No misuse of development aid

Published by the editor

The Danish Institute for Human Rights (DIHR) attracted great media attention last week after a press release was issued by Mr. Christian Friis Bach, the Danish Minister for Development Cooperation, expressing concern about "several irregularities" in the financial affairs of the DIHR from 1997 to 2008.

The DIHR wishes to emphasise the following facts:

• The financial statements of the DIHR were incorrect because of hidden losses that were not recognised in the financial statements. The non-recognition of total losses of DKK 3.2 mill. occurred from 1997 to 2008. No one has suffered any loss or made a gain from the transactions. Rather, debts were postponed year by year.

• DIHR's debt is by the end of 2011 reduced to DKK 0.6 mill.

• The DIHR has never misused any grants. This was confirmed to the DIHR by the accounting firm of PricewaterhouseCoopers (PwC) on 16 January 2012: "Upon specific request, I hereby confirm that our review of DIHR projects carried out from June to October 2011 unearthed no issues indicating any misuse of grants in the projects reviewed, as was also reported on 18 October 2001." The DIHR is now awaiting the final report of the National Audit Office of Denmark.

• Projects can make a loss for two reasons: Either too much money is spent on a project (e.g. if the budget provides for three months' salary and the project is delayed necessitating the payment of salary for four months). Or a loss may arise if the grant has been reduced or has not been paid at all. This may be the case if a donor does not pay, if the amount is in dispute, or if the exchange rate deteriorates during the project period. Such project losses are common and should be included in the financial statements. This was not done, which is the error occurring in the financial statements.

• The DIHR discovered the misstatements itself and initiated a thorough investigation of the matter right away. The DIHR notified the Ministry of Foreign Affairs and the National Audit Office on an ongoing basis of progress made in the investigation. The DIHR asked PricewaterhouseCoopers to assure the quality of the internal investigation initiated by the DIHR.

• The Danish Minister of Development Mr. Christian Friis Bach said on Thursday 2 March 2012 during an open meeting in the Danish Parliament's Finance Committee that the Foreign Ministry has now begun the approval process of the DIHR Framework Agreement. When the Danida Board approves the DIHR's application, the withheld funds will be paid to the Institute. The Framework Agreement will be paid out quarterly.

• The newspaper Politiken said in its editorial on 18 January 2012 that PricewaterhouseCoopers had been the auditor of the DIHR "for the full period". This is incorrect. The National Audit Office audits the financial statements of the Danish Institute for International Studies and Human Rights and accordingly the DIHR. The PwC has assured the quality of the internal DIHR investigation.