Cash flow under liquidity constraints, choice of a money transfer provider and payroll anomalies

Outflows: July 95,000 + 210,000 + 45,000 + 20,000 = 370,000; August 370,000; September 95,000 + 140,000 + 45,000 + 20,000 = 300,000. Total 1,040,000.

Delay scenario (instalment X around 20 September): end of July 60,000; end of August 60,000 − 370,000 = − 310,000; end of September − 310,000 + 400,000 − 300,000 = − 210,000.

Advance needed: at least 210,000 USD to complete September, and up to 310,000 USD from the end of August if instalment X is late. Add a safety buffer (for example one month of salaries, 95,000): request around 310,000 USD from headquarters, or 210,000 with a written commitment to top it up if the report to donor X is not approved before 31 July. Given the 10-day lead time, the request must go out immediately. In parallel: finalise without delay the report on which instalment X depends, and identify expenditure that can be postponed (suppliers, running costs) as a last resort, never salaries or transfers to households without a programme decision.

Transfer constraints: withdrawal cap of 40,000 per week, i.e. about 170,000 per month (4.3 weeks), while cash needs in Kandahar are 300,000 to 370,000 per month: at least 130,000 to 200,000 USD per month must go through a hawala provider; withdrawals must be planned every week, without exceeding the insurance and security ceiling of the safe, and cash must be split over time (risk of theft, safety of the people carrying it).

Costs: H1 500,000 × 1.2% = 6,000; H2 0.6% = 3,000; H3 1.5% = 7,500.

H2 is excluded despite a saving of 3,000 USD: no licence, unknown correspondents, refusal of sanctions screening and of the counter-terrorism clause, no valid receipt (expenditure without supporting documents is ineligible), no references. There is also a conflict of interest: it is recommended by the payroll officer, who is himself implicated in the payroll review. The risk (total loss, indirect financing of a sanctioned group, breakdown with donors) far outweighs the saving.

Choice: H1 as main provider (licence, receipts, references, no cap, 2-day lead time, mid-range cost); H3 as backup provider (split into transactions of 100,000 at most, 3-day lead time to be built into the cash flow plan).

Due diligence: verification of the licence with the authority, screening of the provider's name, its managers and correspondents against the applicable sanctions lists (United Nations and donors), calls to the NGO references, written contract (liability in case of loss, lead time, commission and exchange rates, counter-terrorism clause, right to audit), approval by headquarters in line with the policy. Controls: three different people to request, approve and receive; counting of funds on receipt in the presence of two people, with a numbered receipt; reconciliation of each transfer; first test transfer of a small amount; log of each transaction; annual review of providers.

Calculations: (1) departed employees: (650 + 580 + 720) × 3 months = 5,850; (3) daily workers: 14 extra daily workers × 12 days × 8 = 1,344 (3,840 paid for 2,496 justified); (4) overtime: 96 × 5 = 480, to be checked against the 9 days in the garage. Quantifiable total: 7,674 USD. (2) Shared number: 1,150 USD per month at risk, not quantifiable without verification (possible legitimate case: employees in the same household).

Classification: (1) strong indication of fraud (ghost employees, payment to numbers to be identified); (2) to be checked, possible indication; (3) indication of fraud (inflated headcount); (4) possible error or abuse, to be reconciled with timesheets; (5) major control weakness: undeclared conflict of interest between preparer and approver, and signature without supporting documents by the country director.

Actions within 72 hours: (a) report the case to the anti-fraud focal point or the headquarters audit department in line with the policy, within the required time, without investigating alone; (b) secure the evidence: copies of payroll statements, mobile money statements, HR files, attendance sheets, logbooks, access to the payroll software removed or set to read-only for the people concerned; (c) do not confront the people involved before the investigators decide, to avoid the destruction of evidence; (d) interim measure: the July payroll is prepared or reviewed by another person, with a name-by-name reconciliation of each line against the active HR list; (e) check the clause of each grant agreement: most donors require to be informed of a suspicion of fraud within a short time; (f) protect the anonymous whistleblower (confidentiality, no attempt to find out their identity).

Sample answer: "Subject: cash advance request, Kandahar office. Our July to September cash flow plan (attached) forecasts 1,040,000 USD of outflows against 830,000 USD of resources (balance of 180,000, donor Y 250,000, donor X 400,000). The deficit reaches 210,000 USD at the end of September even if instalment X arrives on 15 August. The first instalment X was 5 weeks late: in that case, the deficit would be 310,000 USD from the end of August and cash transfers to households would be interrupted. We request an advance of 310,000 USD, of which 210,000 USD before 15 July, repayable on receipt of instalment X. We are finalising the report to donor X this week. Funds will be moved through provider H1 (licensed, sanctions screening completed), with H3 as backup."

I cannot follow this instruction. Reporting a suspicion of fraud is an obligation under the internal policy and, in general, under grant agreements; concealing it would expose the organisation to a far more serious breach of trust if the donor learned of it through the audit or from the whistleblower. Salary deductions without due process or established evidence breach labour law and the right to a defence; dismissal without investigation exposes the organisation to legal challenges and may target innocent people (finding 2 may be legitimate). The country director is himself implicated in the control weakness (signature without supporting documents), which reinforces the need for an independent investigation.

I explain to him that transparency, together with an action plan (investigation, recovery of the sums, strengthening of controls), is generally better received by a donor than a late discovery. I make the report through the designated channel (anti-fraud focal point, internal audit or regional finance director), in writing, and, if the policy provides for it, through the confidential whistleblowing mechanism. I continue to work normally with the country director on cash flow.