Auditors report on charity
By TOM TRACY
Special to the National Catholic Reporter West Palm
Beach, Fla.
Auditors investigating financial mismanagement at Food for the
Poor, an overseas relief agency, estimate that the charitys former CEO,
Ferdinand Mahfood, diverted more than $400,000 in donations -- considerably
more than an earlier estimate of $275,000.
The Jamaican-born Mahfood resigned Sept. 25 after admitting to
diverting some charity funds to two female staff members with whom he was
sexually involved and to members of their families.
An auditors report prepared by a former U.S. prosecutor in
Miami was sent to the FBI, two Catholic archbishops and a Protestant financial
oversight agency. A news release accompanied the report. Besides offering new
information on the misappropriated funds, the news release outlines steps the
charity has taken to safeguard future donations.
Mahfood is reportedly receiving outpatient therapy for bipolar
disorder. He has recently concluded a period of residential treatment.
Although a five-page summary of the auditors report shows
the amount of misappropriated funds to be larger than previously reported, the
news release asserts that diverted funds were finite and limited
(with all of the funds later restored by the Mahfood family) and that proper
financial controls are in place to safeguard future donations.
The audit revealed that more than $275,000, along with a new
disclosure of an additional $130,000 in cashiers checks, had been
redirected by Mahfood from the charitys Jamaican offices to the two
female employees.
The funds were diverted during an eight-month period prior to
Mahfoods resignation and have been restored, according to Food for the
Poor spokesman Adam Hollingsworth.
The Miami division of the FBI confirmed this week that its
investigation of Food for the Poor is ongoing, according to spokeswoman Judy
Orihuela. The charity received more than $36.8 million in federal and state
grants last year.
The Protestant oversight agency that received a copy of the audit
is the Washington-based Evangelical Council for Financial Accountability, which
is conducting its own investigation. Audits were also sent to Baltimore
Cardinal William Keeler, who had been listed as an endorser of Food for the
Poor in promotional materials, as well as to Miami Archbishop John C. Favalora,
whose diocese had listed the charity in the Official Catholic Directory as one
of its apostolates.
According to other information in the news release:
- The source of the misappropriated money was a general fund at
Food for the Poor in Jamaica. Previously reports said transactions involving
sale of folding chairs had been the source of the diverted funds.
- Distribution of cash during pilgrimages has been
discontinued. Between 1998 and 2000, Mahfood dispersed $135,053 in funds
directly to hundreds of poor people during pilgrimages sponsored by
the charity. Auditors said some of those transactions were insufficiently
documented.
- While auditors said internal controls at Food for the Poor in
Jamaica (a separate overseas corporation) are sufficient for safeguarding the
organizations assets, the audits revealed some deviations from stated
accounting procedures.
- Between 1998 and Aug. 2000, Food for the Poor gave employees
$285,000 in special bonuses and hardship loans. Special bonuses have been
eliminated, and new policies for employee loan are in place.
Paul Nelson, president of the Evangelical Council for Financial
Accountability, confirmed that his agency had received financial audits from
Food for the Poor, along with an internal managerial report from a consultant
to the charity. The reports appear professional and thorough, he said.
We are having our standards committee go through them,
Nelson said. He added that his organization will probably have further
questions. We applaud them for doing this, but it is not an end for
us, he said. A lot of things in the report are of interest to us,
and it is a kickoff rather than an end.
The news release also points out that Robin Mahfood,
Ferdinands brother and newly appointed CEO at the charity, has overseen
organizational changes.
Since his brothers resignation from Food for the Poor, Robin
has stepped down as CEO of Essex Exports, a for-profit shipping entity that
leases space from Food for the Poor. Peter Goelz, charity spokesman, said Essex
had not been awarded shipping contracts from Food for the Poor last year. Until
now, questions about shipping contracts had gone unanswered.
Goelz declined to discuss specifics of Ferdinand Mahfoods
separation agreement with the charity, but said the board had taken into
account his first 15 years of service without a salary. They also took
into account his need for ongoing medical care, Goelz said.
Tom Tracy is state bureau chief for The Florida
Catholic.
National Catholic Reporter, December 15,
2000
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