Development Center Explains Irregularities

The Center for Social De­velop­ment used donor funds for personal cash advances and to pay for projects that donors didn’t in­tend their money to be used for, CSD President Chea Vannath said Wednesday.

The discovery of financial mismanagement at the rights and anti-corruption group has led do­nors to suspend funding from CSD, while an independent investigation is under way.

The investigation follows an  audit by PriceWater­House­Coopers Cambodia Ltd, which discovered that $3,655 was un­ac­counted for in the center’s books for the Sept 30, 2003 fiscal year.

Until now, CSD regularly used grants earmarked for specific projects to pay for its other ac­tivities when donor disbursements for those activities didn’t come through in a timely fashion, Chea Vannath said.

Such financial juggling was necessary to keep the center’s activities go­ing year-round, since donor disbursements were often delayed for months, she said.

Shunted funds were repaid as soon as possible to the projects from which they were borrowed, but such advances led to inaccuracies in the CSD’s financial re­ports, Chea Vannath said. “When we borrow from one donor and then pay it back, there are errors in the postings,” she said.

CSD also had a policy of allowing staff to take cash ad­vanc­es—sometimes several thou­sands of dollars, according to an investigation re­port. Those advances were allowed for family reasons and for trips abroad, Chea Van­nath said. While they usually came from CSD’s general fund, she acknowledged that some advances may have come from donor grants.

Though the independent investigation team has not yet found any indication of fraud, CSD’s financial mismanagement has hurt its once pristine reputation.

“We’ve lost some confidence in the organization,” said Jonas Nod­dekaer, country representative of DanChurchAid, one of CSD’s do­nors. “Basically, funds cannot be used for anything else,” he said.

Noddekaer said DCA will re­­sume funding as soon as CSD takes on a receiver to manage its cash flow. “None of us really wish to see CSD weakening,” he said.

Financial mismanagement is “not unnormal” in Cambodia, Nod­dekaer said. “It’s hard to find qualified staff.”

With only about $600 left in its general fund and about $10,000 re­­­served for specific projects, CSD will continue low-budget ac­tivities, Chea Vannath said. Al­ready, its court watch project has taken a hit, and its public forums on democracy and human rights, and monthly bulletins have been halted.