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Questions have been raised about the management of an important Fairtrade Africa project in Kenya after an audit by a Nairobi-based firm.

The issue was highlighted in the British newspaper Guardian, which said it had received a copy of the secret audit on the project by Clyde & Associates who were commissioned by the flower company Oserian to investigate possible misappropriation of funds.

The investigators are reported to have looked into a raft of concerns, including poor or non-existent record keeping and lax controls.

According to the Guardian, the audit found “a host of financial irregularities and misappropriation of funds, which have raised fears about the effectiveness of the controls in place at Fairtrade projects.”

But a spokesman for Fairtrade Africa said there were “no findings that bribes had been paid in the report by Clyde & Associates or elsewhere, and no criminal procedures were taken.

“Fairtrade believes these issues are isolated incidents,” he said.

Oserian, Kenya’s leading flower producer, supplies a number of UK supermarkets, including Sainsbury’s, Morrisons, the Co-op and Aldi, with cut flowers from Kenya.

It had ordered a forensic audit into the way $1 million of Fairtrade funds were distributed by community representatives “amid allegations bribes had been paid for bursaries,” according to the Guardian.

A spokesman for Sainsbury’s said it was “aware of this report” and … of course concerned by the issues raised.”

Oserian is Africa’s largest producer of roses and carnations, producing a million stems a day.

The Fairtrade scheme sets aside a portion of cash from the sale of the products to improve the social, economic and environmental conditions of workers.

Oserian executives do not play any part in the allocation of these funds, but are reported to have been actively trying to encourage Fairtrade to improve governance in its flagship projects.

Neil Hellings, managing director of Oserian, said: “The premium has a seven-figure sum. It is effectively the size of a small business in its own right and it has some of the lowest [least qualified] people in the organisation running it.

(Our) management were increasingly concerned at the way in which the premium was being allocated (and) the scope for abuse within that use.

“The forensic audit was carried out — at my instigation but with the full support of Fairtrade Africa. There were anecdotal tales of misappropriation before the forensic audit but these were not proven, only that administrative procedures needed to be strengthened.”

Fairtrade Africa insisted that people should still “be confident in their trust in Fairtrade and, though we work in challenging areas with some of the poorest farmers and workers we learn and adapt in order to improve, as the steps taken in this matter show.”

New reforms have been undertaken and a financial consultant has been brought in.

The UK’s Fairtrade Foundation and Fairtrade Africa are part of a global network of Fairtrade bodies. They license the use of the Fairtrade mark on items sold and around 2.55p ($0.3) in every pound ($1.3) goes towards the premium, administration and the implementation of controls to ensure suppliers adhere to agreed standards, and suppliers also get a minimum price guarantee for products.

The Guardian points out that before Fairtrade was founded in 1992, Oserian was already offering workers free, stone-built housing with running water, sanitation, and security.

A hospital, pharmacy, schools, and creches were provided free-of-charge by the business. In the mid 1990s, people on the estate were also provided with free electricity.


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