October 31, 2008
Financial Wrongdoing Prompts Kellogg Foundation to Suspend Grant Making in Southern Africa
One of the nation’s largest foundations, the W.K. Kellogg Foundation, announced today it is suspending its grant making in southern Africa after discovering “financial irregularities” in its operations there.
The foundation is investigating financial problems at its office in Pretoria, South Africa, which oversees its giving to Botswana, Lesotho, Malawi, Mozambique, South Africa, Swaziland, and Zimbabwe, according to a statement on its Web site.
“Preliminary indications from the audit are that several hundred thousand dollars may have been diverted illegally, and that the final amount may be higher depending on the audit result,” Gregory A. Lyman, Kellogg’s senior vice president and corporate secretary, said in the statement.
Mr. Lyman said the foundation is “working closely” with South African law enforcement as part of the matter.
Former Ambassador Leads Investigation
The foundation has asked James A. Joseph, a former U.S. ambassador to South Africa, to serve as an adviser to help manage its Africa programs during the investigation. Mr. Joseph, who served as ambassador from 1996 to 1999 and headed the Council on Foundations, helped establish the Kellogg program in Africa in the 1980s.
Sterling K. Speirn, chief executive of Kellogg, said “we are of course distressed that our important work in the region has been compromised and will take all necessary steps to determine the facts, take action against those responsible, make every effort to recover the missing funds, and redirect them to worthy beneficiaries. We will also take steps to strengthen our administrative systems to prevent a re-occurrence of this highly regrettable incident.”
Kellogg, whose headquarters are in Battle Creek, Mich., had $8.4-billion in assets at the end of last year, making it one of the 10 wealthiest philanthropies in America. This year it announced big changes in its grant making, established a new mission statement, and set up a new organizational structure for the foundation’s program staff. (The Chronicle, April 17)
Africa Programs Started in 1986
Kellogg’s Africa giving began in 1986, awarding $350-million to support economic development, efforts to train new African leaders, and agriculture projects.
Mr. Speirn told The Chronicle that despite the setback, the philanthropy remains committed to working in the impoverished region.
“We’re suspending our operations while this financial audit takes place down there,” he said. “We’re not in any way backing off from our commitment to southern Africa and our programming there. We just want to take the time to investigate the financial situation so we will be able to proceed accordingly.”
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