Aren't charities supposed to be non-profit organizations?

I know I am supposed to be on hiatus now but KMPG's audit findings on NKF managed to stir up such strong emotions in me that I feel that I will be doing an injustice to my readers and myself if I were to take no actions (passive reading).

Therefore I am going to write about my personal feelings after reading The Straits Time's extensive coverage/summary of KMPG's major findings.

You see, I was a donor myself. I contributed financially to NKF and even helped in the process of raising funds (through NKF donation cards) because I believed that the funds raised will go meaningfully towards helping Kidney Patients. But today I learnt that only 10cents out of every dollar donated goes towards helping the patients.

I also learnt that a substantial amount of funds raised went towards the salary packages of the previous top management team - towards the luxury cars they drove, their first class air tickets, their $70,000 Las Vegas "study" trip amongst other things.

But most importantly of all, I learnt that they have blatantly deceived the whole of Singapore, citing inaccurate figures and statistics to mislead and misrepresent.

I cannot tell you how it was like as I took in each and every word of each and every article devoted to the NKF issue today. It was more than anger. It was more than the feeling of being deceived. I felt outraged. Especially when I read that NKF was turning in a profit from selling the medical drugs that patients need. A profit the top management team used to finance their own extravagant lifestyles.

As far as I know, the top management team is definitely legally liable for their actions/decisions and should be dealt with accordingly. I see no reason for leniency just because NKF is a high profile charity organization. While we are waiting to see what actions, if any at all, will be taken towards NKF's former board of directors, let's look at a layman's (aka my) analysis of the situation.

I looked up the definition of fraud in an auditing textbook:

Fraud denotes a false representation of a material fact made by one party to another party with the intent to deceive and induce the other party to justifiably rely on the fact to his or her detriment.

According to common law, a fraudulent act must meet the following five conditions:

1. False Representation. There must be a false statement or a nondisclosure.
2. Material Fact. A fact must be a substantial factor in inducing someone to act.
3. Intent. There must be the intent to deceive OR the knowledge that one's statement is false.
4. Justifiable reliance. The misrepresentation must have been a substantial factor on which the injured party relied.
5. Injury or loss. The deception must have caused injury or loss to the victim of the fraud.

Fraud in the business environment has a more specialized meaning. It is an intentional deception, misappropriation of a company's assets or manipulation of its financial data to the advantage of the perpetrator.

The textbook goes on to point out that two key questions in a checklist to uncover fraudulent activity during an audit includes: "Do any key executives have close associations with suppliers?" and "Do one or two individuals dominate the company?"

From my personal understanding, even if the former board of directors escape charges of misappropriation of NKF funds, at the very least, they can be charged for providing false information/inaccurate claims/lying under oath in a court of law and thus holding the court in contempt (SPH has published the claims that NKF made and the actual findings that KMPG uncovered).

Of course we know that the claims were not directed at the court alone. It was directed at each and every Singaporean, especially those that have once forked out their hard earned money to give to the NKF in the belief that it will be put to proper use towards our kidney patients. The injury to us is the anger/hurt that we suffered upon coming to terms with the truth as to how the funds were actually used (instead of how they were claimed to be used) and the loss to us is the opportunity cost of the money we have donated had we known better.

The public will not be appeased until there is proper legal recourse.

Related News:
KPMG's report on investigation into the National Kidney Foundation (NKF)
NKF's press release
Former NKF CEO got more money than he appeared to: report
Report finds extravagance, lack of governance at Singapore's NKF
Two women in the fast lane
Regulators wasted opportunity to prevent NKF saga: KPMG report
Former NKF Patron did not know of Durai's salary until court case
Durai's retorts to the KPMG report
Health Ministry to present govt's response to NKF report
Health Minister says no one above scrutiny in NKF saga
'Accounting inconsistencies' in NKF's 2004 financial statements


Trackbacks/Related Entries:
Charitable Charity (Jeff Ooi)
Oops, TT Durai did it again!

Technorati tags: NKF, National Kidney Foundation, Singapore, Charity

DISCLAIMER: YOU AGREE TO BEAR FULL RESPONSIBILITY FOR CONTENT POSTED BY YOU. THE AUTHOR OF THIS SITE DOES NOT MONITOR OR EDIT THE CONTENT AND IS NOT RESPONSIBLE OR LIABLE FOR (1) ANY CONTENT, INCLUDING BUT NOT LIMITED TO, ANY INFRINGING, INACCURATE, OBSCENE, INDECENT, THREATENING, OFFENSIVE, DEFAMATORY, TORTIOUS, OR ILLEGAL CONTENT, OR (2) ANY THIRD PARTY CONDUCT, TRANSMISSIONS OR DATA.