Red Cross controversy threatens China philanthropy

A young Chinese woman who flaunted her wealth online and appeared to have links with the nation's Red Cross has sparked huge controversy and stoked widespread public suspicion over how donations are used. The aid agency has denied any ties to the woman but web users are outraged, believing she may have received embezzled charity funds. Many have vowed not to donate ever again, fuelling concerns about China's nascent philanthropy drive. "This is definitely going to have an impact," a Red Cross spokeswoman, who refused to be named, told AFP when asked whether the incident would affect the amount of donations the group receives. The scandal erupted last month when a web user uncovered the woman's account on Twitter-like Sina Weibo, full of images displaying her opulent lifestyle -- posing in front of a Maserati and sipping a drink in business class on a plane. "Guo Meimei Baby", as she called herself, claimed she was the general manager of a firm called "Red Cross Commerce". The issue quickly went viral, adding to already deep-seated suspicion about state-run charities such as the Red Cross Society of China, amid a general lack of transparency and openness in the sector. The aid agency and the girl soon went into damage control mode, denying any link to each other. The organisation denied that she was related to one of its vice-presidents who shares her surname, and she said she had made up her job title. But China's state auditor then waded into the controversy, saying it had found five discrepancies in its review of the Red Cross' 2010 budget. The charity promptly insisted these were not the result of corrupt practices. In an apparent effort at greater transparency, the Red Cross opened a Weibo account on Monday. But after just four posts, it was besieged with thousands of comments, many of which just said "give back our money" over and over again. The flap has highlighted how angry ordinary Chinese get when faced with any hint of official misappropriation of public funds, as the rich-poor divide widens in a country where corruption is pervasive at every level of society. The China Development Brief, a well-respected publication for the country’s nonprofit and philanthropic sectors, said last year that "lack of transparency and mechanisms to track donations" were huge pitfalls to be overcome. It quoted a study as saying that a mere 28 percent of public foundations disclosed financial statements. Wang Rupeng, head of the Red Cross, said in a blog post Monday that the charity has been working to address this and hopes to launch an online platform that would enable people to find out how donations are used by the end of July. Still, the "Guo Meimei" controversy is just one of recent incidents to hit the Red Cross. In April, a photo of an invoice showing that a department of the Shanghai branch had spent 9,859 yuan ($1,525) on a meal was posted online, sparking an outcry, state media reported. The aid agency enjoys a different status to many other charities in China and has close ties to the government, also fuelling public mistrust. Jia Xijun, director of the Non-governmental Organisation Research Centre at Beijing's Tsinghua University, said it is registered with an office that answers to the Communist Party, unlike most charities that come under the civil affairs ministry. The government also systematically encourages the public to donate specifically to the Red Cross in times of natural disasters, such as during the 2008 earthquake in Sichuan -- a situation Jia compared to a "monopoly." The controversy comes at a time of debate over philanthropic activities in China as the number of millionaires in the country soars, helped along by breakneck economic growth. The issue came to the fore last year when Warren Buffett and Bill Gates hosted a banquet for China's super-rich in Beijing to discuss charitable giving, sparking questions about whether the wealthy should be doing more. According to the official Xinhua news agency Chinese people donated 70 billion yuan to charity last year -- the equivalent of $8 from every one of China's 1.3 billion people -- up from 54 billion yuan in 2009. But Jia warned the Red Cross controversy risked having an impact on this evolving charity drive. "If the current situation continues, I don’t think people will be willing to donate in the future," she said.