Caritas Luxembourg announced this week that it was creating a crisis committee following the loss of around 61 million euros ($67 million) in suspected fraud.
The organization, a member of the Caritas Internationalis confederation of Catholic relief groups and one of Luxembourg’s largest charities, disclosed July 18 that it had filed a criminal complaint for the misappropriation of funds.
The scandal emerged weeks before a scheduled papal visit to the Catholic-majority country with fewer than 700,000 inhabitants that borders Belgium, France, and Germany.
The disclosure prompted anger among government officials and sparked a national debate about the oversight of charities receiving state funds.
Prime Minister Luc Frieden said that the charity, which provides services for the homeless and refugees with state money, would not receive “a single euro” more amid the scandal.
Xavier Bettel, the minister for foreign affairs, described the alleged embezzlement as “sickening” and said it would impact “the poorest people in Luxembourg and in the world.”
On July 22, the public prosecutor’s office said that an individual had turned themselves in and was arrested following an order from an investigating judge. The person was later released from custody.
In an interview with RTL, Caritas Luxembourg director general Marc Crochet said: “When the whole thing started, Caritas had just 28 million euros in the account. And that is about half of the money we need in the year to function.”
“And the 28 million euros that were there were not our money either. That was about 25 million that belonged to the Luxembourg state and other donors.”
Crochet said that 33 million euros out of the missing 61 million were in credit and loans taken out in the organization’s name. He suggested an employee was responsible.
“The only thing I knew for sure was that someone was about to rob us. And I could actually just connect the dots and say: I know that person,” he commented.
In a July 23 statement, Caritas Luxembourg, founded in 1932, said it was providing counseling for its almost 500 employees, who it said were “deeply shaken” by the scandal.
It added that an auditing firm had volunteered to assess its financial procedures, “and to identify and change any technical and/or human shortcomings.”
“These findings will undoubtedly shed light on how a misappropriation of funds of this scale, and over a period of nearly six months, could have been possible,” it said.
“The financial losses include transfers from Caritas Luxembourg accounts and reserves, as well as credit lines that were opened thereby diverting funds that the organization never actually had at its disposal.”
The charity said it was negotiating with banks to meet its short-term financial needs, cooperating fully with the judicial authorities, and continuing to provide services to the needy.
In a July 31 update, Caritas Luxembourg said that after ensuring employees received their salaries for July, it was setting up a crisis committee.
The committee, led by former chartered auditor Christian Billon, would “have the power and agility to take the necessary decisions to restore the confidence of donors, the general public, and public authorities in the entities,” it said.
The charity explained that the committee would be supported by the accounting firm PwC Luxembourg, which would “conduct the investigations required to uncover the facts.”
Local media reported the organization had enough funds to pay its employees’ August salaries.
Prime Minister Luc Frieden described the crisis committee as a “confidence-building measure,” but said the government could not yet resume funding.
Pope Francis is due to make a daylong visit to Luxembourg Sept. 26, meeting the prime minister and head of state Grand Duke Henri.
Later, he will meet with the Catholic community at Notre-Dame Cathedral, the seat of the Archdiocese of Luxembourg, led by Cardinal Jean-Claude Hollerich, S.J., who also serves as the synod on synodality’s general rapporteur.
