Oct. 16 (JTA) — To find lax funding controls of Palestinian charities,
one only need take a look at one of the Ford Foundation’s
beneficiaries, the Palestinian Committee for the Protection of Human
Rights and the Environment, also known as LAW.
The group — whose
acronym comes from the name of its predecessor activist organization,
Land and Water — was a key organizer of the anti-Israel debacle at the
September 2001 U.N. World Conference Against Racism in Durban, South
LAW received $9,628,942 during the five years ending
Aug. 31, 2002, from a long list of philanthropic donors. Besides the
Ford Foundation’s $1.1 million, LAW received direct grants from more
than 30 European and American public entities.
$1.5 million from the Dutch charity Cordaid; $853,000 from the Grand
Duchy of Luxembourg; more than $93,974 from the Swedish unit of Save
the Children; and $33,000 from the Canadian Embassy, according to
audits obtained for this investigation.
No Arab sources were listed in LAW’s five-year donor record.
Last fall, donors became concerned when LAW officials were unresponsive
to spending inquiries, according to a newly installed senior LAW
official. Soon it became clear to the donors that vast monies — more
than $2 million — were unaccounted for, misappropriated or being
secreted in bank accounts instead of being spent on programs.
consortium of worried benefactors formed an evolving committee, made up
mainly of Ford Foundation officials and Norwegian and Swiss donors,
according to a source with the International Commission of Jurists in
Sweden, one of the concerned donors.
The consortium wanted a
major accounting firm to launch an immediate investigation and asked
the Swedish relief agency SIDA to quickly commission an audit. SIDA
enjoyed an ongoing contract with Ernst & Young, which accepted the
Ernst & Young’s offices in Stockholm
and the West Bank city of Ramallah then undertook the investigation,
according to a SIDA spokeswoman.
Approximately 80 percent of the
estimated $100,000 audit cost was to be reimbursed by Ford, in concert
with several European charitable groups, she said.
spokeswoman explained 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 percent of the $9.6 million donated was either ineligible,
unsupported, misappropriated or never spent on programs, according to
the investigative report.
And more than $2.3 million was
“retained,” turning LAW into a sort of bank under the nominal control
of its then-executive director, Khader Shkirat, and other senior
officials, the report asserted.
Indeed, three interest-free
loans were made to a moneychanger, Izz Shkirat, related to the
executive director at the time, according to the report. Two of the
three loans, $30,000 and $40,000, were repaid, the report stated.
But a May 1999 loan for $130,000 has yet to be repaid, according to the report.
More than $160,000 in expenses was paid on behalf of an entity called
the Centre for Democratic Advancement, reportedly formed by Khader
Shkirat, which then used the money to purchase a destroyed radio
station, according to the audit.
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.”
Moreover, $490,000 from
LAW became part of a series of transactions among other LAW board
members and used to acquire a 56 percent ownership in Arab Phone Inc.,
according to the audit.
In addition, more than $75,000 was spent
on first-class or business-class international airline tickets, and
lavish hospitality, which added $109,000 to the impermissible expenses,
according to the report.
Seven cars and trucks were purchased
for personal use of several former board members, and several of the
vehicles have remained with those former trustees, according to the
Ernst & Young also concluded that the unused money
arose from “fictitious financial reporting” to donors as a result of
“collusion” among LAW’s board, Khader Shkirat and local accountants.
In June of this year, CBS News interviewed Shkirat as attorney for
Fatah leader Marwan Barghouti, who is being tried in Israel for
The Ford Foundation recently granted Shkirat a
$60,000 grant to conduct human rights research at Harvard and complete
English courses at Boston University.
Shkirat could not be located for comment, and Ford officials refused all comment on the case.
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.
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
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 Price
Waterhouse Coopers 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
As of this writing, Ford was still scheduled to continue its funding of LAW through 2005, according to LAW and Ford sources.
Black is the author of the newly released “War Against the Weak:
Eugenics and America’s Campaign to Create a Master Race” (Four Walls
Eight Windows), which investigates corporate philanthropic involvement
in American and Nazi eugenics. In May 2003, he won the American Society
of Journalists and Authors’ award for best book of the year for his
previous book, “IBM and the Holocaust” (Crown Publishing, 2001).
FUNDING HATE Series
Part 1: Ford funded Durban activists
Part 2: Fordīs Mideast money trail
Part 3: U.S. worries about transparency
Part 4: Case study of a Ford grantee