Finance: News analysis - Regulating charities in a war zone

The Charity Commission can have difficulties keeping tabs on overseas donations, writes Helen Warrell.

Barely three weeks after the start of armed conflict between Israel and Lebanon, the BBC reignited a different Middle East controversy with links much closer to home.

A Panorama documentary broadcast in late July brought out new evidence to support claims that a UK-based charity, Interpal, has links with Hamas, Palestine's ruling party.

The programme's key allegation was that Interpal is funding West Bank charities that are affiliated to Hamas and help to promote its ideology of militant resistance against Israel, including suicide bombing.

The report has implications for the Charity Commission, which cleared Interpal of funding terrorist activity in 1997 and again in 2003. Panorama suggested investigations were not thorough enough and featured an interview with Kenneth Dibble, executive director of legal and charity services at the commission, who admitted that the second enquiry may not have been "in depth".

Dibble says the commission's key difficulty is finding proof of any charity's indirect involvement in terrorism. The 2003 enquiry into Interpal was an attempt to establish why the US government had designated the charity as a terrorist organisation. "We couldn't get that information because the US wouldn't provide it, and we were unable to find it from any other sources, so we closed the enquiry on that basis," says Dibble.

Where was the commission?

The Panorama presenter John Ware criticised the fact that the commission "did not set foot on the West Bank" during its enquiry. The commission didn't visit Palestine during the 2003 investigation because the focus was on the US government's concerns, says Dibble. However, it does send people overseas to find facts and verify evidence and has visited EU countries and Africa for other investigations. But Dibble points out that the regulator does not have investigatory powers in a foreign jurisdiction.

A spokeswoman from the Association for Charities suggests that a remedy would be to "take sole responsibility for terrorist charity investigations off the shoulders of the commission and hand it to a heterogeneous panel that could include officers of the commission, but also members of the police, the security services and NGOs working in the field".

This would improve the strength of international inquiries into charity spending, but such a panel would be quite costly to convene in practice.

In the meantime, the commission is keen to ensure that beneficiaries don't lose out as a result of investigations. "People in the most deprived areas, where there is a great need for humanitarian relief, should not be cut off from charitable funding," argues Dibble. "This is why we must be very careful about how we intervene and clearly justified in what we do."

If charities became wary of supporting any aid project that was also receiving donations from Hamas, many causes could lose out: as a party that bolstered its election campaign with pledges to improve social welfare, Hamas supports a wide range of humanitarian issues across all levels of Palestinian society.

Until there are better ways of tracking funds that might be misapplied by charities, aid organisations working in conflict zones must be open if they are to rise above suspicion.

John Hilary, director of policy and campaigns at War on Want, which has worked in Palestine for more than 20 years, explains that charities are able to have political objectives as long as they are not sought through violence. "We oppose the Israeli occupation, and so do the organisations we fund," he says. "But it is a matter of how you conduct resistance, and our partners do so in a non-violent, peaceful way."

Interpal is quite clear in its response to the BBC's criticisms. "All charities working in war zones face attempts to drag them into the political arena, and Interpal is no exception," says Ibrahim Hewitt, chair of the charity. He adds that Interpal will never support terrorist activities.

Suspicion that charities might be funding organisations linked to terrorism is not new. In the 1980s, Sikh charities in Britain were accused of using funds to support the aim of an independent Sikh state in India. More recently, there have been accusations that the Tamil Tigers in Sri Lanka have been funded by charitable money.

However, Saif Ahmed, chief executive of the UK-based charity Muslim Aid, says that Muslim charities are being unfairly accused of terrorist links and should not have to constantly defend their actions. "We cannot engage in political arguments," he says. "We are British, we are taxpayers and we look to the Government to protect our image. Muslim charities are vulnerable - we are confronting huge opposition and we are helpless to respond."

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