Save the ChiLdren
Ministerie van Buitenlandse Zaken
DSH / HH
Tav. mevrou
Postbus 20061
2500 EB Den Haag

Ons kenmerk: 17.037/PK

Den Haag, 11 april 2017

Geachte mevrouw
Op zijn verzoek stuur ik bijgaande brief van de heer Watts, CFO van Save the Children International,
aan u door.
Het betreft hier de uitkomst van het onderzoek naar kartelvorming bij aankopen van hulpgoederen
in Turkije voor onze hulpoperaties in Sy.rië
2
Graag tot nadere toelichting bereid.

Hoogachtend,

Pim Kraan
Children

Laan van Nieuw Oost-Indie 131

PosWus B2061

Den Hoog

2508 EB Den Haag

T:+31 (0)70 3384448

E: nfo@scivethechitdren.nl
wwwsavethechfldrennI

F: +31 (0) 70 3501279

Bonk: NL74ABNA0707070252
KvK Haaglanden 41201463

ANBI

€

oEmDornn

the Chi,dren

Mrs
c/o Save the Chic1ren Netherlands
P.O.Box 82061
ZIP Code 2508E 8
The Hague
The Netherlands

6 April 2017

Dear Mr
Reference is made to the letter of our
CEO of Save the Children Netherlan
cis, dateci 1.9 ALigust 2016, refe
number 16.075/PK.
rence
We now write to update yOU on the
outcorne of our further investigation
Into procurement activities in our
country office. We start with a sho
Turkey
rt reminder of the background.
Sackground
Last year Save the Children launched
an investigation in to the procur
ement function of its Turkey Country
(CO), which was responsible for prog
Office
ramming in North West Syria.
Our investigations were prornpted
information received from USAID/OIG
by
and whistleblowing allegations mad
e by a Save the Children employc
within the CO.
e from
During the cou rse of our investigations
, it became dear that, in respect of
al least one of our employees,
indications of practices that required
there were
further scrutiny.
tnvestiations and review
KPMG have now completed two detaf
led investigations on our behalf. This
is in addition to our own internal
of internal controls in the Turkey pro
review
curement process.
KPMG’s first report (‘Project Ephesus”
) was provided to us in July 2016
and focused primarily on whistlebl
allegations made by a member of staff
ower
. KPMG reviewed procurernent files
and
emai
l
com
muri
icati
ons
members of Save the Chfldren’s procur
between
ement team and certain vendors. It
was also conducted against the back
of specific allegations being investigated
drop
by OIG that Seymen Ciray (a mem
ber of the Save the Children procur
team in Antakya, Turkey) shared confiden
ement
tial procurernent documentation
with Ernest Halilov, a person iden
to us by DIG. In tandem with this process,
tified
Save the Children conducted its
own internal review of the procurem
processes within Antakya, Turkey.
erit
Both the KPMG investigation in Project
Ephesus and our internal review foun
d evidence that some staff faile
comply with existing processes and proto
d to
cols but did not find evidence of
wrongdoing. The reports identified
a
iiie Chiirni, tnicraaIonol
St Vincent Haute
30 Orange Street
Lc,ndon WC2H 7HH
United Kingdom
Sane

A conlparly liniked by gaaranten.
Rnglttnred charity nurnber 1076022
Registered companij nwnbcr 3732367
RegIterd In Engl2nd cnd Wuleç

T&ephane +46 (01 20 3272 0300
Feit +64 (01 20 3272 0301
infotanethechlldrvn.org
vrw,savethechildrcr,,nct

oclaind wiih Sana iiie Chltdreci
Asnocfatton, NGO In Gnnra1 Con
kntiye
Sttut vdth th Economie and
Sodal Council ol United Nationi

failure to adhere to procurement policies in dealings with
specific vendors, and weaknesses in the application of
our documented procurernent practices and the process itself,
Save the Children responded by instituting an extensive
Remedialion Plan in our procurement practices and
operations in Turkey. We also carriecl our procurernent
spot checks in all other country offices supporting our
hurnanitarian work in Syria.
Subsequently, following a review of Skype material,
KPMG found evidence suggestive of Seyman Ciray’s
involvement in organised bid rigging and collusion.
In response, we further engagecl I<PMG specifically to addres
s the question of determining and quantifying loss to
donors as a result of the failure by certain employees
in Turkey to follow our procedures or any fraudulent
behaviours by our employees (with specific reference to
the Seymen Ciray Skype material). It also acknowledged
the further information we received from OlG.
KPMG identified and reviewed a risk-based selection of our
procurement contracts associated with our work in
Turkey. This involved scrutiny of:
o
o

•

procurement files and papers;
electronic communications of the principle Save the Childr
en procurement staff, including the Skype
material suggestive of involvement in organised fraud;
contracts with vendors identified to us by OlG and DFID
known as ‘blacklisted’ vendors;
vendors otherwise identified as of potential concern by KPMG
; and
corporate intelligence information to identify any links betwee
n certain individuals and vendors.
-

o
o

This was referred to as “Project cynthia” by KPMG and has
receritly concluded. We can now update you on their
find i ngs.
Conclusions
The Cynthia Review has been detailed and extensive, involv
ing 2,100 hours of KPMGs time (the total cost of their
work to date is £440,604). Although KPMG identitied certain
communications suggesting a concerted attempt by
Seyman Ciray and certain extemal vendors to manipulate our
procurement processes, they did not firid evidence
of a direct link between any material/communications sugges
tive of wrongdoing and identifiable contracts,
Therefore, notwithstanding KPMG’S comprehensive analysis,
they have not found evidence esiablishing financial
loss to donors in the sample of contracts they reviewed.
We are now conctuding our investigations of the historic events
within our procurement function in Turkey, Save
the Children recognise that there was an environment in our
Turkey country office which made us vulnerable to
improper and/or illegal practices. However, the various and
comprehensive reviews undertaken by us and KPMG
have allowed us to conclude that such practices are not linked
to direct evidence of any financial loss to donors.

2

Save the Chitdren

Nexi steps

As mentioneci above, Save the Children have
implemented an extcnsive Rernediation Plan in our
procurement
practices and operations in Turkey and more broadl
y. As an organisation we are determined to learn
the lesson of
these events. All individuals involved with or
associated with any improper Iractices are no longer
ernployed by us
and we have new country leadership in place. Most
importantly, we have enhanceci our controls and
put in place
additional safeguarcis to ensure we have much grea
ter visibility in the future.
Save the Children are now reinforcing our cont
rols in Turkey and more generally. We have
implemented all
elements of our Rernediation Plan in Turkey.
Procurement activities in Turkey are now fully
compliant and
therefore back to business as usual,
We hope this serves as a full and dear upda
te on the steps we have taken and why we
are concluding our
investigations. Should you wish to discuss [urth
er we are very happy to do so.
Yours sincerely,

Jon Watts
CFO, Save the Children International

3

Save the Children

Save the Children
Ministerie van Buitenlandse Zaken
t.a.v. mevrou
Hoofd afdeling Humanitaire Hulp
DSHIHH
Postbus 200061
2500 EB Den Haag

9

Betreft: (intern) onderzoek Save the Children Turkije
Onze referentie: 1 6.075/PK

Den Haag, 19augustus 2016
Geachte mevrouw

Met deze brief breng ik u, in aanvulling op het telefoongesprek van vandaag, nader op de hoogte over
het USAID onderzoek in Turkije.
Eind vorig jaar, in december 201 5, heeft USAID via hun ‘OfficeoHnspectorGerieral’ (OlG Save the
Children geinformeerd dat zij een breed onderzoek zijn begonnen onder meerdere hulporganisaties
naar hun aankoopprocedures, specifiek wat betreft de aankoop van hulpgoederen voor de Syrië
respons. Save the Children heeft in reactie daarop en in nauwe samenwerking met USAID direct een
eigen onderzoek ingesteld naar de interne aankoopprocedures, specifiek gericht op het kantoor van
Save the Children in Antakya, Turkije. Er was toen nog geen aanleiding te vermoeden dat daar
Nederlandse financiering bij betrokken was.
KPMG Forensi heeft vervolgens in opdracht van Save the Children onderzoek gedaan naar de
aankoopprocedures van ons kantoor in Antakya. Daarnaast heeft een eigen fraudebestrijdingsteam van
Save the Children International gekeken naar de aankoop- en controle procedures binnen het kantoor
en de mate van na- en opvolging door het personeel van dit kantoor. Het rapport van beide
onderzoeken is op 29 juli 2016 met ons gedeeld.
Beide onderzoeken leveren geen direct bewijs c5p van fraude of onrechtmatigheden binnen afgerond&’
aankoopprocedures van Save the Children in Antakya. Wel îSr geconcludeerd dat procedures en
protocolle niet consistent zijn gevolgd wat ertoe heeft geleid dat er.. o.i ontoelaatbare
aarikoopwerkwijzen zijn ontstaan4 Zo is bijvoorbeeld de focus op verkeerde criteria gelegd tijdens het
selecteren van leveranciers (leveringstijd boven kwaliteit en ervaring); zijn vrijstellingen te gemakkelijk
toegekend (in verband met tijdsdruk) en zijn niet altijd even consequent de advertentiemogelijkheden
benut om een uitgebalanceerd aanbod van leveranciers te verkrijgen.
Save the Children heeft op basis van bovenstaande bevindingen verder onderzoek ingesteld naar vier
personeelsleden en de desbetreffende personen dientengevolge direct op non-actief gezet. Drie
medewerkers hebben inmiddels zelf ontslag genomen, de laatste medewerker staat onder strenge
supervisie totdat zijn contract eindigt eind deze maand, waarna hij zal afvloeien.
Save the Children neemt de uitkomsten van deze rapportages erg serieus, met als gevolg dat ook de
aankoop- en controleprocedures verder zijn onderzocht en dusdanig zijn aangescherpt dat procedures
aan meer eisen moeten voldoen en er meer controle is, nationaal en regionaal, op de uitvoering van
dergelijke protocollen. Dit is ook van cruciaal belang om onze humanitaire response optimaal en
transparant te laten verlopen.

Den Haag T: -f3 (0) 70 3384448 F: +31(0) 70 350 279
Postbus 82061 2508 EB Den Haag E: info@savethechildren.nl www.savetbecNldren,nl
Bank: NL74ABNA0707070252 KvK Haaglanden 41201463

Laan van Nieuw Oost-Indiè 13

CBF

Save the Children
Save the Children is zich terdege bewust van de ernst van deze situatie en doet er alles aan de bovenste
steen in deze zaak naar boven te krijgen. Het onderzoek van USAID, inmiddels tevens onder grote
interesse van andere donoren waaronder DFID, Is nog niet afgerond en eerste bevindingen zijn
derhalve nog niet gedeeld. Wij vinden het desalniettemin belangrijk het Ministerie hierbij alvast op de
hoogte te brengen van bovenstaande feiten, mede omdat fondsen van Buitenlandse Zaken voor
noodhulpactiviteiten in Syrië, onderdeel uitmaken van deceds onderzochte inkopen. Wanneer er
meer informatie beschikbaar is, zullen wij uiteraard opnitiw]contact opnemen.
Graag tot nadere toelichting bereid.

Met vriendelijke groet,

Pim Kraan
Directeur

Laan van Nieuw Oostlndc 31 Den Haag T: +31(0) 70 3384448 F: -31 (0) 70 350 279
Postbus 82061 2508 El Den l-Lag E: Info@savethechildcennl wwwsavethechildrennI
Banlc NL74ABNA0707070252 KvK Haaglanden 41201463

ANBI

€

t

SavetheChiLdren
Private and Confidential
3OjuIy 2016
TO: Global Programme Directors, Save the Children members programming in TurkeylNW Syria
Re: Save the Children International Turkey 1 North West Syria Country Office summary of
findings and management response
-

Save the Children has been conducting an investigation into the procurement of goods and services supplied via
Turkey in relation to our programming in Syria. This document is intended to provide an overview of the
situational context, the investigation process and findings and Save the Children’s management response.
Background
Save the Children began programming in Syria at the end of 2012. Our work inside Syria focuses on providing
lifesaving assistance to the most marginalised children and their communities. In early 20 16, in response to the
political climate and ongoing safety and security issues in the region, we transitioned our operations in North
West Syria from a combination of direct and partner implementation to a 100% partner implementation model.
Our team continue to provide oversight and programme management from the Turkey country office, based in
Antakya, Turkey. This was the right decision for our staff and the communities we work with long-term.
Now more than five years into the conflict, operating inside Syria presents significant complexities. To respond to
urgent humanitarian needs we must be able to respond quickly, including the ability to provide life-saving goods
within tight timelines. In addition, increased security measures and migration in Turkey and Syria create issues in
recruiting and retaining strong talent and partners. Despite ongoing challenges, our work is saving lives. To-date
our programmes have reached over 2 million people, including nearly t .3 million children inside Syria of which a
significant number of programming was managed from the Turkey country office.
—

Investigation and Internal Review background
Through our internal risk management process, in late 201 5 Save the Children recognised and addressed core
leadership concerns at the Turkey country office, culminating in the departure of the then Turkey Country
Director in early 20 1 6. In addition, Save the Children was made aware of concerns raised by DFID and notifled of
the USAID OlG (OlG) investigation into procurement activities in Syria. Wanting a better understanding of its
own procurement function in Turkey, we launched an internal review of the function.
Having initiated an internal review of procurement, Save the Children received whistle blower allegations from
within the country office relating to the operation of the procurement function. We engaged KPMG, for an
independent, forensic investigation focusing on these allegations and instructed their team to investigate with a
specific emphasis on the whistle blower allegations. These included allegacions of collusion and fraud relating to
specific contracts, individuals and procurement activities. Steps taken by KPMG as part of its investigation included
document review, formal interviews, and a forensic review of hard drives of implicated individuals.
The internal review, led by Mr. Zeeshan Iqbal, looked at the country office’s procurement function and controls
environment more widely. Mr. lqbal took a risk-based approach consisting of document review, transaction
testing, vendor verification and physical walkthroughs and testing of the complete control process. For a full
understanding of the findings it is important to consider both reports and we have taken both into account when
developing our Remediation Plan. In addition, both KPMG and the Mr. tqbal have reviewed each other reports
and the Remediation Plan recommendations.

Findings
Neither the KPMG investigation nor the internal review found direct evidence of collusion or fraudulent acts
relating to any particular procurement. However, there is substantial evidence that staff members failed to comply
with Save the Children policies, processes and protocols.
Both pieces of work focused on the areas of highest risk within the procurement process and those related to
specific suppliers. Weaknesses have been identified across all elements of the procurement process.
To put the findings in context, the scope of the internal review work has provided assurance in relation to the
following:
• There were no irregularities and weakness found beyond those outlined in the detailed report, including
no irregularities of other NFI vendors or from the sample of processes that were reviewed in the other
procurement categories outside NFI;
• On a sampled-basis, MEAL and third party monitoring reports on our programmes verified consistent
cross-border delivery of appropriate goods and services to end beneficiaries and featured no complaints
about not receiving items;
• The review uncovered no evidence of double or over-payments to suppliers; and
• It was established that procurement committees were functioning and debarred several bidders for
irregularities identified, including two of the main suspect vendors, subsequently brought to our attention
by USAID and DFID.
Overall, Save the Children is dear that the procurement function, in its Turkey country office, has represented an
unacceptable control environment, which has made us vulnerable to abuse.
Management response and remediation steps
Accountability
Four Save the Children Turkey country office staff members were implicated through the investigation. All
implicated staff were placed on immediate suspension. Three of the staff members are no longer with Save the
Children. The remaining staff member was the original whistle blower who was implicated by his disclosure.
However, through the investigation it was determined that his conduct demonstrated poor judgment, but no
intentional wrong doing. He has now returned to work under close supervision until the end of his contract in
August. His contract will not be renewed and none of these individuals will be employed by Save the Children
again in the future.
Over the past year Save the Children has made significant relevant leadership changes, including appointing a new
Middle East and Eurasia, Regional Director (Tom Krift) and a new Country Director in Turkey (Nick Finney).
Both of these appointees are highly-respected within the humanitarian sector and have led established careers
with Save the Children. We have also appointed a Head of Logistics to oversee the procurement function in the
Turkey/NW Syria country office who begins in early August. These leadership changes will greatly strengthen
accountability within the country office and in the region overall.
As part of planned operations strengthening through our new global strategy, Save the Children also appointed a
new global Director of Supply Chain who is working to improve the function across all our countries.
Remediation Plan
Save the Children’s Remediation Plan has been built specially in response to issues identified in this report. It has
taken on the recommendations of KPMG and Mr. lqbal and is committed to its rapid and efficient implementation.

2

Save the Children

The Remediation Plan outlines core improvements within the procurement function in detail, which is
summarised below.
Purchase Requisition
The nature of humanitarian context demands for quick response and therefore strong and effective programme
planning. Staff need to identify programming needs, define procurement plans and prepare purchase requisitions
earlier. What emerges from the reports is that, the criterion of ‘lead time’ was frequently prioritised during the
selection process.
Vendor Selection
Deta lied recommendations to improve the way tenders are advertised, vendors are assessed and selected and
controls established over the bid process.
Agreements and Purchase Orders
Agreement policies and purchase orders will be strengthened and monitored for effectiveness.
Payments to Vendors
The procedures taken, monitoring and infrastructure used will all be improved to strengthen this process. This
includes procurement tracking and general ledger reconciliation.
Waiver System
There will be stronger monitoring, governance, clarity and communications regarding expectations of waivers and
the processes within the waiver system, such as international and national sealed quotes, ratifying breaches and
agreements and amending contracts.
All of this work should be seen as part of Save the Children’s ongoing improvements of its supply chain. In light of
this, we will be carrying Out spot checks on additional country offices over the next six months to assess the
strength of the procurement control environment, globally. We are currently assessing which country offices
should be prioritised for the purpose of this exercise. Our initial focus will be on neighbour-countries supporting
the Syria crisis, including lraq, Jordan and Lebanon. We will be raising our compliance standards substantially and
will continue to invest in programme improvements and reinforcing our compliance and controls standards.
We anticipate members and donors will have follow up questions to which we will endeavour to provide full
answers in the spirit of cooperacion and transparency.
Save the Children is committed to reaching the most marginalised and deprived children in the world many of
which live in extremely challenging and dangerous contexts to operate within. To do this, we need strong and
effective policies and procedures, and recognise that in this instance there have been dear failings, putting the
confidence of donors and our work at risk. We are committed to fixing all issues found in Turkey and applying
the lessons learned, This work will improve our ability to ensure all children survive, learn and are protected.
—

Kind regards,
jon Watts, Chief Financial Officer, Save the Children International

3

Save the ChiLdren