Abstract:

CARE Australia was exposed in 1995 for financial misconduct in its use of Australian aid grants and public donations. This paper is a first-person account of the events behind that exposure, written from the perspective of the whistleblower. As CARE’s Director of Emergency Relief, I found evidence in 1990 that budgets and acquittals for AusAID-funded food aid projects in southern Africa were being overstated, and in January 1991 I put allegations involving some $1.25 million to CARE’s board — and was threatened, then blacklisted, for doing so. Drawing on the contemporaneous record — the findings of the Australian National Audit Office and of auditors BDO Nelson Parkhill, the parliamentary record, press reporting and internal documents — the paper traces the course of the affair: the board’s failure to investigate, AusAID’s reluctance to inquire into an NGO chaired by a former Prime Minister, the audits that confirmed budget “massaging” and more than $1 million in accumulated surpluses, and the television exposé that finally forced action. Yet the direct consequences for CARE were slight: some $238,000 repaid, and no charges laid. The affair became the catalyst for the aid sector’s 1997 Code of Conduct, whose signing became a condition of government accreditation. The paper concludes that the ingredients of the CARE affair — cynicism, opportunity and strong disincentives to unearthing wrongdoing — cannot be assumed to be absent from today’s aid sector, and argues for more active fraud detection and greater transparency about fraud discovered.

The events described here are three decades old. Today’s CARE Australia is a respected and trusted NGO, and nothing in this paper should be read as a reflection on the organisation as it now is.