MOI demands NT$3.2 million back from Red Cross

STATE FUNDING: An audit of the Taiwanese branch of the Red Cross revealed that it had spent disaster relief subsidies on other expenses, the Ministry of the Interior said

By Max Hirsch and Loa Iok-sin  /  STAFF REPORTERS

Sat, Aug 11, 2007 - Page 1

The Red Cross in Taiwan must return NT$3.2 million (US$97,300) in government subsidies to the Ministry of the Interior (MOI), the ministry said yesterday, adding that the non-governmental organization (NGO) had spent government subsidies received from 2002 to last year improperly.

The ministry's director of civic affairs, Tseng Chung-ming (曾中明), said in a statement yesterday that his department had sent an official notice, dated Aug. 8, to the Red Cross Society of the Republic of China demanding that NT$3.2 million in government subsidies be returned to the interior ministry.

The announcement yesterday followed a ministry investigation into the local Red Cross' finances that began when two ministry auditors visited the organization's headquarters on April 11 to review how it had spent subsidies earmarked for "disaster relief" and "office operations," the notice states.

How disaster relief and office operations subsidies are to be used, the statement said, "is clearly defined."

"The ministry has discovered that, from 2002 to last year, some portions of the subsidies weren't used according to the relevant regulations," the statement added, without elaborating.

The notice says that some receipts documenting usage of the subsidies had not been properly stamped by local Red Cross authorities, while some money was used to purchase fire insurance, fund business trips to China and offset asset depreciation, among other unauthorized expenses.

The ministry will now require the Red Cross to submit receipts and other documents pertaining to the usage of government subsidies to the ministry for review, the statement said.

Earlier yesterday, Democratic Progressive Party Legislator Wang Jung-chang (王榮璋) held a press conference during which he showed a copy of a notice issued by the MOI which requested that the Red Cross return the sum.

"All other non-governmental organizations have to return their leftover subsidiary funds to the government. They are not permitted to save it for future use," Wang said.

Wang said financial statements released by the Red Cross revealed that 30 percent of an annual disaster relief fund had been used for administrative expenses from 2003 until last year.

"But according to the ministry's subsidiary usage guidelines, administrative expenses may not exceed 5 percent of the money," Wang said.

Representatives from other NGOs attending the news conference decried the large subsidy to the Red Cross as being unfair.

"We're always worried when we apply for funding from the government, as our applications are often turned down," said Lin Chin-hsing (林進興), chairman of the Alliance for Handicapped People.

"We're all working for the good of the public, no one should be privileged over others," he said, adding that it was unfair for the Red Cross to be granted more resources than other NGOs.

However, Red Cross spokesman Chen Shi-jen (陳世人), who arrived after the news conference had started and engaged in a brief verbal altercation with Wang, denied there was any problem with the expenditure.

"We've been receiving government subsidies for 13 years, and had our financial statements checked by the government every year," Chen said. "We never had any problems."

Chen said that government subsidies for the Red Cross "do not have a designated usage."

The Red Cross does enjoy a special status "because we're the only NGO founded by law and required to collaborate with the government in all disaster relief efforts," Chen said, referring to the Red Cross Act of the Republic of China (中華民國紅十字會法).

The act was passed in 1954 to create the Red Cross as an NGO with a special status that collaborates with the government in humanitarian aid efforts and receives government subsidies.

In response to the Red Cross' insistence that no improprieties have occurred in its 13 years of receiving government subsidies, the MOI said that "the standards by which the interior ministry subsidizes NGOs are consistent, and the Red Cross must abide by them."

Chen said the Red Cross had not yet received the MOI's notice to return the money, but could appeal once it has been delivered.