LSE reuse scheme sends fake charity to the recycling bin after investigation

The Beaver, London School of Economics/March 16, 2009

LSE environment officials have thrown a company pretending to be a charity out of the school's book reuse scheme, after the Beaver discovered serious financial irregularities in the company's practices.

Two organisations affiliated with the controversial Humana People-to-People 'charity' network, the UK branch of which was closed in 1998 after Charity Commission findings of 'serious financial irregularity', took part in LSE's recycling of old books to Africa until officials were alerted to the Beaver's findings.

Planet Aid-UK - the direct successor to the Humana-UK clothes recycling enterprise - has profited from the LSE Reuse Scheme and LSE Halls of Residence Reuse Scheme. Incorporated as a limited company in October 1998 upon Humana- UK's closure, Planet Aid-UK claims that it provides aid for Africa. It is not subject to Charity Commission regulations.

Planet Aid-UK donates its LSE Reuse collection material to a recently formed organisation internal to Humana Peopleto- People: Development Aid from Peopleto- People-UK (DAPP-UK), registered with the Charity Commission in March 2007.

Between late 2007 and early 2008, DAPP-UK received books from LSE through its 'Books for Malawi' scheme: the approach came via Planet Aid-UK, operating under the guise of DAPP-UK. The Beaver suspects that the company Planet Aid-UK retains disproportionate 'administrative costs' for its intermediary work, donating incomplete proceeds to the charity DAPP-UK. Among purposes for such covert activity are tax evasion and reduction in declared profits.

On 20 January of this year, Poul Jørgensen, a senior leader and spokesperson for the worldwide Humana People-to- People organisation was convicted by the Danish Western Appeals Court (Vestre Landsret) for profits of Danish kroner 18 million in embezzled funds and a further 22 million in untaxed income. According to the allegations aired in court, money was channelled to private businesses through a trust and left undeclared for tax purposes.

In Britain, DAPP-UK's General Manager Csaba Szeremley told The Beaver: 'When we came to LSE to collect the books, our Vauxhall Vivaro van was overloaded. Over a period of four months, we collected 2.5 tonnes: 2, 500 books. To be honest, I felt we just cleared departments of outdated books consigned to the dustbin of history: the political sciences of the seventies'.

'Since the last occasion proved so fruitful, we have plans to run this project again in the near future', he added. Szeremley, who became DAPP-UK's General Manager earlier this year, having unsuccessfully applied to LSE in 2007 to read for an MSc in Development Studies, said it was volunteers at the Planet Aid Academy who had the task of sending the proposals to educational institutes and libraries.

A Charity Commission spokesperson said that though neither Planet Aid-UK nor Humana People-to-People fall into their jurisdiction, the Commission would be interested if the organisations were claiming to be registered charities and operating in England and Wales. Companies House confirmed the status of Planet Aid-UK as 'an active company, listing its activities as 'other business activities''. Any company claiming to be a charity but not so registered can face investigation by Trading Standards.

Shortly after LSE cooperation, a BBC investigation into Planet Aid-UK's accounts for the tax year 2006/2007 revealed £400, 000 of their turnover exceeding £1 million went to what Planet Aid-UK Director Birgit Soe described as 'staffing and administration costs'. A mere £120, 000 - 10 percent - went to what Soe described as 'good causes'.

By contrast, Textile Recycling for Aid and International Development (TRAID) - also a beneficiary of the LSE Reuse Scheme - successfully diverts 97 percent of all donations from landfill to serve its development aid projects.

Planet Aid-UK Director Birgit Soe told The Beaver: 'Since DAPP-UK did not at that time have any storage space themselves, Planet Aid-UK helped them store the books collected from LSE. However, the books Planet Aid-UK donated, DAPPUK could not send to Malawi because DAPP-Malawi asked specifically for educational books: they were instead sold in DAPP-UK's charity shops'.

Szeremley was contradictory: 'The books donated from LSE and other educational establishments - the Institute of Education, the University of St. Andrews and the University of Nottingham - were all sent to Malawi'. 'But unfortunately the books got stuck in Durban, South Africa, and DAPP-Malawi received a bill for using the warehouse there', he added. The Beaver requested details on the proportion of 'administrative costs' retained by Planet Aid-UK from DAPPUK after collection and storage of the books from LSE.

Planet Aid-UK Director Birgit Soe said: 'Planet Aid-UK did not get anything in return for donating the books from LSE to DAPP-UK. Planet Aid-UK is a not-for-profit company: all our profit is used for development work. There are no shareholders - that's very important'.

Other instances confirm this to be the classic Humana People-to-People modus operandi: the merging of charitable and commercial activity, the extent to which the lines between are made obscure.

In September 2006, Asda evicted Planet Aid-UK clothes donation bins from its car parks, following its dispatch of a cease-and-desist letter to the company. The BBC revealed further instances of Planet Aid-UK placing charity collection bins on private land without obtaining permission and with no licence to do so.

Planet Aid-UK has since overcome this difficulty by deploying bins bearing the name of the registered charity DAPPUK.

Szeremley told The Beaver, 'We have a contract with Planet Aid-UK since 2008, given negative press coverage and the allegations against Planet Aid-UK's aid work. The contract establishes Planet Aid-UK pay royalties to use the DAPP-UK charity name on their containers, and then transfer the money to DAPP-UK'.

'It's all for the greater good: DAPP-UK is perceived as more transparent. It's a charity, subject to stricter regulations', he added.

Journalists and researchers have identified more than 250 such interdependent companies and charities, many of whose accounts are located in offshore tax havens. Danish police, who have been investigating since 2000, put Humana People-to-People's worldwide assets at £420 million.

Mike Durham, a journalist who has studied Humana People-to-People since 1999, said, 'This kind of activity is absolutely typical of the way Humana operate all over the world: shunting assets between different companies and charities so that at the end of the day as much money as possible goes into private hands, and hardly anything is left for charity'

'There is powerful evidence that wellmeaning people are being exploited, and unwittingly helping fund an extravagant lifestyle in faraway places for a few clever individuals. Their activities are bringing recycling and the development aid world into disrepute'.

Author of the Danish language book on Humana People-to-People, Jes Fabricius Møller, said: 'The problem is that since the beginning more than 30 years ago, they have failed to comply with simple rules of transparency and auditing. They consistently mix up their commercial with their beneficiary activities in a way that makes it impossible for outsiders and even high ranking insiders to find out how and to what extent they actually help poor Africans'.

Only on 20 February last month, the German Bundestag Federal Department for Economical Development declared Humana People-to-People Deutschland not to be a legitimate non-governmental organisation. 193 NGOs applied to be considered for the German Welttwärts programme for young people volunteering in the developing world: of the 192 recognised, Humana People-to-People - of which Planet Aid-UK and DAPP-UK profess membership - was the sole NGO to meet with non-recognition.

LSE Environmental & Sustainability Manager Victoria Hands, who pioneered the LSE Reuse Scheme and London-wide Reuse project said: 'As LSE provides leadership in the sector for sustainable development and moving towards zero waste in particular, it welcomes the diligent research and helpful presentation of findings on Planet Aid-UK and DAPP-UK'.

'LSE received a free collection service for old departmental books that would otherwise have gone to landfill. Although Planet Aid-UK met LSE requests to feedback on tonnages, it did not meet LSE requests for information on recipients and confirmation of reuse of materials. LSE has therefore decided not to work with Planet Aid-UK again'.

DAPP-UK General Manager Szeremley expressed his dismay: 'If I find that the organisation is corrupt, then I will surely leave. I am definitely disconnected from those people at the top, and I do benefit from information coming from the outside. But, you know, the Royal Bank of Scotland executive who refused to return his millions pension fund - he's just as bad.'

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