(December. 23, 2010) Canada’s foreign aid agency once again finds itself in the middle of a corruption scandal involving its funds.

Canada’s development agency is once again being forced into the spotlight after reports that its aid donations have fallen into the hands of corrupt government officials in Kenya. According to recent reports [PDF], officials at the Canadian International Development Agency (CIDA), the country’s national aid agency, are hoping to recover as much as $2-million that have been siphoned off by corrupt officials in Kenya’s Ministry of Education.

The money, part of foreign aid programs that were intended to be used for textbooks and other education programs, had been misused—say Canadian officials—due to  “mismanagement, corruption and weak internal controls.” The $2-million owed to CIDA is just a sliver of the $100-million an audit by Kenya’s Ministry of Finance says has been lost to corruption in Kenya’s Ministry of Education.

“CIDA will ensure that all misappropriated Canadian funds are reimbursed by the Government of Kenya,” says Scott Cantin, a media relations manager at CIDA.

A report from AFP says the World Bank, the UN children’s fund and the development agencies of Britain have joined Canada and called on Kenya to “hand over the names of all ministry… staff implicated in the loss of funds to the Kenya Anti-Corruption Commission for further investigation, and subsequent prosecution in the courts.”

To date, Canada has been reimbursed a paltry $65,000 by the Kenyan government for the losses, which were first revealed in an October 2009 Kenyan government audit.

While other donors, including the United States and the UK, have frozen aid to Kenya’s education ministry, CIDA’s website currently provides no evidence that the aid agency has any intention of stopping aid transfers to the country. In fact, nowhere on the website is there even an acknowledgement that CIDA-money has been corruptly used in Kenya.

The agency’s website does say, however, that CIDA has given Kenya more than $94-million since 2004, with more than $36-million going to education programs in the country.

These latest allegations of corruption in Kenya follow reports that CIDA money has been used improperly in Zambian aid projects too. According to internal reports released to Probe international, CIDA lost $880,000 in a corruption scandal involving top Zambian health officials who stand accused of embezzling around $7-million from health programs funded by foreign donors.

But the most alarming aspect to the corruption cases in both Kenya and Zambia is that aid agencies, like CIDA, were unaware that they’re money was being used improperly. According to Sweden’s minister of international development co-operation, Gunilla Carlsson, the aid agencies weren’t aware of the misuse of their funds in the Zambian health sector until a Zambian whistle blower alerted them. This has prompted questions about the aid agencies’ own internal auditing capabilities.

“There are indications that irregularities have existed since the early 2000s,” she said. “I cannot help but ask the question: How long would it have taken before we, as donors, noticed something was awry if it hadn’t been for the whistle-blower?”

CIDA as an organization has also come under attack. Last year Canada’s auditor general, Sheila Fraser, said CIDA is dysfunctional and lacking the ability to effectively and strategically deliver its $3-billion foreign aid budget.

The recent corruption case in Kenya fuels arguments put forth by economists such as Dambisa Moyo—author of the 2008 best-seller “Dead Aid”—and groups like Probe International, which argue that aid, itself, is the problem. Aid distorts local economies and allows governments in the developing world to operate without accountability to their own people.

While aid agencies like CIDA continually promise the public—both in their own countries and those they’re seeking to help—that they’re able to monitor aid funds and ensure they won’t be subject to fraud, real-world evidence shows they always come up short.

Brady Yauch, Probe International, December 23, 2010

Further Reading:

• Zambia corruption scandal links back to Canada
• Miami rice: subsidizing poverty creation in Haiti
• Tax happy: Another African leaders says taxation a better way to promote development
• Like water through your hands: Most foreign aid money sent to East Timor not spent in the country
• Rewarding corruption: World Bank gives more money to corruption-riddled Uganda
• Foreign aid discredits itself
• Taxation with representation: the better way to development say experts
• Dictators and Disasters: a disaster waiting to happen
• China learning how to play the foreign aid game
• Banking on disaster: Pakistan officials accused of diverting funds from earthquake aid
• African leaders tell Britain to end aid game
• Enough is enough: British public taking a stand against foreign aid
• Foreign aid in Afghanistan: what goes in must come out
• Health charity spent millions to raise thousands
• Foreign aid to Pakistan is a victim of nepotism
• Banking on the hand that feeds: Food aid is big business in the US
• African leaders call for tax reform, not foreign aid
• Foreign aid and under-development in Africa
• Corruption biting the hand that feeds: food aid industry facing tough questions
• Moyo: international aid to Africa spurs corruption
• Aid in Haiti creates competition with local business owners
• Foreign aid takes another blow—this time in Australia
• Another foreign aid critic says there is a better way
• Banned Aid: Why international assistance does not alleviate poverty
• Thinking outside the foreign aid box
• Foreign aid on the ropes