Approximately 80% of the estimated $100,000 audit cost was to be reimbursed by Ford, in concert with several European charitable groups, she said.
SIDA’s spokeswoman explained that her agency was not actually a LAW donor, but merely facilitated the audit as a convenience to Ford and other funders.
Ernst & Young headquarters in London refused to discuss any aspect of its audit or provide a copy of the investigative report, which was submitted to the donor consortium on March 25 of this year.
But a copy of the 60-page investigation, obtained from overseas sources, catalogs a stunning list of financial improprieties.
Nearly 40% of the $9.6 million donated was either ineligible, unsupported, misappropriated or never spent on programs, according to the investigative report.
Asked about media reports that LAW funds were embezzled, an American employee of Ernst & Young familiar with the audit replied: “It depends what dictionary you use. They were certainly misappropriated.”
While spotlighting LAW’s abuses, Ernst & Young also reported to donors that the foundations’ controls were so sloppy that “it cannot be ruled out that LAW was under the impression that it had the donor’s silent consent to use the funds in any way it saw fit.”
A key American Ernst & Young source familiar with the report denigrated the funding arrangements as “goulash.”
“Everything goes into the pot; everything goes out of the pot. No one knows what is what — not Ford, not any of them,” he explained.
A senior LAW executive added: “What do you expect? I know of one grant for $200,000 made from the European Commission with nothing more than a phone call.”
When reached, LAW’s new director, a Lebanese Canadian named Jihad Sarhan, apologized for LAW’s former management and said LAW would not engage in future agitation or name-calling, simply human rights advocacy.
Sarhan stated that he did not completely agree with the Ernst & Young report and was hoping to retain PricewaterhouseCoopers to conduct a follow-up audit. He added that the group appointed a new board, and in early August changed its name to Law Association for Human Rights.
LAW correspondence and submissions over recent months to Ford and other donors, obtained exclusively for this investigation, thanked international donors for continuing their financing and promised strict financial controls in the future.
As of this writing, Ford was still scheduled to continue its funding of LAW through 2005, according to LAW and Ford sources.
The Ford Foundation has announced a $20 million partnership with the New Israel Fund, effectively putting the left-leaning Jewish group in charge of all the foundation’s grants to Israeli causes.
The foundation announced this week that it plans to bankroll a five-year “peace and social justice fund,” which will grant between $3.4 million and $3.5 million annually to programs in Israel approved by the Washington-based New Israel Fund. The partnership translates into an increase of more than 50% in the foundation’s annual contributions to Israeli civil rights and peace programs. In the past Ford’s annual donations to such programs hovered between $2 million and $2.5 million.
The five-year partnership will mean a 20% boost in the annual grant-making power of the New Israel Fund, which currently raises $20 million a year to support 130 Israeli groups ranging from civil liberties to religious pluralism and women’s rights.
Under the new arrangement, Ford will direct $1 million into a New Israel Fund endowment plan. The rest of the $20 million grant will be spent down over five years, allowing the fund to use the interest generated on the remainder.
The shift takes the Ford Foundation out of direct involvement in Israeli human-rights programs, in effect outsourcing its activities to the New Israel Fund. Ford’s former program officer for Israel, Aaron Back, is now employed as a consultant to the New Israel Fund, overseeing the new Ford-funded program. An advisory board comprising members of the Ford Foundation, the New Israel Fund and Israeli civic leaders will recommend grants, which ultimately require approval of the New Israel Fund’s board.
The New Israel Fund is currently searching for a new executive director, following the recent departure of longtime chief Norman Rosenberg.
Ford officials said the partnership with the New Israel Fund had nothing to do with accusations, published in this week’s Forward, that the foundation has been funding Palestinian groups that engage in anti-Israel and antisemitic activity.
Ford officials say their Israel grants have been issued until now through the foundation’s New York office, while its funding of Palestinian groups is handled by its Cairo office.
Ford officials described the new setup as part of an international overhaul aimed at placing decision-making powers on grants closer to the people being served. Similar restructuring is taking place in Ford’s programs in Poland and Cuba.
New Israel Fund leaders hailed the new plan as a boost to their work and a vote of confidence.
“We’ve had a very, very constructive relationship with Ford in our work and we look forward to that in the future,” said the fund’s board chairman, Georgetown University law professor Peter Edelman.
Edelman declined to address allegations that Ford aids anti-Israel activists, saying he needed more information. But, Edelman added, “my general view about any foundation is that it’s not up to me in terms of making a judgment about all of their grant-making.”
Officials of Rabbis for Human Rights-North America, a group that receives half of its $150,000 budget from Ford, also declined to respond to criticism of the foundation. But the group’s executive director, Rabbi Brian Walt, told the Forward, “It’s important that we not portray all Palestinians as terrorists or antisemitic.”
In a telephone interview from his office in Martha’s Vineyard, Walt said he would like to see Ford require its grantees to certify that no funds are being used to advocate or support terrorist activities. This standard was recently adopted by the U.S. Agency for International Development.