Comité International de la Croix Rouge - Comments

5) Financial resources

-The financial figures mentioned in our database are taken from the ICRC’s annual reports. They have been adjusted in line with changes in the institution’s accounting methods over the years.

-Until recently, the ICRC’s budget was incomprehensible to mere mortals. It was a mass of randomly interconnected accounts that were not untangled until 2000, when the organisation finally adopted international accounting standards. The ICRC used to distinguish between overheads and operations expenses in the field. Its “general”, “permanent” or “ordinary” budget covered regular peacetime activities, and was financed by return on investments, government subsidies and contributions from national Red Cross and Red Crescent societies. For emergencies, the “special” or “occasional” budget was funded by specific appeals. It was called “relief fund” in the 1960s and “war activities account” in 1870, 1914 and 1939. Big international operations we re often given their own separate balance sheet, as was the case in Biafra in 1968-1969 and Jordan in 1970. Last but not least, between 1971 and 1978, there was a “temporary” or “additional” budget, used to pay the salaries of casual or temporary staff. According to Jean-François Golay, the function of this budget was primarily to hide the Swiss government’s discreet increase in funding, as Berne did not wish to give other governments the impression their contributions were unwelcome. Finally, the ICRC also benefited from private foundations, whose accounts were presented separately.

-Historically, the ICRC’s budget has expanded in line with its activities, especially during the two world wars, when the Committee received many government subsidies to assist prisoners of war. Its income reached over 1 million Swiss Francs in 1918 after stagnating around 100,000 Swiss Francs in the 1870s. Despite integrating the accounts of the International Prisoners-of-War Agency, which ran at a surplus , funding returned to pre-war levels in the 1920s. States began to repatriat e their own soldiers captured during combat and the ICRC’s operating budget dropped accordingly. According to Jacques Meurant, it fell from 675,000 Swiss Francs during World War One, to 500,000 in 1919, 400,000 in 1920 and 200,000 in 1924. It remained at around 100,000 Swiss Francs until 1939. World War Two brought another increase: in 1945, the budget exceeded 17 million Swiss Francs. In the following decade , however, the organisation’s sources of funding dried up and the Committee experienced a period of financial turmoil. This was partly due to unpopular relief operations in post-war Germany, which led to cuts in subsidies from the American, British and Canadian governments. It was also due to a decrease in contributions by Red Cross societies, which could no longer use war patriotism to collect donations at very little cost . The new political context definitely handicapped the ICRC, as the Cold War caused humanitarian operations to be blocked and sponsors to reduce their funding. Despite cutting costs and firing most of its staff at the end of 1945, the Committee was unable to prevent chronic operating deficits. Its budget fell from 9 million Swiss Francs in 1947 to 4 million in 1953. The situation remained uncertain until the 1970s. At this point, while the Committee’s activities still ran at a deficit, the shortfall was now caused by an unprecedented expansion in activities and subsequent increases in expenses . The LRC experienced a similar situation, with deficits between 1965 and 1967 despite an increasing income from 680,000 Swiss Francs in 1947 to 11.5 million Swiss Francs in 1961. This was particularly visible during the Biafra crisis in 1969, when the ICRC’s budget exceeded a hundred million Swiss Francs for the first time. The Committee’s operations manager , Jean-Pierre Hocke, was partly responsible for this state of affairs : after being named High Commissioner for Refugees at the United Nations in January 1986, h e caused the UNHCR’s deficit to become so out of control that the General Assembly had to step in to take control. He was pushed to resign in October 1989. Meanwhile, the ICRC was still plagued by operating deficits. Far from hiding the problem , the Geneva Committee institutionalised it for psychological reasons. “For the ICRC,” explains Jean-François Golay, “a budget deficit justified increasingly frequent calls for funding, while showing it was impossible to cut costs any further.” Indeed, budgetary imbalances did not prevent the organisation’s financial growth, which peaked during the humanitarian crises in Cambodia in 1979 and Ethiopia in 1984. Between 1976 and 1986, the ICRC’s “ordinary” and “special” budgets quadrupled in real terms. In nominal terms, this meant a jump from 48 to 256 million Swiss Francs, and these figures did not include the Committee’s return on investments. Today, the ICRC’s total, integrated budget is around 1 billion Swiss Francs.

-The ICRC’s funding comes from three major sources which will be examined in greater detail below: governments; national societies; and private foundations. Donations by companies or individuals have little overall effect on the organisation’s budget. Unlike national societies, the ICRC does not organise beauty contests, lotteries or charity galas to finance its various activities.

-Today, the Geneva Committee is extremely dependent on government subsidies. This has not always been the case. Initially, the ICRC was far more dependent on volunteers and individual donations. Members were frequent donors. From 1869, subscriptions to the ‘International Bulletin of aid societies to wounded soldiers’ (Bulletin international des Sociétés de secours aux militaires blessés) were the organisation’s first regular source of income. The Committee also had the support of several royal patrons , including Augusta of Saxe-Weimar (Germany) in 1890, Maria Feodorova (Russia) in 1902, and Shoken Kotaigo (Japan) in 1912. On 15 November 1915 the organisation gained civil status under Swiss law, meaning it could legally receive bequests. It therefore sought to increase its visibility and began requesting donations from the wider public. According to Jean-Pierre Gaume, it was initially reluctant to accept Swiss governmental subsidies, the first being granted in 1920 for child victims of World War One. Following the economic crisis of 1929, however, Berne became a regular contributor. On several occasions it even saved the ICRC from bankruptcy, in particular in 1946. In the 1950s , it also acted as a guarantor for loans contracted by the Committee, allowing the organisation to fund its chronic deficits. In the 1960s and 1970s, Berne took over 50 to 75% of operating costs incurred at ICRC headquarters in Geneva. The regular nature of these contributions, added to donations by other states, meant that this temporary situation inevitably became a permanent one, with lasting effects on the institution’s sources of funding. Between 1950 and 1970, subsidies began to supplant donations by national societies. While governments contributed 50% of the Committee’s “ordinary” budget in the 1960s, this figure increased to 80% by the 1980s. Private donations, 89% of the organisation’s total income in 1950, dropped to 20% in 2005 according to calculations by Aid Watch. The real figure may be even lower given that deficits and surpluses carried over from government subsidies in previous years were classed as “private”. The contributions of Red Crosses and Red Crescents were also counted as “private” despite the fact that most of their funding came from public sources. Indeed, most national societies receive considerable financial backing from their governments, not to mention tax and logistical advantages that help reduce the cost of collecting private donations. E xamples include France and Belgium, where they benefit from the sale of postal charity stamps; Canada, Columbia and South Africa, where they are given preferential access to national lottery funds; and the Philippines, where the Red Cross is exempted from customs duties by means of Presidential Decree 1643 passed on 1 October 1979.

-As the ICRC’s financial sources have become less diverse, the increased dependency on government funding has caused several problems. Firstly, public grants are not compulsory. As a result, the ICRC has to continuously appeal for funds, with limited success if a government has little or no interest in a particular humanitarian crisis. Secondly, the unreliability of subsidies contradicts the Committee’s principle of “universality”. During the Cold War, for example, 90% of its public funding came from the West: the Soviet bloc was conspicuous by its absence. In the 1980s, only half of the signatories to the Geneva Convention contributed to the ICRC’s budget. The Soviet Union only made its first payment in 1988. Thirdly, the Committee received funding from countries that violated the Geneva C onventions: imperialist Japan and Nazi Germany in the 1930s and 1940s, the South African a partheid r egime in the 1960s, and terrorist Libya under Muammar el-Kadhafi through the Omar el-Muktar Foundation in the 1980s. Fourthly, government subsidies are often conditional on financial, institutional or geographical constraints that limit the Committee’s sphere of action. Thus, the increases in Swiss public funding between 1972 and 1978 went hand in hand with tighter federal control of the ICRC’s temporary budget expenditure. Similarly, the Committee has occasionally acted as a “proxy” in furthering certain countries’ international priorities. This arises when funds are “earmarked” for a particular project or programme. As a result of the Western “war against terror”, for instance, many subsidies were directed at Afghanistan , where the ICRC was conducting its biggest relief operation in 2002 and where  the strategic objective was also to incite the Muslim population to rally with the Americans against the Taliban.

-Because government contributions are voluntary and not necessarily renewed from one year to the next, the Committee runs considerable risk in opposing state pressure. In 2001, its president, Jakob Kellenberger, was seen as being a little too conciliatory after a Jewish congressman from New York, Elliot Engel, criticised his views on Israel and threatened to put pressure on the White House to decrease its backing and adjust the Foreign Assistance Act of 1973 under which the American government paid a compulsory annual subsidy to the ICRC. As a matter of fact, the Fitzgerald-Clinton-Dole amendment, which was pushed through by Jewish lobbyists and passed in 2000, made it possible for Washington to reduce its funding by 25% if the organisation did not recognise the Maguen David Adom as a full member of the Red Cross movement. The amendment was never actually applied but showed how the Committee avoided crossing paths with the authorities. Thus, a ccording to Monica Kathina Juma, a Kenyan researcher, it is governments who call the shots . Consequently, ICRC operations now depend on available funds , rather than demand for relief. The new approach dates from the 1970s and differs to the 1920s, when the Committee’s budget fluctuated in line with appeals following disasters. This evolution has helped the ICRC to stabilise its financial resources and reduce its deficits. Rather than indicating an increase in humanitarian crises, it points to an institutionalisation of the organisation’s budget and a greater reliance on government funding.

-According to the Committee, however, voluntary public funding gives the ICRC more independence than intergovernmental agencies that receive regular grants via a quota system. The institution claims it has managed to retain sufficient leeway to preserve its neutrality. For instance, the fact that the United States is an important contributor did not prevent the ICRC from denouncing Guantanamo or condemning Washington’s refusal to sign the Ottawa Treaty banning anti-personnel mines. Moreover, the Committee was able to refuse grants that would have jeopardized its neutrality and favoured some victims over others, as in Kuwait in 1991. For Geneva, maintaining diverse sources of funding was important to limit the risks of state interference. In the 1960s, it refused offers by the Political Department of the Swiss Confederation to finance all of its ordinary budget, leaving international operations to be paid for by other public bodies or individuals. Instead, t he Committee tried to encourage local governments to donate funds, but with little success: Swiss cantons and communes only contributed 1% of the organisation’s 1988 budget of 322 million Swiss Francs, while states accounted for 79 per cent. In the 1990s, the ICRC then began looking to oil-producing countries in the Gulf for financial assistance, as their contributions had been all but non-existent before the petrol shocks in 1973, and had declined after 1984. In the same vein, it began approaching international agencies like the Council of Europe, the Organisation of African Unity, the Organisation of American States and the Organisation of the Islamic Conference. The European Union, the largest backer of IFRC emergency operations since the 1980s, also became increasingly important to the ICRC and funded around 25 per cent of its “special” budget, on a par with the United States. Over the years, the identity of the main donors has changed somewhat. Switzerland’s contributions have dropped to around 10 per cent of total financial resources. Great Britain has become the second largest contributor after the United States, even though American donations increased considerably after the Foreign Assistance Act passed in 1973. The Committee subsequently decided to restrict contributions by one sole donor to 25 per cent of the total amount of grants collected. Still , its four main funders, the European Union, the United States, Great Britain, and Switzerland, have accounted for half of the organisation’s budget since 2000.

-Consequently, the ICRC has always been on the lookout for alternative sources of funding. In particular, it has focused on the possibilities offered by the private sector. In 1970, the Committee hired a fundraising specialist. In 1982, it set up a Swiss support organisation to collect donations from the public based on the model of the “Friends of the League of the Red Cross”, which has existed since 1952 . However, the ICRC’s efforts did not bring the expected results. Over the last 30 years, private donations and legacies have never accounted for more than 3% of the institution ’s consolidated budget. In Switzerland, this is partly because of an agreement between the ICRC and the local Red Cross limiting the former’s ability to collect individual donations from Swiss residents. In Geneva, the ICRC also has to compete with the IFRC . As a result, it receives little funding from the general public. The situation is paradoxical . In a survey carried out by Peter Warren and Iain Walker amongst 2,648 ICRC and Save the Children supporters in the United Kingdom, respondents indicated that, for them, aid efficiency was more important than empathy for the victims. So it is surprising that individual donations are not more important for the Geneva Committee, a professional organisation with a good reputation. Nor are sponsors a significant source of revenues. Traditionally, business contributions to the ICRC budget have stagnated around 0.2%, although the Committee’s current aim is to increase this figure to 3% by 2010 or 2015.

-Today, most of the ICRC’s “private” funding comes from return on investments and contributions from Red Cross and Red Crescent societies. In order to become more financially independent, the Committee has set up various foundations , no less than 12, which have helped the organisation to get through difficult periods. They include legacies of the empresses Augusta of Saxe-Weimar in Germany in 1890 and Maria Feodorova in Russia in 1902 to assist the war wounded. Operational in 1921, a nother foundation was set up in 1912 by the Japanese Empress Shoken Kotaigo to fight against tuberculosis, promote public health and support relief operations for victims of natural disasters in peacetime. As for the Florence Nightingale Fund, it came into legal existence on 24 December 1913 and its statutes have been revised several times, most recently on 31 January 1992 . Named after the famous British nurse who served during the Crimean War, this foundation rewards the most worthy volunteers with medals and gives support to the families of humanitarian workers killed in the field . After the First World War, the Committee also took advantage of a Swiss government subsidy to establish a “Foundation for the ICRC” on 5 May 1931. During the Second World War, again, the institution created a Red Cross Foundation for Transport in order to charter cargo and hospital ships: i t came into legal existence on 15 April 1942, and was recorded at the Bale Chamber of Commerce five days later. Since then , other f und s have been set up under Swiss law. The Clare Benedict F und was launched in 1967 by a rich American heiress to provide aid to the victims of armed conflict. The Maurice de Madre Fund was set up in 1970 by a French Count to assist ICRC or Red Cross staff wounded while carrying out their duties. Backed by Tripoli, t he Omar el Muktar foundation was established in 1980 under the name of a Libyan hero who fought against Italian colonisation. In 1983, both the Special Fund for the Disabled and t he Paul Reuter Fund were set up, the latter by a professor at the University of Paris to promote international humanitarian law. The most recent foundation, Erinnerung, Verantwortung und Zukunft (Remembrance, Responsibility and Future), was created in Germany in August 2000 to back the ICRC’s ITS (International Tracking Service).

-In addition to the return on its investments, the Geneva Committee also receives funding from Red Cross and Red Crescent organisations , which amounted to around 10% of its expenditure on relief operations in the 1990s. Nevertheless, the contributions of national societies have never lived up to expectations and have dropped significantly since the 1930s, when they accounted for around 50% of the institution’s income. Given their lack of decision-making power at the ICRC, their funding is not compulsory, unlike the IFRC. After the Second World War, the Committee had hoped that national societies would pay the equivalent of half of their contributions to the LRC and would make up around a third of its budget. A donation scheme had even been worked out based on the pro-rata system used by the United Nations for each country , excluding Switzerland, which was not part of the UN and whose Red Cross’s fundraising was twice penalised by the presence of both the ICRC and the LRC in Geneva. All these plans failed. Between 1975 and 1988, national societies’ average contributions only amounted to 6% of the Committee’s ordinary budget. In addition, most donations were from the same members, namely, in decreasing order, Sweden, Norway, the United Kingdom, Finland, the United States, Germany, Canada, Japan, Denmark and Holland. The statistics are revealing: contributions by national societies fell from 12 per cent of the ICRC’s consolidated budget in 1988, to 10 per cent in 1998 and 6 per cent in 2007.

-In this regard, the IFRC’s sources of funding are very different. The Committee depends mainly on governments , while the Federation relies more on national societies. Before the Second World War, half of the LRC’s funds came from the American Red Cross. Subsequently, the League sought to reduce its dependency on the United States. In 1948, it introduced a quota scheme, modified in 1952 and 1968, which stipulated that one member could not contribute more than 30% of the institution’s budget. It also set down conditions for funding based on the income of a national society, its staff numbers and the resources of its country, in line with the gross domestic product per capita. After the last two criteria were abolished in 1976, the Federation adopted the proportional system in place at the United Nations. In cases of repeated late payments, sanctions were gradually increased and culminated in a member’s loss of voting rights. As the number of national societies increased, so did the IFRC’s “ordinary” budget: from 1 million Swiss Francs in 1945 to 4 million in 1970, and 20 million in 1980. The “special” budget grew at even faster rates. It increased tenfold between 1978 and 1980, from 2.3 million to 22.6 million Swiss Francs, and again between the Cambodian crisis in 1979 and the Ethiopian famine in 1985, from 15.9 million to 141.4 million Swiss Francs. Currently, the IFRC’s total incoming resources amount to around half a billion Swiss Francs in the 2000s.

-Despite these impressive increases, the Federation’s budget is now inferior to the Committee’s, which  exploded thanks to government contributions. By way of comparison, the IFRC’s “ordinary” budget was five times larger than the ICRC’s in the 1950s. Today, the Committee’s incoming resources are twice as large as those of the Federation. This is not only because of an increase in government contributions , but also because of the ICRC’s global expansion. In 1974, the Committee’s total resources were less than the American Red Cross’ national emergency relief fund. From 1980 onwards, however, the ICRC’s “ordinary” budget, which still absorbed 75% of total receipts in 1970, began to become less and less important as international activities increased. The “special” budget was progressively used to finance overheads, some 10% of recurring expenses in the 1980s. Today, the administration in Geneva absorbs around one fifth of the organisation’s total budget: 20% in 1990, 16% in 1991, 17% in 1992 and 1993, 18% in 1994, 20% in 1995, 22% in 1996, 21% in 1997, 23% in 1998, 17% in 1999, 16% in 2000, 17% in 2001, 18% in 2002, 16% in 2003, 19% in 2004, 15% in 2005, 16% in 2006 and 15% in 2007.

-To some extent, the ICRC’s history can be read in the difference between overheads and operating expenses. For a long time, the organisation’s functions were mainly administrative and focused on spreading humanitarian law throughout the world. As a result, much of the budget was spent on salaries, if we are to believe annual reports, which published no statistics on this matter between 1963 and 1998 . After the Second World War, salaries were around 75% of total expenditure (70% in 1952, 76% in 1953, 75% in 1954 and 77% in 1955) and up to 80% of the organisation’s “ordinary” budget (79% in 1956, 70% in 1957, 80% in 1958, 81% in 1959, 76% in 1960, 72% in 1961 and 79% in 1962). Since then , salaries have varied between one third and one half of the Committee’s overall expenses (33% in 1999, 37% in 2000, 39% in 2001, 42% in 2002, 43% in 2003, 49% in 2004, 48% in 2005 and 2006 and 46% in 2007). These changes are partly due to requirements by backers to reduce costs and publish data on overheads (from 1990 on) and implementation rates (from 2000 on). This last indicator measures what proportion of the budget is actually spent in the field: 87% in 2000, 78% in 2001, 73% in 2002, 80% in 2003, 90% in 2004, 91% in 2005, 86% in 2006 and 91% in 2007.

-Generally speaking, the ICRC has strict management principles. Occasionally, it inflated some expenses. According to an audit released in 1970 and quoted by Morris Davis, for instance, the London firm Peat, Marwick, Mitchell & Co noticed that, during the Biafra War, the Committee under-evaluated the value of food items and did not include the contribution of Red Cross volunteers, so as to reduce its costs, or hide them in the budget of other organisations. As it hoped to resume its flights, it maintained a whole fleet of planes and had to pay an average of $840 per ton delivered to the Biafran enclave, compared to $362 for the Protestant Churches and $115 as the normal price in peacetime! To the best of our knowledge, however, the ICRC’s executive has never been involved in misappropriating funds on a large scale, unlike national societies. As for individuals employed by the Committee, there have only been two recorded examples of misconduct: one in Turkey during World War Two and the other in South Africa during apartheid. The first  example was Giuseppe Beretta , who joined the ICRC in 1942, and was investigated by the Swiss police in 1945 for forgery and the trafficking of currencies belonging to Turkish Jews held at Treblinka. This delegate was involved in transporting Nazi gold after diplomatic relations between Berlin and Istanbul stalled and the Swiss Confederation was appointed to represent German interests in Turkey. According to an article published in Lausanne’s Nouveau Quotidien on 20 August 1996, Giuseppe Beretta attempted to smuggle more than 10,000 gold coins into Switzerland by way of the diplomatic bag, and not 710 as originally claimed by the ICRC. Once events came to light, he was summoned to Geneva and fired.

-Most other cases regarding the misappropriation of funds are linked to the Committee’s partners abroad, especially Red Cross and Red Crescent societies in both developing and developed countries. Otherwise, management problems within the ICRC a re limited to ethical conflicts of interest. As we have already seen, one of the institution’s main objectives is to spread humanitarian norms throughout the world. To do so, the Committee has accepted funds from countries that do not respect the Geneva Conventions, like Nazi Germany and militarist Japan up until the end of World War Two. The organisation even demanded its share of the gold sold by the Reichsbank to the Swiss Central Bank to assist German nationals returning home after the defeat of the Wehrmacht in 1945 . In 1950, the Federal Republic of Germany finally paid arrears for services rendered by the ICRC in delivering supplies to prisoners-of-war. Consequently, the Committee has sometimes been suspected of overlooking violations of humanitarian law when this would compromise its sources of funding. The importance of revenues from the Empress Shoken Fund, for example, may have explained why the ICRC failed to denounce Japanese exactions in China at the 16th International Red Cross Conference in London in 1938. However, the apartheid regime contributed very little to the institution’s income, yet the Committee refused to expel the South African Red Cross from the movement.

-In addition to receiving state subsidies, the ICRC accepted funding from private groups or organisations with vested interests in armed conflicts. After the Nazis were defeated in 1945, for example, it began to discreetly collect donations from the German diaspora to assist friends and relatives held by the Allies as prisoners-of-war. Prior to the creation of Israel in 1948 , the ICRC also accepted donations from associations like the Hebrew Committee of National Liberation and Assirenu (“For our Prisoners”), a charity organisation of the Jewish community in Palestine (Va’ad Le’umi). During the civil war in North Yemen in 1964-1965, again, an ICRC delegate, André Rochat, raised five millions of Swiss Francs in the Gulf amongst Arab monarchs who supported the royalist resistance against the Republicans in power in Sana’a.

-Conflicts of interest involving companies are studied in section nine, which deals with the ICRC’s relations with economic forces. Meanwhile, it is possible to state that Geneva’s ethical concerns are not always shared by members of the Red Cross movement. Funding by gambling, for instance, is condemned by r eligious humanitarian NGOs because games encourage personal gain, put strain on household budgets and allow mafias to recycle their profits. In this perspective, the ICRC rejected a proposal by the French Red Cross to organise lotteries to finance its activities. But the Committee does not control national societies, and has not been able to prevent them from using gambling as a source of revenues. Today, the Canadian, Belgian, South African, Nicaraguan, Columbian and Philippine Red Crosses share profits from the national lottery; their Brazilian and Norwegian counterparts receive money from sporting bets and slot machines respectively. The Philippines National Red Cross is also allocated part of the revenues  of PAGCOR (Philippine Amusement and Gaming Corporation), a semi-public company that backs elec toral campaigns, contributes to the secret funds of the political parties in power and organises charity galas in favour of candidates wishing to improve their image. As for t he ICRC, it accepts anonymous donations and sponsorship by Swiss banking institutions. Given that third world dictators often choose to launder their money in Switzerland, this is another problematic source of revenue. Potentially, the Committee could be involved in recycling embezzled public funds in countries where little or nothing is invested in health or education. One such source is the Union of Swiss Banks, an institution whose subsidiaries Metalor and Argus-Heraeus were accused of supporting the apartheid regime in South Africa in the 1980s and illegally importing gold from Congo-Kinshasa in the 1990s. Likewise, the ICRC receives subsidies from Liechtenstein, another offshore platform with a strong reputation for money laundering. To justify its position, the Committee shifts the burden of responsibility onto its backers. According to its former president Cornelio Sommuraga, quoted in Massimo Lorenzi’s book: “we don’t want to know where the money comes from but […] we do want [bankers] to ensure the funds we receive are ‘clean’.” National societies are no more scrupulous. The British Red Cross, for example, accepted contributions from Jersey Overseas Aid, a cooperation agency set up on an island known for laundering dirty money from third world dictators like General Sani Abacha in Nigeria between 1993 and 1998.

-While the sources of the ICRC’s income may be questionable, the use of funds for humanitarian projects is indisputable. National societies, on the other hand, have occasionally diverted money. As early as 1975, Donald Tansley recommended that steps be taken to improve their integrity. Indeed, unlike the Committee, national societies have been directly involved in misappropriating funds, in both developed and developing countries. The cases of France and the United States are particularly edifying and provide a good, historical overview of common problems.

-For the CRF (Croix-Rouge française), problems started during the Franco-Prussian war. The Société de secours aux blessés militaires des armées de terre et de mer, as the organisation was originally known, was accused of being “wasteful” and “stingy”, with an income of 13.6 million Francs in 1871 compared to a few hundred in 1869. One commentator, Léon Le Fort, deplored the organisation’s lack of accountability at a time when the British Red Cross published complete financial statements for a budget that reached 7.5 million Francs in 1871. At the end of the war, the CRF was running a surplus of 3.5 million Francs, while its Belgian counterpart had spent its entire 1871 budget of 0.3 million Francs. In Léon Le Fort’s opinion, it would have been better to use this money to compensate the many volunteers who, in the field, had had to pay expenses out of their own pocket . Fundraising was also controversial. It first relied on contributions by other national societies, including the Mexican and Japanese Red Crosses. It then went on to collect donations from the public after the French army’s first defeats in August 1870. Campaigns were support ed by a Press Committee which was set up in July 1870 by Le Gaulois newspaper. The following month, however, the organisation was accused of inefficiency and asked to give the money back: its a ristocratic bureaucracy had caused professional doctors to lose out. Paradoxically, explains Bertrand Taithe, the Press Committee encouraged the organisation to buy more ambulances so as to receive more donations. Consequently, quantity replaced quality. According to Grégoire Wyrouboff, the mortality rate of French casualties during the war was twice as high as for the German military. Medical errors were also made. During the battle of Sedan in September 1870, for instance, Charles Ryan reports how he worked in an Anglo-American ambulance where there was no “serious attempt to render the instruments, operating table, and surroundings of the patient, aseptic. Hence the high rate of mortality which ensued. Startling, in fact, as the statement may appear, I am convinced that if we had refrained from from performing a single secondary operation at Sedan, our results would have turned out far better”.

-As far as management is concerned, Leon Lefort’s comments of 1871 were still valid a hundred years later. Once again, the CRF was in the spotlight because of its overheads. As shown by an investigation carried out by the French Ministry of Finance and the General Inspectorate of Social Affairs, administrative costs were still excessive. The organisation employ ed too many staff for a deficit of some 20 million Euro in 1989. According to articles published by Le Monde newspaper on 28 April and 6 July 1989, only one third of donations received was actually spent on social activities. In addition, the organisation was plagued by fraud. In 1991, the directors of DBS, a marketing company, pocketed almost all of the money collected for the French Red Cross. Twelve years later, a surprise visit by the Health and Social Services revealed several problems in the running of a CRF emergency centre at Le Bourget in the Paris suburbs of Seine-Saint-Denis. According to Libération newspaper on 19 December 2003, the local Red Cross chapter occasionally refused to shelter homeless people, claiming its beds were already occupied so as to artificially inflate its occupancy statistics and receive more public funding. After a complaint by the head office, the manager of the CRF chapter in Seine-Saint-Denis, Robert Dray, was convicted for breach of trust; the organisation itself was brought before the tribunal by several employees. Finally, in December 2004, the Asian tsunami confirm ed the institution ’s dubious tendency to give preference to fundraising over social missions. While the disaster entail ed long-term reconstruction programmes, the CRF cho se to portray the drama as an “emergency” in order to collect more donations. Unlike its American and Canadian counterparts which stopped fundraising as early as January 2005, it continued collecting donations for several weeks, like the British and Swiss Red Crosses. Yet it knew that the most pressing needs had already been met, and that any additional funding could, at best, be used for development initiatives. Médecins sans Frontières, for example, asked donors to stop giving money. The CRF, on the other hand, decided to keep on collecting for emergency relief thanks to its connections with the media, especially through Etienne Mougeotte, a member of its board and the director of the popular channel TF1 (Télévision Française 1). It refused to ask donors to fund other less publicised but equally pressing disasters. The result, notes Richard Werly, was that the CRF had more money than it could conceivably spend: a total of 115.8 million Euros, of which only 15% had been used for tsunami victims as at 31 December 2005. Under pressure from the general public, the organisation invested its surplus in local NGOs and deviated from its normal practices of funding its own operations. Partners were selected too quickly, with doubtful results. To build houses at Pudukuppam in Cuddalore District on the Indian Coast of Tamil Nadu State, for instance, it backed the Mata Amritanandamayi Math until September 2005, an organisation run by adepts of Ayurvedic medicine, and led by Sri Mata Amritandanandamayi, a guru known for his healing powers. And in October 2007, the French Red Cross had to fire its local staff in Sri Lanka because they took bribes to allocate the houses built by the organisation. Meanwhile, back in France, the CRF announced its intention to close down health centres in the poorer areas of Seine-Saint-Denis in December 2005. Statistically speaking, this region’s doctors per inhabitant rate is twice as low as the national average. The decision was therefore controversial, and Jean-François Mattéi, the CRF’s president, was criticised for giving preference to “profitable” relief operations in Asia. The Mayor of Drancy, Jean-Christophe Lagarde, attacked the “dishonest tactics” and “lies” of an organisation that failed to consult local representatives or respect employment laws, while claiming it had to close local clinics for lack of municipal funding. Under public pressure, the Red Cross chapter of Seine-Saint-Denis had to provisionally re-open three health centres in Drancy, Blanc-Mesnil and Epinay-sur-Seine.

-The American Red Cross (ARC) is another good example of the problems that can affect a national society. As early as April 1904, its president and founder, Clara Barton, was the object of a parliamentary enquiry for relocating her private house to ARC headquarters, using the organisation to take free holidays abroad, and diverting funds to a commercial farm. Nearly a century later, the institution was caught out again. After the attacks on the World Trade Centre on 11 September 2001, its president, Doctor Bernadine Healy, chose to open a special fund for public donations. This deviated from normal procedure, since the organisation usually launche d general appeals for emergencies. As a result, local ARC chapters resented being excluded from the decision-making process, and were unhappy with the preference shown for New York: victims of the San Francisco earthquake of 1989, the Oklahoma City bombing of 1995 and the Red River floods in 1997 had not been given such favourable treatment. The situation was further complicated by Bernadine Healy’s lack of popularity with her staff. She fired corrupt executives, and paid herself a $400,000 annual salary, twice that of her predecessor. After the attacks on the World Trade Centre, she ended up with excess funds, and nothing on which to spend them. She considered transferring the money to victims of terrorism in general, against the wishes of donors who gave specifically for the survivors in New York. She was finally forced to resign in October 2001, when it became obvious that a considerable proportion of the $540 million donated had been spent on administrative costs and other operations with no clear link to the disaster. However, this was not the end to the institution ’s problems. The following month, the state of New Jersey sued Joseph Lecowich and Catalina Escoto, respectively the manager and accountant of the ARC’s chapter in Hudson County, for misappropriating $1 million. In the aftermath of Hurricane Katrina, which struck New Orleans in August 2005, imposters also collected donations pretending to be members of the Red Cross. As Eric Lipton explains, the ARC provided hotel rooms to flood victims but some were used by mere holidaymakers or billed to the institution even though they remained empty.

-National societies in other developed countries have also been affected by fraud, misappropriation of funds, corruption and tax evasion. According to Liz Gooch, the Australian Red Cross faced similar problems to its American Red equivalent in 2001. In 2003, it was criticised for misappropriating funds collected on behalf of the victims of the Bali bombing in Indonesia. Even though an audit officially cleared it of the more serious accusation of embezzlement, the Australian Red Cross clearly failed to explain properly to donors what it intended to do with their money. In Europe there have also been various scandals over the last few years. In April 2000, two managers of the Bavarian Red Cross found themselves in prison after getting a kickback of 3 million Deutschemarks from pharmaceutical companies and artificially inflating the purchase prices of products used for blood collection. In February 2006, the head of the Bulgarian Red Cross, Hristo Grivorov, was arrested for misappropriating considerable sums of money, and went on a hunger strike to protest against his questioning. Finally, in Serbia, the Belgrade chapter of the Yugoslavian Red Cross diverted so many supplies that its relief operations were put under temporary IFRC and ICRC management between 2001 and 2003.

-Of course, national societies face similar problems in developing countries where corruption is rife. Indeed, their leaders are usually as corrupt as public officials, as many of them are recruited from the civil service. There are several possibilities. Firstly, international relief is often misappropriated, especially supplies by the ICRC, the IFRC or other national societies. During the Bangladesh Liberation War, for example, the local Red Cross was led by the Awami League independence fighters, who sold considerable amounts of provisions on the black market. A ccording to The Times on 19 August 1974, only one food ration in seven and one blanket in thirteen actually made it to the victims targeted by Western humanitarian organisations. The Malaysian Red Crescent behaved little better than its Bangladeshi counterpart when Vietnamese boat people fled the Communist regime in Hanoi. Led by Tunku Tan Sri Mohamed, the organisation decided to build a hospital for refugees on Poulo Bidong Island. To do so, it was supplied with fibre cement boards by one of it s secretaries who owned the production factory. The secretary overcharged the institution and was sent to prison in 1979. In Mauritania, the local Red Crescent experienced other kinds of problems during the drought that affected the Sahel between 1984 and 1985. Charged with distributing provisions donated by the international community, the organisation worked with Caritas and the Lutheran World Federation. It relayed government demands for three times more aid than was necessary in order to siphon off part of it. Likewise, the Sri Lankan Red Cross gave in to state pressure in 1995 by blocking funds and putting a halt to humanitarian operations on Jaffna Peninsula during a large-scale offensive against the Tamil Tigers. In Indonesia, one of the most corrupt countries in the world, the local Red Cross (Palang Merah Indonesia) was also suspected of misappropriating relief intended for victims of the 2004 tsunami. Under the leadership of a former Minister of Finance, Pak Marie Muhammad, the organisation eventually had to undergo extensive reforms.

-Embezzlement is not limited to international relief. Abuses also occur with funds collected locally, as in Latin America. The Brazilian Red Cross CVB (Cruz Vermelha Brasileira) is one example. Between 1991 and 2000, it was led by a controversial woman, Mavy d’Ache Assumpção, who had links to the military dictatorship in the 1970s and was suspected of taking advantage of the organisation to misappropriate funds, travel first class, stay in luxurious hotels, rent a magnificent apartment, use her official car for personal ends, and pay her family’s holidays abroad. She was acquitted of these accusations in the Court of Auditors. However, repeated deficits led the CVB on a downward spiral until a new management team was nominated in September 2001 and supervised by the IFRC under the aegis of a lawyer, Luiz Fernando Hernández, who smoothed internal tensions and paved the way for more decentralised management by revising the statutes in January 2004. Meanwhile, the Nicaraguan Red Cross, CRN (Cruz Roja Nicaragüense), encountered similar problems after an audit revealed important discrepancies in the financial years between January 2000 and December 2001. The head of the organisation, Esperanza Bermúdez de Morales, was accused of misappropriating funds and falsifying accounts with help from her son, who had conveniently been nominated to the position of legal advisor. The CRN employed a large workforce, but was unable to produce financial statements on expenses, assets, and the use of public subsidies and cash donations after Hurricanes Mitch in October 1998 and Felix in September 2007. Esperanza Bermúdez de Morales was eventually forced to resign when the Court of Auditors launched an official investigation in March 2008.