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Auditors report on charity

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 charity’s 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 cashier’s checks, had been redirected by Mahfood from the charity’s Jamaican offices to the two female employees.

The funds were diverted during an eight-month period prior to Mahfood’s 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 organization’s 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, Ferdinand’s brother and newly appointed CEO at the charity, has overseen organizational changes.

Since his brother’s 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 Mahfood’s 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