Charity fails to account for funding gap on aid

Alarm bells ring over education group set up in Denmark which has mushroomed into empire with companies in Cayman Islands

The Guardian, London/July 8, 1993
By Daniel E. Martin

Ian Katz and Tom Sharratt report on the mysterious finances of a multi-million-pound organisation which runs charitable foundations, controversial aid projects, and owns offshore companies and plantations.

A British third world aid charity which sells more than £1 million of used clothes a year was last night being Investigated by the Charity Commission amid allegations that It has been donating thousands to a bogus organisation.

Following a Guardian investigation, the charity watchdog said it would raise with Humana's trustees what it believed were "non-charitable fund-raising aspects" of its operation. Michael Meacher, Labour's spokesman on cooperation and development, said last night he would raise the matter in ParIiament. In a written question he asked why It had been allowed to operate in Britain since 1987 despite its sister organisations being banned from collecting in several European cities.

Humana, which collects used clothes and resells them, says it has donated more than £50,000 to the International Emergency Centre in Belgium. But Guardian inquiries established that aid officials there had not heard of the centre, and no organlsation by that name is registered there.

Questions have been raised over the charity's apparently commercial nature. In 1990, the last year for which It has submitted full accounts, it donated under 10 per cent of turnover to aid projects. Oxfam says it donates around half the turnover of its second hand clothes shops to charitable projects and approximately 20 per cent of the money it receives from sales to traders.

Humana, which has seven used clothes shops In London and Manchester, is the name used In non-Scandinavian countries for the Danish third world charity, Development Aid from People to People (DAPP). It Is linked to Tvind, a Danish-based educational organisation.

Attempts to trace the flow of money through the organisation quickly become swamped In a labyrinthine network of offshore companies, charitable foundations and properties. The charity owns offshore companies on the Channel Islands and the Cayman Islands, fruit plantations In the Caribbean and at least one shipping company.

Humana also produces only the sketchiest literature on the third world development projects It backs. "I have never In my life come across a charity that couldn't swamp your door with a thousand pieces of paper about what they do," says Richard Lugg, a highway enforcement officer at Hounslow council who has monitored the charity since it began operating in the west London borough In 1987.

Supposedly autonomous national organisations raise funds In all the Scandinavian countries as well as Britain, the Netherlands, Belgium, Germany, Switzerland and France under the umbrella of a federation established in 1991.

Control of the Humana/DAPP empire Is exercised by Tvind, an educational organisation founded in Denmark by a group of left wing teachers In the early seventies. The teachers, led by the charismatic Mogens Amdi Petersen, built a string of "progressive" boarding schools which specialised In taming troublesome children and emphasised a pro-third world outlook.

The organisation owns more than 40 schools in Denmark along with others in Norway, the US and Britain. In Denmark the government pays a large proportion of the salaries for the 600 or so Tvind teachers. Most of them hand over the money to a "general fund."

During the early 1980s Tvind established two charitable foundations, Common Ownership Fund and Estate. Between 1983 and 1987 around £7 million was transferred from the general fund to the foundations to buy properties for the Tvind schools, as well as plantations In St. Vincent, St. Lucia, Grand Cayman and Belize.

Through a third foundation, Thomas Brocklebank, Tvind also acquired B&B Shipping. Its address - P0 Box 103, Bodden Town, Grand Cayman - was the same as those given for at least two other Tvind firms. In 1987 Tvind's total capital was estimated at around £31 million.

DAPP, also known as UFF, was established as the movement's charitable wing in the late 1970s. Volunteers from Tvind schools, many with problem backgrounds would work for periods In third world countries. Money for projects would be raised by collecting and selling unwanted clothing. The charity concentrated Its efforts on the socialist states of Angola, Zambia, Mozambique and Zimbabwe.

According to Paul Jorgenson, chairman of DAPP and believed to be second In command of the Tvind empire, the best clothes - around 12-15 per cent - are sold in its shops, around half sold In African countries, 30 per cent sold to rag traders and 10 per cent given away. Humana/ DAPP income from the sale of clothes was supplemented with large grants from the Swedish Government (approximately £1 million per year) and from the European Community.

First doubts about Humana/DAPP's operations surfaced in the mid-1980s. Critics claimed DAPP's cheap clothing sales was killing domestic textiles industries and pointed to very low wages paid to workers on Tvind's plantations in Belize and St Lucia. On St Lucia a wages dispute on a Tvind plantatlon led to a violent strike while the organisation was expelled from nearby St Vincent.

A 1986 report commissioned by the EC criticised the organisation for depending too heavily on inexperienced volunteers and failing to employ project workers In host nations, The EC has stopped its grant to the organisation.

Last year another report prepared for the Swedish government found that only 2 per cent of money raised by DAPP/UFF In Sweden found its way to recipients in third world countries. The report prompted a block on Swedish government funding for DAPP.

In Belgium the official charity registry, the Centre for Social Documentation and Coordination, advised Brussels communes not to allow the installation of Humana collection boxes. Similar bans are In force In the Norwegian cities of Oslo and Bergen and the Norwegian government has stopped funding the Travelling High School, a branch of the Tvind movement. The Dutch government has ordered an investigation but the Centraal Bureau Fondsenwerving (CBF), the country's equivalent to the Charity Commission, complains that DAPP headquarters have failed to reply to its Inquiries.

The names of many of Tvind's founders appear repeatedly as shareholders of offshore companies. In Jersey, Tvind owns a company, Cedex Pac Ltd, which describes itself as a "secondhand general outfitters and tailors". The 1991 records show as shareholders a Thomas Vaeth, a Svend Sorenson and a Josephus Hermanus Maria Nagel. All three are listed among the names of the hundred teachers who helped found Tvind. The address of Mr. Vaeth and Mr. Sorenson Is registered as P0 Box 103, Bodden Town, Grand Cayman.

The name of the company was changed from Goliath Services Limited to Cedex Pac following a meeting of share holders in Bodden Town, Grand Cayman, in July 1990. It was to Goliath Services that Humana UK paid thousands of pounds In leasing charges for their collection boxes. Until this year Mr. Sorenson and Mr. Vaeth were also listed as director and secretary of Westpac Hamlin Limited, a company described as a "ship, yacht, boat owner/dealer" registered In Guernsey.

Mr Jorgenson says the "Cayman question" is part of a smear campaign against Tvind "There has never been any connection between UFF, DAPP or Humana with anything on Cayman." Later he admitted that Tvind had owned property on the islands but claimed it had now been Sold. B&B Shipping had also been sold, he said, and he did not know of any links with companies celled Cedex Pac and Westpac Hamlin.

Mr Lugg says of TvInd: "The radical dressing has become their formula for recruiting the youth but they just found there was a formula for making huge amounts of money without any effort. There's a logic because once they've set up the machinery they can't bring themselves to shut it down."