Salvation Army regroups following major theft

Multi-million dollar heist "shows everyone is vulnerable"

By Mags Storey  |  Friday, January 18, 2013

Photo by docentjoyce via Flickr

TORONTO, ON—The discovery in late 2012 that someone had stolen more than $2 million dollars of toys, school supplies, personal hygiene items and food from The Salvation Army started with a phone call to organization's national whistleblower hotline.

While The Salvation Army's Railside Road warehouse only employs about a dozen staff itmanages about 150,000 donated toys each year and 7.5 million pounds of food.

"It's a big operation," says John Murray, Salvation Army spokesperson. He adds that the warehouse handles up to 75 pickups and deliveries a day.

Then a whistleblower claimed that someone inside the operation was stealing donations.

Salvation Army senior management launched an immediate investigation. A team of forensic auditors were brought in. Once verified, police were notified. Key staff and stakeholders were informed before the news was made public. Murray says, "We didn't want our board members finding out through the media."

Police have laid 40 charges against former Railside Road executive director David Rennie and businessman Umaish Ramrattan, who ran locations where items were allegedly recovered. Of the more than 100,000 toys stolen less than 4,000 have been recovered by police so far.

"As an organization you can plan and prepare for these worst-case scenarios that you hope never happen," Murray says, "but unfortunately, fraud happens… And it would appear, from this situation, that if somebody wants to defraud you they would, allegedly, look to work around the security provisions in place."

The fact a fraud of this scale happened to The Salvation Army proves it could happen to anyone, says John Pellowe, chief executive officer of the Canadian Council of Christian Charities (CCCC).

"I have been quite impressed with their internal audit procedures," says Pellowe. "They are doing everything right, and something like this still can happen."

Pellowe says every church, charity and organization should have both an ethics and whistleblower policy. "I think the big message is that we should be vigilant. It's part of stewardship to have the proper procedures in place. The main thing is this—don't think it can't happen to you."

Christian organizations and churches are especially vulnerable to theft and fraud, Pellowe says, because the belief that Christians should trust one another sometimes leads to a reluctance to put proper oversights in place.

"There are predators that prey on the trust that Christians have," he says. "If you put checks and balances in place, it can give the impression that you don't trust people."

However, as CEO of an organization which is regularly audited by external auditors, he adds that such oversights also protects people from false accusation and temptation.

"Something we need to recognize within Christian community is that we're not perfected until we get to heaven. We don't always know the personal issues that people are struggling with. So there could be instances where, for example, someone may do something they may not normally do out of desperation, if given the opportunity...

"Also, the fact there is a failure in one part of a person's life doesn't mean everything they've said or done is all of a sudden valueless, or the grace of God hasn't been working in their life."

The accused are expected to face the courts early this year. Murray says The Salvation Army has been working to help staff deal with the current situation.

"People have been disheartened and discouraged," he says. "People have been angry. When fraud happens, you are violating trust—whether organizational trust or personal trust."

The Salvation Army is also grateful for the overwhelming support they've received from the public since the news broke in November.

"I think it's important for people to understand that The Salvation Army respects every donation it's received and that we're grateful for them," Murray says, "and for all the organizations and individuals who stepped up during our dark time to be assured that when they make a donation it will be used for their intended purpose. The Salvation Army will continue to work with police and the organizations we've retained to ensure this never happens again."

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