Consortium Against Terrorist Finance Aug. 17, 2016, 3:36pm

Humanitarian enterprises being manipulated for illicit purposes is not newsworthy in Gaza, but the World Vision case may be an exception. An indictment unsealed few weeks ago revealed that Israeli authorities have been investigating a new – and, in many regards, unprecedented – case of infiltration of the Gazan branch of an international charity by Hamas which has possibly gone undetected for several years. Prosecutors in Beersheba, Israel, levelled serious allegations against World Vision’s manager of operations in Gaza, Mohammed el-Halabi, who is accused of diverting conspicuous funds designated for civilian and humanitarian projects in the Gaza strip for terrorist financing purposes. While allegations remain to be confirmed, the extreme vulnerability of NGOs to terrorism financing especially in critical contexts is once again exposed, along with the necessity to rethink countermeasures to avoid further harm to local populations relying on humanitarian programs.

The charges against Halabi

World Vision is an evangelical Christian charity established in California in 1950 which currently operates in 97 different countries. The charity suspended its operations in Gaza shortly after Mohamed el-Halabi was arrested on June 15, 2016 at the Erez border crossing by Israeli prosecutors. After 50 days in custody mostly without access to a lawyer or family, Halabi was charged with directing considerable organizational funds to Hamas. Under Israeli interrogation, Halabi seemingly confessed to all charges, claiming that he had been a Hamas operative since youth and since he began working there in 2005, has infiltrated the charity and worked his way up its ranks. Israeli officials claimed that Halabi siphoned 60% of the organization’s Gaza funding – roughly $7.2 million a year for a total of $43 million of the charity’s funds – to pay Hamas fighters and operatives, to purchase weapons, and to sponsor the digging of tunnels used in terror operations aimed at Israeli security forces and civilians alike. In one instance – Halabi reportedly admitted – private and government grant donations funded the building of an entire Hamas military base.

Israel’s internal security agency, Shin Bet, stated that Halabi had established a complex and systematic methodology to send the funds to Hamas through creating fabricated humanitarian projects and ordering overstated receipts to get funds to the terror group. Shin Bet posited that, based on their investigations, some of the money intended for injured children was diverted by families fraudulently listing their children as hurt. Additionally, Halabi reportedly established fictitious humanitarian projects that diverted funds that were meant to aid farmers, fishermen, and the disabled. In addition to transferring funds, the intelligence agency also argued that Halabi transferred physical materials, equipment, and packages of food and medical aid to Hamas for their benefit rather than for Gazan civilians.

Ineffective internal control mechanisms

If confirmed, these allegations would suggest that Halabi has successfully worked around the organization’s internal and independent audits for years. World Vision has its employees’ accountability capped to a predetermined signing authority, in line with the prescriptions defined by a binding contract called “Covenant of Partnership” signed by all members of the World Vision partnership to ensure that humanitarian funds are not mishandled, among other things. Moreover, the international auditing firm PricewaterhouseCoopers audits World Vision on a yearly basis. However, in some respects, World Vision’s internal control mechanisms leave the charity vulnerable to financial mismanagement, especially when it comes to direct project funding. A specific clause of the Covenant of Partnership can be easily manipulated to direct funds to shell organizations which may only be superficially verified. In addition, the way in which World Vision is structured – though interdependent federal offices under different levels of central control – and its large size could easily allow for funding to be mishandled and go undetected. The World Vision Gaza branch’s annual reports entail transparency issues as well, in that those reports do not specify a separate budget for Gaza-based operations.

World Vision stands by Halabi

World Vision’s strong defense on Halabi’s behalf is certainly noteworthy and highly unusual given the high reputational risks the organization will face from the allegations. On August 4, 2016, World Vision issued a statement saying “it was shocked to learn of the charges against Mohammad.” Despite Shin Bet’s claims that Halabi confessed to funding Hamas, a World Vision appointed lawyer for Halabi, Muhamad Mahmud, claimed that his client denied the charges as well as any ties to Hamas. Last week, World Vision’s CEO publicly stressed the charity’s commitment to transparency and accountability. He noted that these allegations may not actually add up, as its Gaza budget ranges from $4-$6 million annually, less than the $7 million purportedly sent to Hamas. He also reiterated that, although the charity takes the allegations very seriously, World Vision finds the charges to be groundless and has not yet found any independent evidence to prove the alleged diversion of funds.

World Vision’s firm standing on the issue, despite all the repercussions these supposed ties to Hamas have had and will continue to pose to the organization, shows a genuine lack of insight on the matter and seems to suggest that the charity would rather be accused of negligence than of financial support of terrorism. World Vision’s sincerity, however, does not necessarily prove Halabi’s innocence. Ultimately, neither World Vision’s innocence nor Halabi’s guilt can be independently verified at this stage. As NGO Monitor President Gerald Stenberg reiterated, accurately tracking funds in critical areas where terrorism and extremism historically thrive is only partially a realistic ambition. After all, Dexter Van Zile wrote for The Algemeiner, “tolerating a certain amount of diversion of charitable donations is part of the business that World Vision is in.”

A feared spillover effect

The allegations of terror financing have already triggered major repercussions for World Vision’s donations, with countries such as Australia and Germany halting their donations while investigations remain ongoing. After the recent allegations against Halabi surfaced, Australia’s department of Foreign Affairs and Trade (DAFT) froze its funding of World Vision programs in Palestine. DAFT has devolved a total of $3.8 million in donations to World Vision programs in Palestine for the past three years. In a statement, DAFT indicated these allegations were deeply troubling and Australian officials are investigating further. Meanwhile, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) froze $1.6 million meant to go towards new projects in the region until accusations against World Vision and el-Halabi are cleared. The German ministry stated that no disbursements will be made until further notice.

The magnitude of the spillover effects of the World Vision case may be significant. Since the indictment was unsealed, other employees from Save the Children and UNRWA, two international NGOs operating in Gaza, were accused of diverting funds to Hamas. One the one hand, such an outcome is desirable, as the internal control mechanisms of NGOs operating in critical contexts such as Gaza are clearly falling short when it comes to transparency and accountability, mostly due to structural deficiencies that international audits cannot compensate.

Analogously, the halting of donations, such as the example set by the German branch of World Vision and the Australian government, may contribute to forcing charities towards a stricter compliance of international regulations and stronger vetting of employees, donors, and beneficiaries. In the long run, however, freezing humanitarian programs will not solve the systemic problems NGOs face in critical contexts, and risks inflicting serious harm on communities who rely on humanitarian aid. A reinforced commitment to increased transparency and accountability, and greater cooperation with local agencies and law enforcement authorities, must remain international aid agencies’ long term goal.

See also: Hamas’ Dwindling Funds Signal Organizational Crisis

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