Hong Kong's Wikimania 2013—failure to produce financial statement raises questions of probity

Investigative report

Hong Kong's Wikimania 2013—failure to produce financial statement raises questions of probity

Further half year of delaying

In the interests of probity and transparency, the organisers had agreed to a three-month deadline for delivering a financial statement. Well after the expiry date we made inquiries of the organising team; on 28 November, team member Deryck Chan responded that the treasurer [Tango Chan] was coordinating the process, and referred to the "many who handled money" as a difficulty in preparing the accounts. He also blamed the breaching of the deadline on the "WMF’s reluctance to fund administrative staff". This may have been a reference to the FDC's recommendation just months before the event to refuse funding for an annual grant to the Hong Kong chapter, due to concerns about "internal governance, financial management capacity, and capacity of its volunteers to manage a plan of this size", noting critically that "WMHK is currently out of compliance with its previous WMF grants." This had been followed by an angry protest from the chapter.

We sent a reminder email on 7 December. On 20 February, the WMF’s chief of finance and administration Garfield Byrd advised us that "Ellie and I have been working with the Hong Kong team to get a final financial report on Wikimania 2013. To date we have not received a report, but have received indications that they are working on it and plan on having it to us soon".

On 4 April, Byrd wrote to us: "I currently have an understanding in place to have a report on Wikimania 2013 completed by April 15, 2014. If the report is not complete at that time, then WMF is reserving the right to have an independent accounting done of the Wikimania 2013 grant and expenses." A week after that deadline, he told us that "I did receive the report and we are reviewing it now. Once we have agreement on the report with Wikimedia Hong Kong, we would expect the Wikimedia Hong Kong will post it on Meta where comments and feedback can be posted."

We followed up with a further email on 6 May, this time to four members of the organising team: Jeromy-Yu Chan (coordinator in chief), Tango Chan (treasurer), Simon Sheck (community coordinator of program and scholarships, and chief advisor, WMHK Advisory Board), and Deryck Chan. We received no reply.

A week later we wrote again—this time copied to the general email address of the Hong Kong chapter, which owns the Wikimania 2013 trademark—posing six questions about financial probity for the event. Nearly nine months after the event, we gave notice that unless, by copy-deadline, we received a reply or a prima facie satisfactory financial report was posted on Meta, we would publish these questions; we advised that "the story would raise the possibility that significant issues of probity and/or process may explain the non-appearance of the financial statement, and would call for a wider investigation by the WMF."

The six questions the organisers have not answered

In the absence of a financial report, these are the questions we put to the organisers of Wikimania 2013 concerning the finances for the event:

Were adequate accounting procedures used for controlling, monitoring, and verifying income and expenditure?
How many people had access to spending capacity from the budget, and how many people were involved in on-the-ground monetary transactions? Was this restricted to "section leaders", and how many such personnel were there?
Did the recorded details of cost-centres and budget lines satisfy the WMF’s standards for financial reportage; if not, in what respect?
Is any money unaccounted for?
What was the nature of the financial and other relationships with sponsors of the event? Were there any exchanges of gifts or benefits in either direction? Were these relationships transparent?
Why is it taking so long to produce a financial statement, and when will a full financial report be published?

Future safeguards

Having copied the correspondence to the WMF's chief of finance and administration, Garfield Byrd, the Signpost asked him what steps the Foundation can take in future to avoid such a failure of financial transparency and possibly of probity:

“

... we have already implemented some changes, based on our experiences with Wikimania 2013.
In cases where we do not have a team with a proven track record of accountability and reporting on movement funds, the Wikimedia Foundation will act as fiscal sponsor for the event and pay all expenses directly and take responsibility for the financial reporting on the event. In other cases, when possible, we will look at providing funding on a reimbursement basis upon submission of a complete event expense report or some combination of both of these approaches. ...
... The goal here is greater cooperation and pre-planning with the local Wikimania or Wikimedia Conference teams to resolve any issues with the awarded Wikimania bid or Wikimedia Conference proposal well in advance of the event. It is the objective of WMF to maintain Wikimania and the Wikimedia Conference as community events, led by local volunteers and adjusting the level of support based on the capabilities of the local team.

”

An additional process added to the Wikimania 2015 selection process, he said, is that key elements for an awarded Wikimania bid will be confirmed by the WMF within 60 days of the award announcement (30 days for Wikimedia Conference proposals) and that any material discrepancies will be reported to the jury to determine whether they are sufficient to prompt a review of the decision.

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The people who need to be investigated are WMF, not WMHK. Money was allocated for a Wikimania. The Hong Kong team produced a "'Beautifully smooth' Wikimania with few hitches". End of story. Hong Kong should ignore requests for a financial statement, which serves no purpose whatsoever. I would recommend instead Garfield Byrd should be sacked. Hawkeye7 (talk) 21:16, 17 May 2014 (UTC)[reply]
- What should the WMF be investigated for here? They provided WMHK with a grant to organize Wikimania 2013. It seems reasonable to expect a financial statement how the grant was used. And what's Byrd done here to be sacked here? Martijn Hoekstra (talk) 21:28, 17 May 2014 (UTC)[reply]
  - That doesn't make much sense, Hawkeye. WMHK put on a well managed event, but that does not relieve them of responsibility for providing an accounting of how donor money was spent. That they haven't is, unfortunately, not surprising. It is of a piece with the resistance to and rejection of WMF norms and expectations after the chapter was refused a major uptick in funding. Nathan^T 21:31, 17 May 2014 (UTC)[reply]
    - Just chiming in with a side note here as the EIC of the Signpost and the author of our Wikimania report last year ("'Beautifully smooth' Wikimania with few hitches"). The front end of the conference was done very well; it was well-organized, there were no major mishaps, and the participants broadly enjoyed the sessions. The back end, however, has not gone so well, and that's what this story focuses on. Ed ^{[talk] [majestic titan]} 21:53, 17 May 2014 (UTC)[reply]
      - WMF is yet to articulate what purpose the accounting serves. Putting on a well-managed event is what the funding was for, and that was done. The back end, as you put it, serves no purpose whatsoever. It is just an invitation to pointless bureaucracy and micromanagement. We should all reject this, and if they are indeed WMF norms, then more than one person may need to be removed. And yes, I once fired someone like Byrd for precisely this reason; prioritising processes over the mission. Hawkeye7 (talk) 22:34, 17 May 2014 (UTC)[reply]
        While I agree that the WMF generally places too much emphasis on useless bureaucracy, to the detriment of the movement, I respectfully disagree about the issue of financial reporting and more specifically this situation. The reason why a report is needed is to see that the money was properly spent. I am biased on this issue, having helped organize a Wikimania myself, but I think most Wikimania veterans know that there have been Wikimanias that were organized better and spent less donor money. Not putting down the Hong Kong team here, which did a good job given the circumstances. However, both the WMF and the volunteers (us / the public) needs to know how the money was spent, both so that we know of deviations (if any), and so that we (the WMF and future organizers) can learn the appropriate lessons. Overspending on Wikimania is a growing problem in the movement, and therefore at this junction it's especially important to understand the financial aspects of each conference better. —Ynhockey ^(Talk) 22:44, 17 May 2014 (UTC)[reply]
        Not to mention the message this would send to future Wikimania organizers: "do what you want with the hundreds of thousands of dollars we're sending you; we won't be auditing what happens to it." Secondarily, imagine the subsequent effect that would have on donations to the movement. Ed ^{[talk] [majestic titan]} 23:07, 17 May 2014 (UTC)[reply]
It seems like there is a lot of passing the buck going on here. Who ultimately will be held responsible for delivering the report? What are the consequences for late delivery? What are the consequences for no delivery at all? And who would be on the receiving end of consequences, if there are any? (Wllm (talk), 21:59, 17 May 2014 (UTC)[reply]
- Looks like this is a learning experience for the WMF. Hopefully this will lead to a change in practice were local chapters may handle the organization of things and the WMF is at least somewhat involved with managing the "back end". WKHK is a small organization. After organizing this size of conference I am sure they are burnt out. Doc James (talk · contribs · email) (if I write on your page reply on mine) 00:45, 18 May 2014 (UTC)[reply]
  - I'd have to agree. "FDC's recommendation just months before the event to refuse funding for an annual grant to the Hong Kong chapter...." I'm going to go out on a limb here and suggest that it's probably a lot easier to get accounting work out of people if you don't pull the rug out from under their budget just months before a huge event. If they had to use conference money to pay for expenses that were budgeted to the chapter to pull everything off, but are now afraid of getting in hot water if someone starts complaining that wasn't proper, then more power to them. EllenCT (talk) 01:19, 18 May 2014 (UTC)[reply]
    - (commenting not in my role as the FDC chair) I believe that the costs of accounting for such an event should definitely be included in the event's budget (which possibly is a reminder for future Wikimanias; but also for WMF which may decide to reserve an amount for this purpose for all future meetings). It is unwise to assume that a quite elementary report would be provided only if the chapter was given a grant for their general program. With such amounts of money, accounting for all expenses is really essential for transparency purposes, and also to show that we, as a movement, have integrity. Pundit|utter 06:48, 18 May 2014 (UTC)[reply]

@Pundit: are you familiar with critical path analysis in event, process, product, and budget planning? Can you imagine a situation where preconditions for a successful event funded in a chapter budget when the event budget was drafted would result in event failure if unexpectedly unfunded? Are you suggesting it would have been more ethical to duplicate such necessary chapter budget expenses in the event budget as contingent expenses to be returned in the event of chapter defunding? If so, were there ever any instructions to that effect? Do you think integrity involves preventing your friends from being in such unexpected situations? EllenCT (talk) 09:45, 18 May 2014 (UTC)[reply]

I think it's a stretch to assume that a giant uptick in general funding from the WMF for the chapters operations was a critical path for a successful Wikimania event - where "successful" includes the existence of basic accounting controls. The two funding streams were unrelated, the WMHK should have had no firm expectation of funding approval (as no such sign had been provided to them), the funding period for the FDC grant began after the event, etc. For information, the WMHK had no general budget grant from the WMF prior to the Round 2 submission to the FDC, yet asked for over $200k in funding for Round 2. Nathan^T 16:01, 18 May 2014 (UTC)[reply]

As Nathan wrote. Also, all entities of this size have to have accounting services required by law. I'm only suggesting that organizing a large event may require some additional work in this area, which should be included in the costs of event. Pundit|utter 05:21, 19 May 2014 (UTC)[reply]

Quite simply as the senior body in this relationship, WMF should have made sure that the appropriate reporting was in place - and maybe they did. What constitutes appropriate reporting is, of course, open to discussion. Had a third party event manager charged a fixed amount to organise and deliver the event, we would not be asking for their expenditure on paper napkins and attendance bags. Unless a specific agreement was made with the WMF to publish particular financial information, there is no onus from that point of view on WMHK to do so. WMHK does of course need to comply with HK law and accounting standards - that, however, is a matter for the regulatory authorities.
While investigative journalism is great fun, to request information with the rider "unless it is provided, questions will be asked about your probity" does not seem a good way to go.

All the best: Rich Farmbrough, 01:18, 18 May 2014 (UTC).

Rich, we gave the conference organizers literally months to respond. I think the questions we raised were appropriate, and that they were given more than enough lead time to answer any of our questions. Ed ^{[talk] [majestic titan]} 02:53, 18 May 2014 (UTC)[reply]

Rich, not fun; hard work. Tony (talk) 05:13, 18 May 2014 (UTC)[reply]

Am I reading this right: the meta:Wikimania 2013 bids/Hong Kong#Budget didnt include any provision for overheads such as detailed financial reporting? Is there another revised, more detailed, budget that was constructed with the WMF staff after the bid was successful and before funds were handed over? John Vandenberg ^(chat) 02:01, 18 May 2014 (UTC)[reply]
Those are some good questions. I always felt that WMF is not doing very good in budget transparency, and I'd love to see a Signpost issue focusing on that. In my opinion, what budget information is given to the community is disorganized, and non-verifiable (have scans of any receipts been ever posted)? By the way, it would be nice if the report would compare WHMK budget information (or lack of therefore) with those of priors Wikimanias. This report is a good start, I hope to see much more digging on this. For the record, I don't expect to uncover much problems, but I'd like to see the transparency of financial matters significantly improved across the entire Wikimedia movement organizations.--_{Piotr Konieczny aka Prokonsul Piotrus| reply here} 02:58, 18 May 2014 (UTC)[reply]
LOL, what an outstanding example of Signpost style. Thank you for raising attention on Wikimania budget transparency, but I wonder why you focus on the lack of 2013 statements when m:Wikimania 2012/Budget is still empty. The only available financial statements for a past Wikimania are at m:Wikimania 2011/Budget (thanks Wikimedia Israel for your leadership in transparency!). On the bright side, WMF last month published its own costs for Wikimania, only 8 months later than most chapters, at m:Wikimania 2013/Budget. --Nemo 07:39, 18 May 2014 (UTC)[reply]
- Hello Nemo bis. Wikimania 2012's financial statement was posted four months after the conference, in November 2012, on the Wikimania Handbook. I did not create m:Wikimania 2012/Budget nor was I originally expected by anyone to post financial data there. I would like to also note that Wikimania 2012 is responsible for the overall development of the Wikimania Handbook, including a comprehensive timeline detailing all the factors that go into planning Wikimania and when they need to happen. The Handbook supplements the "Guide to Planning Wikimania" I prepared which includes countless receipts and invoices, so that you can investigate in detail which goods and services were purchased for the conference. (I make the Guide available on request, but I don't publish it online because some vendors get touchy about people posting their prices online.) The Wikimedia Foundation did not have comparable documentation until I sought its development following Wikimania 2012. So I strongly contest the claim that Wikimania 2012 was not transparent with its accounting. I am greatly disappointed that Wikimania 2013 could not build on the work I did for 2012. Harej (talk) 16:32, 18 May 2014 (UTC)[reply]
  - Thanks Harej, I've transcluded the information on the now-standard place. Forgive me if it looked otherwise, but I was not making any claim about Wikimedia DC's transparency or accounting. In fact, other than greeting WMIL, the only organisation I mentioned was WMF, because WMF travel is the single biggest Wikimania expense by far. --Nemo 07:54, 21 May 2014 (UTC)[reply]
We should all understand that financial shenanigans are possible in any charity and in any business - when money is involved the watchword should be "trust but verify", not simply "assume good faith." With WMF grants, we are especially at risk: there are many inexperienced young people involved here in many different countries with different cultures of financial accountability and different methods of financial reporting. It is inevitable that we will have some "misunderstandings" and more mini-scandals with WMF money. We must accept that without condoning it and take necessary steps to minimize it. I say "more mini-scandals", but some might say we've already had our share of real scandals. These include events at a couple of our largest chapters, in the UK and in Germany (which failed to get approval by its own audit committee). If I remember correctly there were similar events in an Asian chapter and in Africa.

But there are only 3 paths to take here

- 1. close down all grants - which we don't want to do;
- 2 ignore the problem - which will *inevitably* lead to real major scandals getting international attention (a la the Red Cross scandal of several years ago, or the Brazil World Cup fiasco), which could possibly close down the project; or
- 3. strictly require financial budgeting and financial reports to maintain transparency both before and after projects, and to use our influence with chapters to help educate them on the need for financial transparency and how to implement proper financial reporting and budgeting.

3 is the only viable option.

People must realize that without transparency the projects themselves will be hurt or curtailed. Most shenanigans won't be of the type where somebody gets a grant and then immediately disappears across a border with a new Mercedes. Rather they will be padding accounts, e.g. an extra 20-30% goes to a family or friend's business with kickbacks expected. Or expensive but unneeded frills are added simply because they are easy to skim from. Project managers may spend more time figuring out how to get the kickbacks, or free computers, than in running the project. At some point we may have a Wikimania where everybody arrives and finds that there is no organization at all, mangled hotel reservations, no technology set up, or even no venue.

Kudos to Tony for following this up. The Signpost having a reputation for investigating the flow of money will keep everybody on their toes. I also think that the accounting dept. at WMF has done a good job so far, in a tough situation. But progress all around is still needed.

And don't forget the next financial scandal - I will say "I told you so." Smallbones_(smalltalk) 13:26, 18 May 2014 (UTC)[reply]

All in one place

There is a photo of a planning committee, and they are all in one place. Wikipedia editors are scattered all over and almost never really met. So is Wikmideia different?— Vchimpanzee · talk · contributions · 20:05, 19 May 2014 (UTC)[reply]

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