High salaries, bonuses and suspect cash withdrawals

Published by The Mail on Sunday (11th December, 2016)

It all sounds so positive on Adam Smith International’s website: an example of the way in which the aid giant spends British Government money to make life better in troubled places.

The firm boasts of helping to spend £30 million of taxpayers’ cash in 2008, setting up a non-profit ‘facility’ to ‘improve the investment climate’ in Afghanistan. This included ‘creating appropriate governance and management structures, recruiting and mentoring the management team.’

Yet a leaked internal audit from three years later reveals a rather different picture.

The organisation, Harakat, which strongly disputes the report, was accused of having ‘a family business mentality’ with high salaries, unauthorised payments to relatives, unexpectedly high cash withdrawals, suspicious invoicing and false documentation.

More than three-quarters of first-year income went on administration and expenses, with the chief executive paid £225,000 over the first two years, in a country where the GDP per capita is under $500 a year.

Auditors even warned of possible ‘manipulation of disbursements to trigger bonus payments, which is deceptive and fraudulent’. They found 271 cash withdrawals worth £458,500 over the first two years – ‘higher than expected’. The brother of one director received payments that could not be accounted for.

Sources at DFID admit they had to take ‘robust steps’ to resolve the issues, including sending a senior adviser to address widespread concerns. A DFID review in 2011 admitted key targets of contributing to increased economic growth and private sector investment were ‘not achieved’.

Yet Harakat was handed another four-year UK contract worth £15 million last year after claims it had created 20,000 jobs. ‘DFID is committed to securing peace in Afghanistan, where UK aid is helping tackle poverty,’ said a spokesman.

An ASI spokeswoman said they were not responsible for Harakat’s management or finances. ‘Our role was as a sub-contractor. We helped set up and register the organisation,’ she said.

A spokesman for Harakat’s board said claims in the leaked report could not be substantiated and that the organisation had procedures to ensure good governance. He pointed to numerous schemes Harakat is involved in to improve private sector reform.

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