Red Cross completes self-critical report of its response to Katrina

NEW YORK -- Overwhelmed volunteers, inflexible attitudes and inadequate anti-fraud measures are among the many shortcomings acknowledged by the American Red Cross in a candid and comprehensive new report assessing its response to Hurricane Katrina.

The in-house report stresses that the organization is intent on correcting the problems. Several steps have been taken for the start of the 2006 hurricane season; other reviews, addressing financial policies and how the Red Cross governs itself, are in progress.

"Some of the things we did this year were by brute force," Red Cross interim president Jack McGuire said. "We're going to do far and away a much better job this year if we have the same challenge as last year. What worries me is if we have something totally new and unexpected."

Katrina, along with hurricanes Rita and Wilma, tested the Red Cross last year as never before. It mobilized 245,000 relief workers, provided $1.5 billion in financial aid to more than 4 million people, and accommodated nearly 500,000 survivors in shelters.

The report -- compiled over several months with input from throughout the Red Cross -- praises the volunteers' work, but offers a detailed look at weaknesses exposed by the hurricane onslaught. Among them:

* The Red Cross logistics system wasn't able to expand rapidly enough to meet demand.

* Although 233,000 volunteers -- along with nearly 12,000 paid staff -- were mobilized, many would-be volunteers were turned away or put on waiting lists.

* The Red Cross fell short in assisting some minority communities and other constituencies, such as the elderly and disabled. Some religious and civic groups complained that the Red Cross, although receiving the bulk of Katrina donations, shared little with them to address community needs.

The Katrina response "highlighted that the Red Cross had not developed strong and enduring local partner relationships in certain parts of the country," the report said.

--Lacking an effective, disaster-wide shelter database, Red Cross operations often relied on outdated information, resulting in faulty estimates of food and supply needs. Local managers couldn't accurately determine which shelters were full; callers couldn't rely on the Red Cross to provide timely verification that missing relatives were in its shelters.

Each of the 804 local chapters operates its own financial system, complicating efforts to make accurate, cost-effective budget decisions during a disaster of nationwide scope. The Red Cross is moving to implement a single, standardized financial management system.

--For the 2005 hurricanes, 1.41 million financial assistance cases were processed, nearly 20 times the previous high, but a debit card program used for many of the cases proved hard to monitor, and call centers failed to identify some bogus claimants. The Red Cross is investigating about 7,100 cases of potential fraud by aid recipients.

--The system of protecting Red Cross staff computer passwords and user IDs was overwhelmed. Without rigorous controls in place, some temporary staff devised schemes to defraud the Red Cross. For example, in Bakersfield, Calif., more than 70 federal fraud indictments have been issued.

--The Red Cross online donation system was unable to handle the enormous volume; the strain affected processing and acknowledgment of gifts.

--The Red Cross failed to take advantage of numerous offers of help from major companies.

"Having a corporate culture of 'We know better' can be perceived as arrogant," said the report, made available this week.

McGuire said much work remained to address these flaws, but he expressed satisfaction with progress thus far. Steps already have been taken to improve delivery of emergency supplies, toughen controls against waste and fraud, and reach out to local church and civic groups.