American Red Cross squandered aid after Haiti earthquake, report alleges

Despite raising nearly half a billion dollars and allocating $170m to ‘shelter relief’, the aid organization built only six permanent homes, an investigation has found

The Guardian, Alan Yuhus, 4 June 2015

An undated American Red Cross handout photo of the aftermath of the earthquake
shows the devastation to homes in Haiti. Photograph: Matt Marek/American
Red Cross/PA

Despite collecting nearly half a billion dollars for Haiti earthquake relief, the American Red Cross has built only six permanent homes and seemingly squandered millions in the country, according to a new report.

A joint investigation by ProPublica and NPR uncovered rampant mismanagement, high overhead costs and deeply rooted acrimony from Haitians toward the aid organization. Among the investigation’s findings was that although the Red Cross apportioned about $170m to the category of “shelter” relief, and although it at first planned to build some 700 houses, it only constructed six permanent homes.

The report charges the Red Cross with consistent misrepresentation of its projects, especially in housing. The authors cite promotional materials that say the Red Cross provided more than 130,000 people with homes, and then note that that total includes people in “transitional shelters”, recipients of short-term rent assistance, and people who had been “trained in proper construction techniques”.

The Red Cross disputes the report and asserts it has “helped build and operate eight hospitals and clinics” and “move more than 100,000 people out of make-shift tents into safe and improved housing”. In a statement, the organization said it is “disappointed” by the “lack of balance, context and accuracy” on the part of ProPublica and NPR.

A major problem for the organization was leadership and staffing, according to the report. Integral positions, including experts for health and shelter, were left vacant for months and sometimes years. The positions that were staffed were predominantly held by expats or by people flown in from the United States, many of whom could not speak French or Creole.

In one 2011 document, Red Cross official Judith St Ford notes that there are “serious program delays caused by internal issues that go unaddressed”, including for cholera relief.

“There is a clear lack of foresight and planning,” she wrote, and “the lack of leadership ability has contributed to poor morale in the field.”

She also urged her superiors to hire more Haitians: “the implication that talented, smart, competent Haitians cannot be found in Haiti has to be dispelled.”

In its statement the Red Cross says 90% of its current staff are Haitians; the organization did not break down the hierarchy or positions of its staff.

“If they were an organization that had a real history in Haiti I think this would’ve gone a lot better,” said Justin Elliott, one of the journalists who co-wrote the report. “The entire Haiti reconstruction effort has been really problematic, but the outside groups that have done better have roots there, have Haitian people working at high levels, have people who speak the language.”

In one 2013 email published by ProPublica, CEO Gail McGovern admitted a project had failed and that she did not know what to do with a $20m remainder. “Now that the Northern project is going bust and we are still holding $20 million of contingency, any ideas on how to spend the rest of this?” she asked, before mentioning a mysterious “wonderful helicopter idea”.

Without Haitians in leadership positions, the Red Cross was particularly ill-prepared to deal with Haiti’s land tenure rules, a system so tangled and unforgiving that it has intimidated USAid and Vatican relief efforts.

Residents of the Jean-Marie Vincent camp for people displaced by the 2010
earthquake, wait for customers outside their tent where they have set up a
stand to sell rice, oil and canned goods in Port-au-Prince on 9 January 2013.
Photograph: Dieu Nalio Chery/AP

“Land tenure is probably the biggest stumbling block,” said Jonathan M Katz, a freelance journalist and author of a book about the earthquake, The Big Truck That Went By. The system has stymied aid organizations for years, and Katz said that for years aid organizations have “thrown up their collective hands and said ‘we don’t really want to deal with this.’”

The Red Cross entangled itself in a web of other organizations, often paying them to do relief work, themselves struggling in Haiti. This outsourcing is commonplace in the international aid industry, Katz said, and leads to inevitable but not necessarily unreasonable overhead costs. But eager to better solicit donations, organizations often try to downplay these costs.

The report notes that overhead charges by the Red Cross and its contractors undermine McGovern’s claim that “minus the nine cents overhead, 91 cents on the dollar will be going to Haiti.”

In one case, Elliott and his co-author, NPR’S Laura Sullivan, found that the International Federation of the Red Cross (IFRC) exacted $1.56m in overhead from the American Red Cross’s payment of $6m, all to help give Haitians rental subsidies so they could leave tent camps. The IFRC said the costs were related to “administration, finance, human resources”.

In another case, the Red Cross commissioned Swiss and Spanish Red Cross societies to upgrade shelters, but still took 24% of the money for the project in additional overhead costs, according to the report.

Where exactly the $488m of the American Red Cross’s Haiti budget has gone is unclear, Elliott said, since “the whole international aid sector is pretty opaque in general. And the spending of the American Red Cross is incredible opaque. You can tell hardly anything from their disclosures.”

He said that the issue of money was particularly sensitive to Haitians who had coordinated with the Red Cross.

“They were furious basically over broken promises,” Elliott said. “About three years ago, the Red Cross told people they were going to build hundreds of new homes in this very hard-hit area, and this thing was just stalled. Over the next two years they had meetings with the community, handed out juice boxes and so on, and nothing happened for a long time.”

The Red Cross is now helping build a road and install solar lights in the area.

Katz said that the problems of the American Red Cross are “typical of the aid industry in general. The Red Cross is sort of the biggest kid on the block. Because they make way more money than anybody else, what they do is magnified.”

The interconnected NGOs and aid organizations of the world, ranging from the many satellites of the Red Cross to Doctors Without Borders to the Clinton Foundation, Katz said, should deserve more skepticism from the public. Reports have traced the 2011 cholera epidemic to United Nations relief efforts, he noted, adding that many organizations operate more like businesses than anything else.

“Even when an aid group is pulling off a project well,” he said, “if it isn’t going to be there forever, if it isn’t going to be accountable for successes and failures, if it isn’t leaving something behind that’s permanent, then it’s still capable of doing damage.”

Last year the Red Cross similarly took issue with another ProPublica report that said the organization had disastrously mismanaged aid relief after hurricane Sandy.