One of Kenya's largest flower farms Oserian instructed accountant Clyde & Associates to investigate the distribution of $1m of Fairtrade funds by community representatives. The farm suspects the representatives that bribes have been paid for bursaries.
The report of Clyde & Associates, seen by the Guardian, discovered a host of financial irregularities and a misappropriation of funds which have raised fears about the effectiveness of the controls in place at Fairtrade projects. Top of the list of concerns flagged in the report was the “awarding of bursaries to non-qualifying beneficiaries”, but it also found a “disbursement of grants without approval” and “procurement irregularities”.
Fairtrade said the problems flagged in the report were due to a lack of adequate training and skills of the Fairtrade Premium Committee (FPC), a group of democratically elected worker representatives and appointed management advisors who are responsible for jointly managing, investing and spending the Fairtrade Premium on behalf of a separate legal body representing all the workers.
When shoppers buy Oserian Fairtrade flowers in a British supermarket a portion of cash is set aside from the sale of the products. Fairtrade sums are forwarded to a communal fund for workers, farmers and the community, to improve their social, economic and environmental conditions. The FPC then manages the funds. Executives from Oserian do not play any part in the allocation of these funds, but have been actively trying to encourage Fairtrade to improve governance over its flagship projects.
Neil Hellings, managing director of Oserian, said: “The premium has a seven-figure sum. It is effectively the size of a small business in its own right and it has some of the lowest [least qualified] people in the organisation running it.
“The management were increasingly concerned at the way in which the premium was being allocated, the scope for abuse within that use, and that the FPC was heading toward insolvency and refusing all management attempts to guide them on the need to ‘cut their cloth’.
“The forensic audit was carried out – at my instigation but with the full support of Fairtrade Africa. There were anecdotal tales of misappropriation before the forensic audit but these were not proven, only that administrative procedures needed to be strengthened.”
Click here to read the complete article in The Guardian.
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