American Red Cross has been reluctant to make public details over how it raised and spent over $300 million in Hurricane Sandy relief funds. The charity’s lawyers say the disclosure would inflict “competitive harm” on the group.
The Red Cross supplied some of the information concerning its
Sandy activity to New York Attorney General Eric Schneiderman,
whose office has been investigating the issue.
When a New-York based independent non-profit media outlet ProPublica filed a public records request for the same information, the charity’s lawyers argued that journalists could only be given a redacted version, as some of the facts mentioned in the report constituted a “trade secret.”
If such details were disclosed, "the American Red Cross would suffer competitive harm because its competitors would be able to mimic the American Red Cross's business model for an increased competitive advantage," Gabrielle Levin of the Gibson Dunn law firm wrote in a letter to the attorney general's office.
Disaster Accountability Project, a watchdog that monitors aid groups, found Red Cross’ citing trade secret exemption was a strange thing to do.
"Invoking a 'trade secret' exemption is not something you would expect from an organization that purports to be 'transparent and accountable,'" said Ben Smilowitz the group’s executive director.
The attorney general's office agreed to redactions for which the
Red Cross asked, but not all of them. The response to the
charity’s lawyers, which has been made public,
lists 10 instances in which requests for redactions have been
The NY attorney general has for quite a while been pressing the Red Cross on greater transparency over its Sandy activity. In a letter sent to the charity a year ago, the office expressed “continuing concerns about fundraising and relief efforts conducted by the American Red Cross in response to Hurricane Sandy.”
Last April, the Red Cross said it still possessed a third of donations raised for Sandy relief. The group’s officials said the money will be spent on that particular storm recovery.
Some disaster relief experts then criticized the Red Cross for not spending the money more urgently in the weeks following the storm, but keeping the funding instead for long-term recovery.
Government spending of the Sandy relief aid has also been questioned. New Jersey Governor Chris Christie has faced allegations he misspent millions of dollars in relief aid received from Washington. Federal officials have been investigating whether Christie used some of the $25 million in aid to produce tourism ads that starred him and his family.