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Published on Monday, October 29, 2001 in the Toronto Star

Storm Brews Over Sept. 11 Funds
$200 million goes to other Red Cross programs

by William Walker


WASHINGTON - Generous North Americans who gave more than half a billion dollars (U.S.) to the Red Cross expected their donations would go directly to surviving family members and victims of the Sept. 11 terrorist attacks.

Canadians opened their wallets to donate $10 million (Cdn) to the New York, Washington and Pennsylvania victims, Suzanne Charest of the Canadian Red Cross said last night.

But in a growing scandal which threatens to rock the foundation of the 120-year-old American Red Cross, it now appears that of the $530 million (U.S.) total donated, more than $200 million is being diverted to the blood agency's long-term goals and administrative costs.

That includes (all figures in U.S. dollars):

$109 million for improving the Red Cross' telecommunications, accounting and database management systems.

$50 million for the agency's blood reserves program.

$26 million for "community outreach."

$29 million for "indirect" or administrative relief costs.

$11 million for international assistance.

"That's fine for afterwards, but their priorities seem to be a little mixed up here," Mike McLaughlin of Pelham, N.Y., who lost his brother, Rob, in the World Trade Center North Tower, told The Star.

His sister-in-law Liz, who is now a widow, has been frustrated by her inability - as have been many of the families of the 5,000 dead, including 7,000 children who lost a parent and 50,000 people who lost their jobs - to access relief assistance.

Liz McLaughlin did receive a check from the Red Cross, "but I would expect there will be more and I hope it will not take too long," her brother-in-law said.

Just last Wednesday night, former Red Cross president Elizabeth Dole delivered a speech in Toronto in which she said Americans will "never forget" the outpouring of affection and support from Canadians.

Last Friday, Dole's successor as president in 1999, Dr. Bernadine Healy, suddenly and tearfully announced her resignation from the Red Cross as the scandal over Sept. 11 donations began to break open publicly.

So far, only about $40 million (U.S.) of the $530 million total raised has been distributed to victims' family members, the Red Cross says.

Last night, Mike McLaughlin said in an interview that he wasn't aware of the millions the Red Cross was planning to spend in areas unrelated to the victims' families.

He said donors thought they were giving money which would go to those families.

"We've been trying to see to it that Liz gets all the benefits that are available to her. We started the process as soon as we came to the realization Rob wasn't going to return," he said of his brother, who worked at the bond trading firm Cantor-Fitzgerald. "But this is the first I've heard of this ... it's not where I would have expected donations to the Red Cross would end up."

Victims' families are supposed to be contacted by the Red Cross call center, just outside Washington in Falls Church, Va., to receive three months of living expenses for each family.

The Red Cross had initially promised the checks would be sent out within 48 hours of a family being contacted.

But more than six weeks after the horrific tragedy, thousands of families have not been contacted and have not received any assistance. Red Cross officials now admit the Falls Church call center is overwhelmed, has a shoddy records-keeping system and is awash in confusion.

"I was turned into a widow on Sept. 11 and a single mother and now they're turning me into a beggar," one woman told the New York Times, asking that she not be named for fear her check might be canceled.

Some say the $530 million (U.S.) outpouring of public support for the Sept. 11 victims' families was just too much for the Red Cross to possibly manage. In the entire fiscal year of 2000, the agency raised just over $600 million (U.S.)

When the half-a-billion dollars arrived in just a few weeks after the terrorist attacks, Red Cross president Healy became embroiled in nasty infighting with her 50-member board of directors over use of the donations.

Healy, former dean of the Ohio State medical school and a cardiologist, choked back tears on Friday at a Washington news conference, saying she'd been "forced out" by the board.

American Red Cross board chairman David McLaughlin (no relation to Mike or Liz McLaughlin) said simply that the board had differences with Healy on "various issues."

Now it appears the Red Cross will use millions of dollars raised on the basis of Sept. 11 for purposes that have nothing to do with the victims or their families. Instead, critics say, the Red Cross is using the money to expand its own empire.

"In recent weeks, questions have been mounting over whether the Red Cross and Dr. Healy have been candid about how much of the money raised after the attacks will really go to the victims, their families and rescue workers," noted the publication Chronicle of Philanthropy, which monitors U.S. charitable organizations.

"Many people both inside and outside the Red Cross have expressed concern that Dr. Healy was focused more on raising extra money to expand the Red Cross's reach through long-term blood and anti-terrorism programs than on accurately evaluating the needs of the Sept. 11 disaster victims."

One former Red Cross employee told the publication: "Dr. Healy's attitude seems to be `If the money is there, we'll find a program to spend it on'."

In the American Red Cross' defense, spokesperson Dana Allen said the Sept. 11 disaster is unlike anything the agency had dealt with.

"The Red Cross has been responding to disasters for 120 years, but this was a completely different type of disaster," she said. "The Red Cross is not only responding in one disaster-struck region. It is responding all over the country because the entire nation is suffering as a result of these attacks."

But for Mike McLaughlin, it's all about ensuring his brother's widow gets the support generous North American donors wanted her to have.

"It's been rough, but we're trying to get through it, little by little," he said last night. "You probably never really get over it."

Copyright 1996-2001. Toronto Star Newspapers Limited


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