Reports on financial irregularities

Here we publish reports on cases of financial irregularities within RFN funded operations, and their conclusions.


Insufficient documentation of project costs by RFN partner in Ecuador

A former partner organization of RFN, PSHA (Pueblo Shuar Arutam, Ecuador) has failed to document some of their project costs funded by RFN and NORAD in 2017. This was the project’s last year, as the cooperation with PSHA was being phased out.

In 2017 the Shuar Arutam people which PSHA represents was subject to repression by Ecuadorean authorities related to the opening of a government-licensed copper mine on their territory. In this emergency situation PSHA was not able to carry out normal administrative routines, the office was moved and they were not able to present a complete financial report on the project funds after the year ended. PSHA has presented credible reports that the activities were carried out, but not complete accounts and cost documentation. RFN commissioned an external audit in 2018, in which the auditors concluded that they could not verify costs totaling USD 20.641,88 of which USD 11.064 was PSHA’s own co-funding. In addition, USD 4.313,50 was not sufficiently documented.

As a result of this, RFN has paid back to NORAD its share of the unverifiable and insufficiently documented costs, with NOK 68.785. RFN has not asked PSHA to return these funds to RFN as we believe they were spent on relevant activities although not adequately accounted for due to the extreme circumstances PSHA endured in 2017.

The cooperation with PSHA ended 31.12.2017 and has not been reinitiated.

Mismanaged project funds by RFN partner in Indonesia

In march 2017, the director of the Indonesian organization Walhi Kalteng, informed RFN about the suspicion that the Finance Manager in the organization had mismanaged project funds.

An internal commission and the external investigative audit revealed that the mismanagement essentially was manipulation of the accounts by falsifying signatures, financial reports and bank statements, and this was later admitted by the Financial Manager. The investigative audit also revealed general shortcomings and weaknesses in Walhi Kalteng's internal control, financial routines and systems, which were not in line with the RFN’s financial guidelines. The previous board also acknowledged that they had not exercised real monitoring and control over the organizations financial activities during the period. Based on the findings, Walhi Kalteng reported the case to the local police on May 09, 2017.

RFN’s pro rate share of the mismanaged funds was NOK 331,639. The investigation also found project cost amounting to NOK 470,172, without proper documentation. However, based on reports and other additional documentation (such as pictures, newspaper clippings, etc) RFN believes that most of the undocumented cost, actually has been used for projects purpose. Unfortunately, it cannot be proved in the form of acceptable documentation.

In total, Walhi Kalteng mismanaged funds from RF amounting to NOK 801,811. RFN has repaid the amount to Norad as sole donor on this project. The cooperation between RFN and Walhi Kateng was terminated as a result of this case and the information revealed during the investigation.