Red Cross in the Crosshairs
The Chinese Red Cross is playing a critical role in managing relief donations for victims of the earthquake. However, along with great authority comes great responsibility. The Red Cross is now being hit with allegations of corruption from every corner.
Within 24 hours of the earthquake, CCTV (and all other news organizations) began to redirect all donations to the Chinese Red Cross. Chinese Red Cross account numbers has been a regular presence on the scrolling banner on the bottom of every TV station ever since. Although this isn’t clear, I suspect the donations being collected by government-affiliated overseas Chinese groups (including the Chinese embassy) is also largely being directed to the Chinese Red Cross. Even the money collected by many independent funds (like Jet Li’s One Foundation) are ultimately being redirected into the Chinese Red Cross.
Most Chinese are unfamiliar with the Red Cross; public charity on this scale has simply never been done in China before. Therefore, many have been shocked by a few ugly facts that the West is more familiar with… including the heavy processing fee the Red Cross can claim for itself. (For example: the American Red Cross CEO has an annual salary of more than $650k).
In China, the law regulating charitable organizations allows charities to take up to 10% of all donations as a “processing fee”, to pay for operations. The Chinese Red Cross apparently takes 5% off the top of all donations. For many in China, the realization that the Red Cross isn’t a volunteer organization, but instead is in effect making a living off of donations intended for earthquake victims, has been very difficult to stomach.
Many Chinese have seen this ugly YouTube video of a Red Cross organizer in Hainan, counting cash and arrogantly insisting that she “deserves” the processing fee. It’s not clear whether this video was recorded recently, or after a previous disaster.
This problem was exacerbated when an Internet report began to circulate that a Chinese Red Cross representative had said on CCTV-4 they were in the process of sending 1,000 tents worth 13 million RMB ($1.85 million USD) to the disaster zone. Some quick math convinced many Chinese that the Red Cross were buying tents at 13,000 RMB each, which is many times the fair market value. The questions immediately followed: who’s swallowing the difference? Is the Red Cross or any government officials associated with any sporting goods factories?
A story quickly followed that a major portal (NetEase) had broken off its fund-raising relationship with the Red Cross because of accounting issues. This story is somewhat technical; NetEase wanted to fully document the donations by its members and track its usage, and the Red Cross was either unwilling or unable to do so. NetEase has subsequently linked up with a different charity. This story might be an innocent accounting issue, but it contributed to the fears of many that the Red Cross was crooked.
After a very long delay (in Internet time), the Chinese Red Cross finally came clean with something close to an explanation. They claimed that they could find no proof anyone from the Red Cross had been interviewed by CCTV4, and that their tents cost only 1174 RMB ($167 USD). All of this might only have been simple miscommunication, as the Red Cross might have said the donation amount included 1000 tents and other supplies. The effect that this has had on donations for the earthquake can be imagined.
The story has spread from there. Others looked into news stories about the amount spent on rice (2 million RMB for 30 tons), and compared prices to market prices. Others began to report that Chongqing Red Cross members were seen splurging on food and liquor; the local chapter published its receipts in response to this pressure, explaining that they were “forced” to eat out on that particular day. But this still wasn’t very satisfying to many Chinese netizens, as the amount paid (46 RMB/person) suggest a more than decent meal.
As public pressure built, one unnamed Red Cross worker claimed that the Chinese Red Cross would bypass its customary service fees, and donate 100% of all funds to disaster relief. Many netizens remain very skeptical. The Chinese Red Cross touted its web-based system that allows individual donors to track their donations by entering a confirmation transaction number, but many Chinese netizens want much more transparency on how funds are spent.
From the point of view of Chinese society, this sort of public scrutiny can only have a very positive effect. The Chinese Red Cross has made promises that its accounts and operations will be made “more” transparent; if it fails to do so, public outrage will quickly rise again.
UPDATE: On May 22nd, the Hainan Red Cross announced at a news conference that the organizer captured in the video above has been suspended from her job. The video is apparently from a fund-raising drive in March, before the earthquake.
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