GiveDirectly operates by sending aid directly to impoverished people around the world through mobile money transfers – a set-up designed to empower recipients and cut out middlemen.
The charity started in 2009, and last August extended its operations to the Democratic Republic of the Congo (DRC), one of the poorest countries on earth.
It hoped that by wiring money directly to families it could help alleviate poverty, but the money started to go missing almost immediately.
By the time the fraud was uncovered, at least $900,000 had been stolen.
“In late August 2022, we started sending cash transfers to the registered SIMs, many of which were actually in the possession of these GiveDirectly staff,” the organisation wrote on its website.
DRC staff conspired
According to GiveDirectly, its workers in the DRC – including field enrolment staff, call centre operators, administrative personal and internal auditors – conspired to steal the SIM cards on which monies were sent before they could reach the intended recipients.
More than 1,700 families in the South Kivu province lost out, the New York-based NGO said.
Hundreds of would-be recipients complained about the issue, but were lied to by in-country staff about the missing funds, GiveDirectly revealed.
“One of the devastating details of the case is that... the fraud required suppressing recipient complaints,” Joe Huston, the managing director of GiveDirectly, told The New Humanitarian, which broke the story.
“We know hundreds of recipients called in to complain and ask about their next transfers, and were told various types of lies.”
The DRC is a nation wracked by decades of conflict. It is among the five poorest nations in the world, with nearly 62 per cent people living on less than $2.15 a day.
Largest sum ever lost
GiveDirectly says its donors include “individuals, foundations, businesses and institutions”.
The $900,000 fraud came out of a total of about $7 million, which GiveDirectly intended to transfer to some 5,000 households in South Kivu.
Households were meant to receive one-time transfers of $392, and then $40 per month for the following two years.
GiveDirectly said it was the largest sum of money it has ever lost to fraud.
All operations in the country have been suspended since January.
Staff ‘exploited isolated region’
Recipients of donations usually register their SIMs with independent mobile money agents, but GiveDirectly said it made an exception with the South Kivu programme due to its isolation and fragile setting.
The staff – none of whom are now employed by GiveDirectly – allegedly exploited this exception.
“In this remote region, the closest agent is often a long distance away. We therefore allowed GiveDirectly’s enrolment team to register these new SIMs for recipients instead of sending them to agents,” GiveDirectly said in its public statement.
A small portion of the lost funds have been recovered, but most is probably not recoverable, it added.
“To the people who should have received cash, we’re sorry. It is our job to design systems that protect the funds that are supposed to reach you – and ultimately we let you down,” said Mr Huston.