The Red Cross has called in forensic accountants after claims that millions of pounds raised in 1991 have gone missing.
Such an investigation could prove embarrassing for other accountants involved in the fund-raising project, spearheaded by disgraced peer Lord Archer.
Forensic accountants from KPMG have be brought in to go over the books of the 1991 Simple Truth aid project, a campaign which Archer had claimed raised #57m in aid for Kurdish refugees in northern Iraq.
The row blew up after Baroness Nicholson called on the Fraud Squad to investigate what happened to millions of pounds raised for the charity.
KPMG has been asked to investigate all financial matters surrounding funds raised for the Kurds and the accuracy of reports about funds raised overseas.
Although the Red Cross would not comment on the scope of the investigation, other accountancy firms could be dragged into the scandal, including Touche Ross, now part of Deloitte & Touche.
Binder Hamlyn, part of Andersen Worldwide, is the current auditor of the British Red Cross, but Touche Ross was the auditor at the time of the appeal in 1991.
The row has forced the Red Cross to defend its role, and spell out how much of the #57m passed through its hands.
Sir Nicholas Young, chief executive of the Red Cross, said the total amount attributed to Archer’s fundraising was more than covered by four separate amounts.
The Simple Truth concert raised #9.2m, #6m was given by the UK government to the United Nations, #11.7m was raised by other Red Cross and Red Crescent organisations, and #31.5m was raised after Archer persuaded various other governments to contribute.
Sir Nicholas has said the #9.2m received by the Red Cross through Simple Truth had been spent on providing humanitarian assistance to the Kurdish refugees.
He added: ‘The figures were audited by our accountants and appear in our annual report and accounts for 1991. None of the other money went through the British Red Cross.’
The investigators could face a difficult task in piecing together all the material. Despite denying any files had been shredded, Sir Nicholas has conceded that some material could have been destroyed ‘in accordance with normal business practice’.
KPMG declined to make any comment about the investigation.
For another charities story see www.accountancyage.com/Tax/1118756.