looking at a range of possible problems," he said, "from issues between a few people that are really nothing other than bad will, to failure to follow good management principles and Red Cross procedures that have caused a lot of waste, to criminal activity."

He said the organization would do everything in its power to hold wrongdoers accountable. "We need to bring this through to the proper and right conclusion," he said. "We owe that to donors and the people who needed our services."

Among the specific problems identified by volunteers were the disappearance of rented cars, generators and some 3,000 of 9,000 air mattresses donated by a private company, as well as the unauthorized possession of Red Cross computer equipment that could be used to add money to debit cards and manipulate databases.

Mr. McGuire said the investigation was being conducted by a team from the Red Cross ethics and compliance department. Because the inquiry is continuing, he said that he could not respond to specific accusations. When it is completed, he said, any finding of criminal activity will be turned over to the law enforcement authorities.

A telephone call to the attorney general's office in Louisiana was not returned, and there was no response to an e-mail message to an official in the Department of Homeland Security who had been contacted by a volunteer looking into the accusations several months ago at the request of the Red Cross.

In interviews over the last two weeks, more than a dozen Red Cross volunteers from around the country described an organization that had virtually no cost controls, little oversight of its inventory and no mechanism for basic background checks on volunteers given substantial responsibility.

Though there was little direct evidence of criminal activity, the volunteers said the magnitude of the missing goods had convinced them that Red Cross operations were being manipulated for private gain.

"I can't find any other reason for what was going on," said Anne Tolmachoff, a volunteer from Louisiana. "Otherwise, it just didn't make any sense."

While the Red Cross has drawn harsh criticism for failures in responding to Hurricane Katrina and for failing to address longstanding governance problems, the concerns raised by volunteers pose new questions about the organization's ability to prevent fraud and theft and protect its resources amid the chaos of a major disaster.

Senator Grassley has threatened to rewrite or revoke the organization's charter if it does not thoroughly overhaul its operations. This is the second time Mr. Grassley has prodded the Red Cross to get its house in order. He first made demands after the attacks of Sept. 11, 2001, but his effort sputtered as a result of other pressing matters, like the war in Iraq.

"The allegations from Red Cross volunteers are wide-ranging and include possible criminal misconduct," said Mr. Grassley, who in February demanded to know what the Red Cross was doing to address complaints from volunteers. "The Red Cross needs to change its mind-set so it addresses volunteers' concerns swiftly and appropriately, regardless of whether a Senate committee chairman is asking questions."

In one case cited by volunteers, a kitchen manager swapped 300 prepared meals for parking spaces for Red Cross emergency response vehicles without creating any record of the transaction.

"When a swap takes place, those products become untraceable," said Jerome H. Nickerson Jr., a Maryland lawyer who in mid-November was assigned by the Red Cross, as a volunteer, to look into accusations of theft and fraud in the disaster area. "It's the disaster relief equivalent of money laundering."

Mr. Nickerson and his partner in the inquiry, Michael A. Wolters, a security guard from Wisconsin who uncovered wrongdoing during an earlier three-week tour in Texas shortly after Hurricane Katrina, filed a report on Dec. 5 with the safety and security division at Red Cross headquarters. In it, they cited "a breathtaking systematic failure" by senior managers to enforce inventory control procedures and "outright contempt for well-established internal fiscal controls."

But they said the report had been ignored until a reporter for The New York Times began speaking with other volunteers who had seen similar questionable actions.

Mr. McGuire said the organization had pursued every tip about potential wrongdoing and noted that it had an internal hot line, called Concerned Connection, that volunteers could use.

"The vast majority are misconceptions or cases of 'I don't like somebody, so I'm going to say something,' " he said. "The key for us is to know whether we've got a problem in the Red Cross system and procedures, whether we've got well-intentioned people who just wasted stuff or whether we have a criminal problem."

Still, several volunteers said Red Cross managers in the disaster area had pooh-poohed their concerns and intervened to prevent them from documenting the problems they had encountered.

Willie A. Taylor, a volunteer from Michigan who owns a computer business, said he was part of a team that was asked to use a computer system to track every item from the time it was ordered until it was delivered to the end user.

He said the program revealed that roughly half of the "greenies," the requisition forms used to track supplies as they move through the system, could not be reconciled, meaning the supplies could not be accounted for.

"They asked me to do this," Mr. Taylor said, "we came up with a bulletproof process — and then they squashed it when it showed how big the problem was."

Mr. Taylor and others said they suspected that some volunteers were manipulating the flaws in the distribution system for their own benefit.

The Red Cross had 235,000 volunteers working in the hurricane disaster area, more than five times the previous peak of 40,000, and the sheer number wreaked havoc with the normal vetting process, the volunteers said.

For instance, the Red Cross prohibits anyone with a criminal record from working in a disaster area. "We do background checks on our D.S.H.R. volunteers," Mr. McGuire said, referring to the Disaster Services Human Resources division. "But we did not do them on some of our spontaneous volunteers."

Several of those volunteers had criminal records. For example, a volunteer working in the security unit in Baton Rouge, La., Kathleen Collins-Fowler, reported on Nov. 7 that the authorities in New York had issued an arrest warrant for Joe Tominaro, a volunteer then working in New Orleans, on grand larceny charges. According to New York State Department of Corrections records, Mr. Tominaro has twice served prison time for car theft and possession of stolen goods and is on parole.

Yet he signed on as a Red Cross volunteer and opened a distribution center in Marrero, La., without authorization from the Red Cross logistics division, which is in charge of such matters.

He then rang up a $17,936 bill installing eight industrial fans and an evaporative cooler and moving the cooler a week later to another wall. He was given at least $800 in cash and more than $2,000 was loaded onto his staff debit card, according to records included in Mr. Nickerson's and Mr. Wolters's report. The Red Cross gave him 11 cellphones and two automobiles while he was in the disaster area, even though New York had revoked his license.

Mr. Tominaro did not respond to an e-mail message sent to an address listed on his volunteer records.

On Nov. 2, two volunteers reported their concerns about Mr. Tominaro to Gary Niki, a senior official in the security and safety department at headquarters.

A day later, Ms. Collins-Fowler reported, Mr. Niki ordered that Mr. Tominaro's staff card remain active until further notice. It was suspended, however, on Nov. 7.

Another volunteer falsely passed himself off as a New York City police officer, a criminal offense, and was buying equipment for local law enforcement officials using his staff card, according to the report.

Volunteers said the breadth of the misallocation of supplies made them suspect foul play. Every volunteer interviewed had an example of supplies appearing in places where they were not needed or where the distribution point seemed to be ad hoc.

For instance, Robert M. Cooke, a volunteer serving as bulk distribution manager, was baffled to find industrial-size cans of diced chicken at a middle school in New Orleans.

Mr. Cooke said the school was not an official distribution site and the neighborhood around the school lacked utility service, so the likely recipients of the chicken would have no way to cook it, let alone store such large quantities.

"Those cans were supposed to go to Red Cross kitchens, where they could be properly cooked and prepared," he said.

Mr. Taylor similarly was puzzled by the distribution of supplies in Cameron Parish when he was in charge of bulk distribution. "We were giving out bleach, paper towels and mops, but the houses there were devastated," he said. "We should have been giving out wheelbarrows, hacksaws and other repair equipment."

Moreover, Mr. Taylor said, volunteers at the site did not seem to know who the recipients were. "People were driving up and picking up stuff and driving off, and my question was, how do you know that these people live in this area and need what you're giving them?" he said. "They basically shrugged at me."

Mr. Taylor and Mr. Cooke, who do not know each other, said the scope of the disaster, as well as poor training of the volunteers, explained some but not all of the problems they saw.

"It's a really bad system, of course, because you couldn't account for everything, but there was some funny stuff going on, too," Mr. Taylor said. "People were definitely taking advantage of the huge flaws in accountability."