World Vision clouded by corruption scandal
11 March 2020 at 4:40 pm
In further revelations, the charity also admitted it had accidentally underpaid hundreds of its workers
The peak-body for Australian aid NGOs has revealed it is working with World Vision Australia to closely examine explosive allegations of corruption and nepotism detailed in a recent newspaper investigation.
A Nine newspapers report on Monday alleged that Glenn Kuramoto was bought in as a World Vision consultant at the recommendation of his son Zane – a WVA executive – and helped printing company Docklands win a multimillion-dollar WVA contract in 2013.
It said that Docklands gave Glenn Kuramoto a free trip to Bali during the tender period, then paid him $3,000 a month for several years after being awarded the contract.
Nine newspapers did not suggest that Zane Kuramoto knew or was involved in any of the alleged activities.
Amid the fallout of these allegations, Claire Rogers resigned as CEO of the charity after three and a half years in the role.
WVA said the resignation had nothing to do with the newspaper investigation, but a follow up Nine report alleged that Rogers failed to act in December on what is claimed to be a whistle-blower disclosure about the incident.
World Vision responds to allegations
WVA chief financial officer Gordon Allison said the charity was deeply concerned by the Nine newspapers allegations and had taken immediate steps to ensure they were fully investigated.
“Since becoming aware of the allegations on Tuesday, March 3, we have immediately: notified Victoria Police; arranged for KPMG to undertake a formal, independent investigation of this matter; engaged workplace investigation and mediation service iHR Australia to conduct an investigation into the role of a staff member in the matter,” Allison said.
Allison said it had temporarily suspended the staff member named in the report, pending the investigation, and immediately advised its board of the allegations.
WVA also said it had notified the Australian Charities and Not-for-profits Commission.
ACFID considers taking further action on the charity
On Wednesday, an Australian Council for International Development (ACFID) spokesperson told Pro Bono News that the peak body was actively working with WVA in regards to the matter.
They noted that ACFID’s members sign-up to its code of conduct, which sets and maintains standards for the work the sector undertakes.
“Accordingly, we take any suggestion of wrongdoing extremely seriously… ACFID’s Code of Conduct Committee are considering the issues that have come to light and will consider any further action,” the spokesperson said.
“As a sector, trust is one of the most valuable assets we have and we must meet the high expectations we have set ourselves and which the community expects.”
In the event of non-compliance with the code of conduct, ACFID members are required to submit a plan outlining how they will become compliant within a time frame of up to 12 months.
Organisations which do not achieve compliance within that period may face sanctions including the suspension and revocation of their code signatory status.
Meanwhile, the ACNC’s secrecy provisions have prevented it from disclosing if it is investigating WVA.
An ACNC spokesperson told Pro Bono News charities were bound to notify the ACNC when in breach of the ACNC’s Governance Standards, including obligations to “act in the best interests of the charity, to disclose conflicts of interest and to manage the finances responsibly”.
“The ACNC takes all concerns about charities seriously, including notifications made by a charity itself,” the spokesperson said.
“We assess all concerns we receive and investigate when there is evidence that a charity has failed to comply with its obligations.”
This scandal comes only days after the government released its response to the ACNC review, and agreed with a panel recommendation to change regulations so charities are required to disclose related party transactions as part of their financial disclosures.
The change would compel charities to report when a family member of an employee gets paid for consultancy services, such was the case with WVA.
World Vision apologises for millions of dollars in staff underpayments
As investigations into corruption allegations start taking place, WVA also revealed this week that it self-reported a payroll error to the Fair Work Ombudsman in December 2019.
The charity said around 200 casual and 45 permanent employees were affected by underpayments.
WVA said it had already corrected the award rates of all its casual staff and expects permanent staff rates to be rectified by the end of the month.
Acting CEO Graham Strong said the underpayments were “an unfortunate error”, while admitting that paying employees incorrectly was completely unacceptable.
“We apologise unreservedly for the error and have moved swiftly and decisively to rectify it,” Strong said.
“I care deeply that this has happened, because I know how deeply our employees care about what they do. This is particularly devastating because I know our employees joined World Vision to make a difference in the world, and they don’t see their work here solely as a job, but as a calling.”
Strong said the charity was working closely with the Fair Work Ombudsman to determine the level of back-pay owed to staff members.
He said WVA has set aside $8.9 million, using assumptions based on the numbers of employees affected and applying contingencies to the figures.
“Given how conservative we have been in this exercise, I’d be very surprised if the final amount comes to more than that provision,” he said.
“We cannot yet confirm the total figure of underpayment until the process with the FWO has been completed.”
Strong added that the charity has completed a comprehensive review of remuneration and improved its processes and governance to prevent further errors.