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Last Updated: Monday, 27 March 2006, 23:49 GMT 00:49 UK
Red Cross probed on Katrina fraud
Red Cross workers distribute food in a New Orleans neighbourhood
The charity has faced questions over its handling of large relief schemes
Allegations that American Red Cross volunteers engaged in theft and fraud after Hurricane Katrina are being probed by Louisiana's attorney general.

The inquiry comes as the ARC, the largest recipient of donations after last year's hurricane, unveiled its own probe into claims of impropriety.

Concerns include the improper diversion of relief supplies and the failure to follow Red Cross procedures.

The ARC's charter could be revoked if it does not overhaul its operations.

Attorney General Charles Foti has asked for the names and telephone numbers of those who participated in Louisiana relief efforts as well as copies of any other internal reports or investigations conducted by the American Red Cross.

"This is not the first time we have heard reports of abuse involving some charitable agencies and unfortunately it may not be the last," he said in a statement.

"I think the American Red Cross is a superb organization but if I find that some individuals committed crimes in our state and took advantage of our tragic situation, I will take the appropriate action."

Meals 'swapped for parking'

On Friday, the New York Times reported details of an internal ARC investigation set up several weeks ago by the charity's chief executive John McGuire.

He said: "We're in the middle of this, and we're looking at a range of possible problems from issues between a few people that are really nothing other than bad will, to failure to follow good management principles and Red Cross procedures that have caused a lot of waste, to criminal activity."

Specific problems identified by the newspaper included the disappearance of rented cars, generators and some 3,000 of 9,000 air mattresses donated by a private company.

They also included the unauthorized possession of ARC computer equipment that could be used to add money to debit cards and manipulate databases, and the case of a kitchen manager who swapped 300 prepared meals for parking spaces for ARC employees.

Senator Charles Grassley, chairman of the Senate Finance Committee, has threatened to rewrite or revoke the organization's charter if it does not thoroughly overhaul its operations.

Call centre controversy

The American Red Cross has faced questions in the past over its handling of large emergency relief schemes, notably the Liberty Fund set up in the wake of the 11 September 2001 attacks.

And the organization was hit by controversy in December when it emerged that 49 people were facing criminal charges over a scheme to steal ARC funds meant for Hurricane Katrina victims.

Many of those indicted worked at an ARC call centre in California and were accused of helping family and friends make false claims for relief money.

The ARC accepts that post-Katrina the pressure to get the money out to those in need meant the safeguards in place were not fully adequate.

And it says it does everything possible to seek out and prosecute fraud.

"While departures from standard procedures after a huge catastrophe like Hurricane Katrina are inevitable and often necessary to provide faster aid to people who need it, any conduct that violates either the law or Red Cross Code of Conduct is not tolerated," it said in a statement.

Although the American Red Cross is not a government agency, it was given authority to provide disaster relief by a 1905 congressional charter.

Pet fraud inquiry

Meanwhile, Mr Foti's office also announced on Monday that is examining allegations involving funds raised by the Humane Society of the United States that were designed to help reunite owners and their animals separated in the chaos of Katrina.

Mr Foti has received numerous complaints from pet owners about problems many are having finding their pets, many of which were displaced to shelters around the country - and subsequently adopted.

In some cases, owners claim that those who are currently caring for the displaced pets are refusing to reunite the pet with the proper owners.

"Once again we will be on the lookout to make sure that those who seek to raise money for Hurricane victims in our state, do exactly what they claim to do when soliciting funds," Mr Foti said.

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