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Flaws, Abuses in Red Cross Katrina Effort Investigated

By Stephanie Strom

The American Red Cross, the largest recipient of donations after Hurricane Katrina, is investigating wide-ranging accusations of impropriety among volunteers after the disaster.

John F. McGuire, the interim president and chief executive of the Red Cross, and Sen. Charles E. Grassley, R-Iowa, who is chairman of the Senate Finance Committee, said some of the actions might have been criminal.

The accusations include improper diversion of relief supplies, failure to follow required Red Cross procedures in tracking and distributing supplies, and use of convicted felons as volunteers in the disaster area in violation of Red Cross rules.

There is no known official estimate of the cash or the value of supplies that might have been misappropriated, but volunteers said it was in the millions of dollars. The Red Cross received roughly 60 percent of the $3.6 billion that Americans donated for hurricane relief efforts.

McGuire said the investigation started “a number of weeks ago” and was continuing.

“We’re in the middle of this, and we’re looking at a range of possible problems,” he said, “from issues between a few people that are really nothing other than bad will, to failure to follow good management principles and Red Cross procedures that have caused a lot of waste, to criminal activity.”

McGuire said the organization would do everything in its power to hold wrongdoers accountable. “We need to bring this through to the proper and right conclusion,” he said. “We owe that to donors and the people who needed our services.”

Among the specific problems identified by volunteers were the disappearance of rented cars, generators and some 3,000 of 9,000 air mattresses donated by a private company, as well as the unauthorized possession of Red Cross computer equipment that could be used to reload cash cards and manipulate databases.

McGuire said the investigation was being conducted by a team from his organization’s ethics and compliance department. Because the inquiry is continuing, he said that he could not respond to specific accusations. When it is completed, he said, any finding of criminal activity would be turned over to law-enforcement authorities.

A phone call to the attorney general’s office in Louisiana was not returned, nor was an e-mail to an official in the Department of Homeland Security who had been contacted by a volunteer looking into the accusations several months ago at the request of the Red Cross.

In interviews over the last two weeks, more than a dozen Red Cross volunteers from around the country described an organization that had virtually no cost controls, little oversight of its inventory, and no mechanism for basic background checks on volunteers given substantial responsibility.

Though there was little direct evidence of criminal activity, the volunteers said the magnitude of the missing goods had convinced them that Red Cross operations were being manipulated for private gain.

“I can’t find any other reason for what was going on,” said Anne Tolmachoff, a volunteer from Louisiana. “Otherwise, it just didn’t make any sense.”