Narcissism And Hubris Cause The Death Of An NGO

A Geneva-based NGO concerned with trade and sustainable development recently closed for good and laid off its 50 employees, largely because of its chief executive’s excessive salary and profligate spending of donor funds, according to a draft audit of the NGO’s operations.

One of those donors, the government of Denmark, is considering legal action after receiving a notice from its Technical Quality Support Division that said the NGO’s senior managers’ activities “could constitute corruption in the form of nepotism, embezzlement, and corruption in the execution of contracts.”

Carl Christian Hasselbalch, a minister counselor with the Danish Mission to the World Trade Organization, said Wednesday that his government was “still looking at how we can follow up.”

The International Center for Trade and Sustainable Development, or ICTSD, founded in 1996, shut its doors on November 30, 2018, owing to what Chief Executive Ricardo Meléndez-Ortiz called “an untenable financial situation.” He didn’t elaborate.

A principal reason for ICTSD’s financial troubles was that Meléndez-Ortiz was paying himself more than 410,000 Swiss francs ($413,560) per year and was availing himself of expensive perquisites, said a former employee, who provided a copy of Meléndez-Ortiz’s pay stub.

Meléndez-Ortiz, who was ICTSD’s chief executive for its entire 22-year existence, told the Swiss newspaper Le Temps that his salary was equivalent to those of his counterparts at similar-sized NGOs. However, he said, he had received “a compensation” for turning down higher-paying job offers.

“ICTSD’s CEO remuneration is well in excess of all other comparators and over 1.7 times more than the next highest comparator,” said the draft audit, by the United Kingdom Department for International Development.

The highly critical audit hasn’t been released publicly, but a former ICTSD employee provided a copy to Forbes.

In the United States, the average salary paid to non-profit CEOs was $138,815 in 2016-17, according to Excellence in Giving, a philanthropic advisory firm in Colorado Springs, Colorado.

A former ICTSD employee, who asked not to be named, said Meléndez-Ortiz decided for himself how much he would be paid and the Governing Board didn’t object.

Meléndez-Ortiz also spent a lot of money on travel in violation of ICTSD’s rules, used an ICTSD credit card for personal spending, employed his brother as a consultant without telling ICTSD’s Governing Board, and committed other transgressions, the audit said.

“Most of the CEO’s travel between 2016 and 2018 is not supported by evidence, such as an invitation or written justification,” it said.

Meléndez-Ortiz also took a “six-figure” loan from ICTSD to buy real estate, said a former employee. The draft audit said, “the amount awarded breaches ICTSD staff loans policy.”

Meléndez-Ortiz could not be reached for comment. He told Le Tempsthat the travel expenses were justified because “we were often invited to participate in conferences abroad.” He said he was not reimbursed for travel and lodging “in many cases.”

A month later, he sent an e-mail to his former employees that said: “I recognise I made mistakes and I profoundly regret making them, and feel sad and absolutely frustrated that we had to close this chapter of ICTSD in this manner. As I said in November, I very sincerely apologise for any hardship and inconvenience to any of you that have resulted from my actions and these unexpected events.”

The four funding governments’ statement said that “ICTSD has for several years struggled to match its ambitions with the level of secured donor funding and has experienced a number of financing shortfalls.” It said the donors had made “several efforts to address some long-standing concerns,” but ICTSD’s leadership failed to get its house in order.

“The progress in internal reform has not been able to convince core donors of senior management’s ability to effectively manage donor funds and to rapidly implement the reforms to get the organization back on its feet,” the statement said. “As a result, the core donors decided it would not be appropriate to supply additional funding to keep the organization active.”

ICTSD’s former Governing Board Chairman, David Runnalls, declined to be interviewed.

However, the entire eight-member Governing Board released a statement saying that no one at ICTSD had done anything wrong. The statement said impressions to the contrary resulted from “local media coverage, speculations on social media and unidentified sources sharing confidential draft documents that present a deceitful and unbalanced story.”

That was a reference to the draft audit, which suggested that board members were in on the chicanery.

“There are examples of members of the board, with the encouragement of senior management, breaching travel policies,” it said.

It also appears that board members were less than diligent in overseeing ICTSD’s operations.

“We never saw the board members. And they were chosen by Ricardo,” a former ICTSD employee said.

“Ricardo operated with a liberty that most boards would have reined in early on when the tendency became evident.  Ricardo’s taste for high living was possible only because the board did nothing to limit it,” said Mark Halle, the founding chairman of the Governing Board, from which he resigned in 2003.

He said he remained close to Meléndez-Ortiz after leaving the board and tried to get him to step down.

Meléndez-Ortiz “was deeply offended and that was the end of our close friendship,” Halle said.

At ICTSD, “all the ideas came from one person at the top,” a former employee said. “Management wasn’t approachable. They thought they knew everything best.”

Some of the 50 people who lost their jobs have initiated legal action against Meléndez-Ortiz and the Governing Board to get severance pay.

“He’s done a lot of harm to employees,” a former employee said about Meléndez-Ortiz. “I’m not looking for revenge. I’m just looking for transparency.”

John Brinkley was speechwriter for U.S. Trade Representative Michael Froman and for Korean Ambasador Han Duk-soo during the Korean government’s quest for ratification of the Korea-US Free Trade Agreement.

This article was originally published in Forbes and has been republished with author’s permission