DEBBIE ELLIOTT, host:
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The Red Cross has fired two senior supervisors and a third volunteer, in response to allegations of fraud and mismanagement. All worked with hurricane victims in Louisiana until yesterday. A Red Cross spokeswoman says the group will refer the cases to authorities next week for possible criminal prosecution.
NPR's Howard Berkes has details.
HOWARD BERKES reporting:
Actually, details are lacking, because the Red Cross won't release them. Here's what spokeswoman Carrie Martin is saying.
Ms. CARRIE MARTIN (Spokeswoman, American Red Cross): Three people were relieved from duty because Red Cross investigators determined that accusations against them, specifically related to waste and abuse, were substantial enough to remove them from duty immediately. We do anticipate criminal referrals this week. This is a pending investigation and I can't comment any further.
BERKES: The cases do seem related to an internal report, dated December 5th, naming at lest two of the three people disciplined yesterday. The report was produced by criminal attorney Jerome Nickerson and security guard Michael Walters, who served as Red Cross volunteers in and around New Orleans. They found evidence that truck loads of relief supplies from one Red Cross center were swapped with supplies from another without proper paperwork. That's a recipe for theft, says Jerome Nickerson.
Mr. JEROME NICKERSON (Maryland Lawyer, Red Cross Volunteer): We obtained statements from volunteers that they were engaged in swapping, that they were submitting fraudulent greenies, the requisition forms to obtain materials for swaps. And when we attempted to locate what happened to these swapped goods, we couldn't find what happened to them. And the concerns become products that have a high black market interest: coffee, canned meats, things like this were being taken into the black market.
BERKES: Nickerson and Walters recommended dismissal of the supervisors involved. But that didn't occur until yesterday, more than three months later. The Red Cross won't explain the delay. But Nickerson says the report was initially ignored.
Mr. NICKERSON: When we attempted to close in, people were threatened, investigations were blocked, and ultimately, my partner and myself were removed from New Orleans.
BERKES: The report was sent to Senator Charles Grassley, chairman of the Senate Finance Committee, who was investigating the Red Cross response to Hurricane Katrina. Grassley says he's worried that the Red Cross didn't take these concerns seriously until he drew attention to them.
All this attention to shortcomings is a problem for the group, suggests Stacy Palmer, editor of the Chronicle of Philanthropy.
Ms. STACY PALMER (Editor, Chronicle of Philanthropy): And the fact that you're talking about criminal activity among volunteers. For an organization that depends on 95 percent of all their manpower is volunteers, that's very serious that they've got a problem in the volunteer corp. So how do you keep moral up in organization like that? And how do you persuade donors that you're worthy of trusting?
BERKES: This is how, says Red Cross spokeswoman Carrie Martin.
Ms. MARTIN: No one takes these allegations more seriously. We're doing everything we can to not only uncover fraud, waste and abuse, but prosecute to the fullest extent so we can be the best stewards of donated dollar.
BERKES: The Red Cross may have more to fear from Congress, which gives the group official and exclusive responsibilities for disaster relief. Again, Stacy Palmer of the Chronicle of Philanthropy.
Ms. PALMER: The frustration could be so high with the Red Cross after what happened, after Katrina, that I wouldn't be surprised if they started thinking about some different approaches to how the disaster plan gets implemented. And that's where the Red Cross could lose the ability to say that they're the only organization that is the nationally chartered organization.
BERKES: The Red Cross adds that it is taking a fresh look at how it operates.
Howard Berkes, NPR News. Transcript provided by NPR, Copyright NPR.
