The in-house audit of Estonian NGO Slava Ukraini found shortcomings in the level of control the board had over accounting as well as that contracts were phrased vaguely, which made it insensibly difficult to monitor the purpose of transactions. The nonprofit's representatives conclude that the situation was not as bad as they feared and it cannot be said based on the findings that the board violated the law.
The report, put together by BDO Estonia Payroll & Accounting OÜ, points out that the first-stage audit checked the documentation of projects "Lootuse jõulud" (Christmas of Hope), "Tuhat kangelast lumes" (A Thousand Heroes in the Snow) and "Guerilla kiirabid" (Guerilla Ambulances) and links to Ukrainian private company IC Construction (ICC) and charity fund All for Victory (AFV).
Slava Ukraini supervisory board chairman Kristo Tohver and management member Marika Priske said at a press conference on Friday that the audit looked at which documents existed and whether they were in accordance with Estonian legislation.
The following stages of analysis should look at whether the documentation was thorough enough, while this is up to the police. This means that Slava Ukraini is not planning to carry out the second and third stages of the audit as further questions should be answered by investigations in Estonia and Ukraine and the NGO does not deem it sensible to duplicate investigations.
"We got a pretty good picture of what happened and how much of the aid has been handed over. There is a picture of which funds went where and through which partners. While it is not clear from the audit whether the Ukrainian side got 5, 10, 15 or 20 percent of the proceeds, the police are far more competent than we are in those terms," Tohver admitted.
He added that the level of documentation at Slava Ukraini is better than was initially feared.
"Take the "Tuhat kangelast lumes" project – every single uniform of the 2,200 ordered has reached military units, with a single sample piece still in the possession of All for Victory. The results of the audit are more positive than we feared. Mistakes have been made, including contracts the signing of which was insensible and that should have been handled in a more transparent manner. But based on these documents, there is nothing to suggest the board has broken the law," Tohver said.
He added that the project clearly had three different suppliers, all price offers and delivery manifests are there, meaning that the chance something might be very wrong with it is minute. But Tohver suggested that not all suspicions can be dismissed regarding the other projects.
How much money was put to one side cannot be revealed through such an audit, Priske said, as Slava Ukraini ordered services and goods, paid for them and received most of the necessary documentation.
"Questions of price formation and questionable aspects will hopefully be answered by criminal investigations in both countries," Priske remarked.
Tohver described "Lootuse jõulud" as the most complicated project with which there are several problems. Documentation for goods is missing, and the price at which the food products were purchased is unclear.
"Secondly, because the aid reached individuals near the front, there are no instruments of delivery and receipt, even though pictures and video evidence suggest aid was delivered. We have some transport documentation to try and gauge how much of it was delivered, while we cannot trace every one of the 22,000 aid packages. We hope they all arrived. Rather, the problem is that we don't know how much money IC Construction made on assembling the packages," Tohver said.
The supervisory board chair said that the biggest problem has been with Slava Ukraini's contract with IC Construction, and while the company has done what Slava Ukraini contracted it to do and all of it has reached Ukrainian forces, the way it was done has not been transparent.
"Saying that IC Construction was brought on board just because invoices were needed is hardly convincing. It is among the biggest unanswered questions – why was ICC brought in in the first place," Tohver said.
He added that no one currently knows whether the Ukrainian company made €100,000 or €200,000, while the police should help get to the bottom of that. According to Tohver, ICC's invoices included little in the way of details and their overhead was not given, which is unusual in the field of humanitarian aid.
Tohver said that sums transferred to All for Victory are covered with contracts and Slava finds them to have been justified. The only questionable transaction concerns two vehicles.
"The information we have today, while there is no way to corroborate it, is that they were used for transport and distributing aid on location," Tohver added.
The supervisory board chairman also said that former Slava Ukraini executive manager Johanna-Maria Lehtme has virtually no more role at the nonprofit but remains a member because she has not quit. Once her contract expires, Slava Ukraini will be run by Anu Viltrop, former head of NGO Pagulasabi.
Marika Priske said that Slava Ukraini's accounts currently hold around €600,000 and the NGO took in €25,000 in donations in May and June, which it plans to use to pay back some of the "moral debt" the Slava Ukraini crisis has caused.
The audit also concludes that not all important documents were produced inside a sensible time frame, which points to the management board's insufficient level of control over accounting.
"Contracts use vague universal templates. Lack of detail when describing transaction aims and specifics makes it insensibly difficult to monitor and protect Slava Ukraini's interests," the document reads and recommends the NGO fix prices, goods, deadlines and other conditions in all contracts in the future.
The "Lootuse jõulud" project saw Slava Ukraini promise to take to Ukraine aid packages holding food, personal hygiene products and other necessities as well as wool socks, hats, gloves and scarfs made by Estonian volunteers.
Even though the NGO's representative said the prices were based on offers it got in Estonia, documentation handed over to auditors did not include quotations.
The project's invoices totaled €1.334 million and were all paid. The largest sum went to IC Construction at €904,887.
According to the audit, a total of 22,600 aid packages were assembled, in addition to pillows, blankets and other products. The delivery of 8,341 packages and 8,245 sets of pillows and blankets has been documented. There are also photos of the packages being handed over and delivery and receipt instruments from IC Construction regarding all packages.
The auditors asked Lehtme how Slava Ukraini verified the price info and integrity of packages. She said that she visited the front and liberated areas personally to make sure.
The "Tuhat kangelast lumes" project procured 2,300 sets of winter gear, with transfer and receipt instruments for 2,299, while All for Victory retains a singe sample set.
Asked why IC Construction's quotation was not made available to auditors, Lehtme said that accounting documents would have to be checked or ICC asked for the document. She said that the purchase criteria were price, time of delivery and quality.
The former manager was also asked why only the cost of the entire order was provided but not the number of makeup of the equipment sets. Lehtme said that all bidders knew which elements were necessary.
The aim of the "Guerilla kiirabid" project was to send to Ukraine reliable vehicles that could be used to transport the wounded. While the first vehicles were refitted in Estonia, Slava Ukraini soon started doing it in Ukraine.
The auditors received transfer and receipt documentation for 52 vehicles and additional information on the location of another ten vehicles. Some transfer and receipt instruments for tires are missing.
The audit summarizes transactions with IC Construction which amounted to €1,555,858.50 – €904,887 for "Lootuse jõulud," €127,972 for "Guierilla kiirabid," €413,505.5 for "1000 kangelast lumes" and €123,579 for other invoices.
It turned out in April that NGO Slava Ukraini has transferred €1.5 million in donations from people in Estonia to a Ukrainian private company called IC Construction, which was tied to its Ukrainian partner, probably had a fictitious owner and the only business activity of which was tied to the Estonian nonprofit. The firm reported a profit of €250,000 last year.
Editor: Marcus Turovski