​Fraud probe into human rights group | Phnom Penh Post

Fraud probe into human rights group


Publication date
15 March 2002 | 07:00 ICT

Reporter : Robert Carmichael

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ONE of Cambodia's leading human rights organizations is being investigated by auditing

firm Price WaterhouseCoopers (PwC) for fraud and misuse of donor funds.

Staff at the Cambodian Institute of Human Rights (CIHR) also told the Post that death

threats had been made to discourage people from speaking out on the issue.

Allegations have been made that thousands of dollars were fraudulently charged as

expenses to donors for items such as translation fees and vehicle hire. At least

$20,000 also ended up, unknown to donors, in an off-budget bank account. A source

at CIHR, which is headed by Kassie Neou, said it might never be known how much money

was involved.

The Post has obtained a copy of the minutes of a January 14 meeting between CIHR

and donor representatives from Canada's CIDA, the EU, the Japanese Embassy, ForumSYD,

and the Asia Foundation.

At the meeting Kassie, who is also the vice-chair of the National Election Committee,

accused CIHR's finance officer, Nhim Sakal, of fraud and said his director of operations,

Steven Pak, had signed fake staff contracts and other incriminating documents. Both

men have been suspended from their duties pending the outcome of the investigation,

as has Kassie.

At a staff meeting February 6, Kassie told his employees he had borrowed around $20,000

from an "off-budget account", known as a "Social Account".

Kassie confirmed to the Post March 14 that donors were unaware of the existence of

the account, but insisted any involvement he had with the account was done properly.

He said the money in the account had come from commissions on printing contracts

and on the rental of CIHR's office.

Rather than individuals pocketing the proceeds, Kassie said he agreed to set up the

Social Account to deal with loans to staff, funeral expenses of staff family members,

medical expenses, and small entertainment expenses which were not payable using donor


"That was our mistake," he said of the way the account, which was set up

around 1996, had been handled away from the view of donors. "We didn't know

how to do it, so we did not inform our donors." Kassie said he currently owed

around $1,000 and strongly denied any impropriety over the allegations sweeping the


CIHR staff have established a committee to deal with the issue, and are reportedly

adamant that anyone found defrauding the NGO be sacked. The Post understands that

the head of the staff committee is Kassie's personal secretary.

At the January 14 meeting, donors brought up the issue of intimidation. CIDA's Michael

Barton told the meeting that it was "ironic" that there was staff intimidation

within a human rights organization. When the Post contacted him, Barton stressed

that talk of intimidation was "not substantiated".

"It's just what some of the staff have commented on," said Barton, "so

in that meeting I just raised the question to the CIHR management as to their position

and what they thought about it."

"We are waiting to see if [the alleged fraud] is just poor financial management

and poor accounting principles or something more serious," he said. "If

there is evidence that there has been misuse of our funds then we won't be advancing

any final disbursements until we are satisfied that the funds that were allocated

for the project were used appropriately."

Kassie said he had heard nothing about threats beyond the usual infighting common

to staff members in any organization.

"You are the first [person to mention that to me]," Kassie said of the

alleged threats. "I have not been given a copy [of the minutes]; I have not

been given a chance to see them. It is very unfair."

The Post has ascertained that there have been concerns about CIHR's financial management

for some time. A March 2001 study commissioned by Sweden's development arm SIDA criticized

CIHR's lack of transparent policies on financial administration, as well as Kassie's

method of managing his employees.

"The management style constrains participation of staff in organizational matters,

and the restricted access to financial information inhibits program managers to plan

efficiently," the report stated. "Further, such lack of transparency is

contradictory to the promotion of good government (sic)." It goes on to state

that CIHR's management had not been forthcoming with providing financial information

during SIDA's research.

At the meeting a ForumSYD representative said management issues had been present

at the NGO for several years, but few changes had come from the "numerous promises"

made. Kassie left donors surprised when he countered criticism of his management

style by telling them there were "limits to human rights" when dealing

with his staff.

"I prefer the control style of management. . . If I were to exercise 100 percent

of the rights [contained in the Universal Declaration], would that result in better

management?" he asked rhetorically. "If it is necessary to give up some

rights in order to maintain order, is that a violation of the rights of the staff?"

PwC's Sally Reth said the firm had been engaged to complete a report of its findings.

It was not a full investigation, she said, and was restricted to "specific points

given to us by [CIHR]". She said it was difficult to tell how long the report

would take as that depended on cooperation and whether CIHR chose to expand the terms

of reference.

Kassie told the Post he was extremely keen for a full investigation - "from

A to Z" - if the auditors deemed it necessary, and would push for it to happen.

"I would like them to find out everything, because I too would like to know

everything," he said.

One ironic aspect of the recent events is that good governance is at the core of

CIHR's mission statement. Another is that some of the money apparently went missing

from a CIDA-funded project set up to promote good governance.

The minutes stated that senior advisor John Lowrie has been tasked with various responsibilities

to keep CIHR running while the investigation proceeds. In a brief written statement

to the Post, Lowrie confirmed an external investigation was underway "following

allegations of serious financial irregularities against the senior management".

"[CIHR's] donors and its Board of Directors have been informed and measures

taken to protect the interests of donors, staff, and most importantly the client

groups served," Lowrie wrote. "These include assigning to me temporary

responsibility for finance, personnel and control of assets pending the outcome of

the investigation."

"When we receive an authoritative report on the outcome, decisions will be taken

on what action will be necessary to preserve the reputation of the Institute, and

its unique human rights education role in Cambodia," he concluded. Lowrie declined

further comment.

One long-time human rights observer told the Post the investigation might result

in a better NGO culture in Cambodia.

"One thing I hope comes from all this is that civil society in Cambodia will

emerge as a stronger, ethical and more effective advocate of human rights and good

governance," the observer said.

Kassie Neou, who holds joint US-Cambodian citizenship, fled Cambodia after the Khmer

Rouge regime. He set up CIHR in 1993 to continue the human rights education program

run by UNTAC. CIHR employs 90 staff at four offices in Cambodia and receives around

$1 million a year in donor funding.

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