Global Policy Forum

Swindling by Fake NGOs


By A.N.M. Nurul Haque*

Daily Star
March 15, 2008

The reports run by The Daily Star and other dailies during the last seven days, on so called NGOs vanishing with about Tk 500 crore after swindling the poor villagers is deeply shocking. Four persons have died so far, three of them of heart attack and the other by committing suicide, being unable to sustain the terrible shock of losing the last penny.

According to reports, 30 fake NGOs operating in remote villages in Natore, Rajshahi and neighbouring districts, swindled about 10 lakh poor people who trusted them to get weekly dividends. People, enthusiastic about making quick money, invested with them even after selling all their belongings or taking loans.

On the morning of February 29, the villagers found that all the officials of the NGO Freedom Unnayan Sangstha had vanished overnight with nearly Tk 250 crore collected from about two lakh members. Several other NGOs in the area vanished in a similar fashion also with crores of taka collected from their members, seizing the opportunity of the Natore district administration's lax management.

Meanwhile, the tendency of vanishing with public money spreads elsewhere, as another NGO in Sylhet named Islamic Development Foundation disappeared with about Tk 50 lakh collected from over 500 members.

A three-member probe committee from the Social Welfare Directorate in Dhaka arrived in Natore on March 6, and its primary investigation revealed that the Natore Social Welfare office registered 59 NGOs since January 2007. Most of them were engaged in illegal business, which the office grossly ignored.

There are 12 laws for registering and regulating NGOs. But most of the NGOs have their registration under the Voluntary Social Welfare Agencies (Regulation and Control) Ordinance 1961, administered by the Social Welfare Directorate, which provides, it seems, even the fake NGOs with the opportunities of getting registered, due to some loopholes in the ordinance.

According to local people, a large number of NGOs sprang out at Natore and surrounding areas over the last one and a half years apparently under the patronisation of the local administration and influential people.

They complained that unholy nexus of the NGO men with the dishonest members of law enforcement agencies helped these NGOs to carry on their illegal operation. The victims said police escort for the NGO men and law enforcers' frequent visits to their offices made them confident about investing.

It is undeniable that NGOs have enormous contribution in a number of areas, including poverty alleviation. NGOs have also demonstrated their relative advantage over the local government bodies in promoting participatory development at grassroots level. Their innovation and skill in micro-credit operation have drawn global attention.

But there are numerous allegations of corruption and irregularities against many NGOs. They are blamed for misappropriation of funds allocated for poverty alleviation, and diversion of those to organisations with no link to poverty alleviation.

A trend has also developed in such NGOs to employ influential persons, especially retired bureaucrats, with high salary, who can use their network to gain special facilities from the government and to cover up irregularities. Allegations have also been raised that some NGOs are involved in dubious political activities.

Mishandling of foreign funds by many NGOs is another major allegation. The NGOs, numbering over 1,500, obtain funds from donors. Some 34 foreign founded major Islamic NGOs are registered with the NGO Affairs Bureau, and 15 of them are getting over Tk 200 crore in donation every year.

The money obtained by each of these NGOs in a year, varying from Tk 5 crore to Tk 70 crore, mainly comes from Saudi Arabia, Kuwait and United Arab Emirates. Some of these NGO's also get funds from the US and UK. There also has been allegation that a good number of NGOs have been using the cheap slogan of poverty alleviation as a pretext to fulfil the hidden agenda of donors.

Transparency International Bangladesh (TIB) has termed them as a mid-level corrupt sector, and recommended forming an independent NGO commission to oversee their activities. TIB noted lack of transparency and accountability in the sector, as well as serious irregularities in their dealings.

The chairman of the Regulatory Reforms Commission said that NGOs must be put under a strong regulatory framework and made more accountable for better benefit of the poor. Weak regulatory and monitoring mechanisms and an apparent state of impunity have contributed largely towards enabling some local NGOs to indulge in corruption and misuse foreign funds meant for poverty alleviation.

The World Bank also underlined a good number of areas relating to NGOs' operations that require regulatory reforms. The areas include financial accountability and transparency that essentially involves proper auditing. It is also alleged that NGOs appoint friendly auditors for auditing and preparing their audit and financial statements.

Considering the size of the sector and its immense contribution to socio-economic development, the government should take immediate steps to form an independent NGO commission to ensure fool-proof supervision and to bring the overall activities of the NGOs under a reasonably satisfactory mechanism.

The NGO Affairs Bureau, the lone regulatory body, set up on March 1, 1990, has not been able to perform as an effective regulatory and monitoring authority perhaps due to its institutional framework.

NGOs like the Brac, Grameen Bank, Proshika and Gonoshashthya Kendro started their rehabilitation activities for the war victims, especially for women and children, immediately after independence of Bangladesh. These NGOs have so many stories of successes in the fields of poverty alleviation, developing a non-formal education programme for poor children and providing health services at the doorsteps of poor villagers. They even enhance image of the country abroad.

The number of the NGOs has increased tremendously in the past decade. There are 48,635 NGOs registered with the Social Welfare Department. Sadly, most of these NGOs are lacking transparency in spending the huge amount of money received from the foreign donors, and are tarnishing greatly the image of the sector. The NGO sector really needs to be better regulated.

Swindling of poor villagers' money by the so-called NGOs is not a new incident in the country. There are several instances that the organised racketeers pretending to run NGOs have made rural Bangladesh a happy hunting ground for swindling ignorant villagers.

Ample reasons have been there for raising doubt about the intention of the NGOs in Natore, promising 4 to 6 times higher profit than the investment. The local administration and social welfare offices cannot avoid their responsibilities for turning a blind eye to the illegal operation of such fake NGOs.

About the Author: A. N. M. Nurul Haque is a columnist of The Daily Star.

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