At Solar Sister, we are committed to our values of trust, sisterhood, and grit. Living these values compels us to share the difficult news of failures just as we share the good news of our successes. We believe that by communicating honestly and transparently, we open up a dialogue that builds a foundation of trust and facilitates sharing so we can continuously learn. Our often quoted operating motto is ‘better every day’, which is a recognition that it is not how many times you fall, but how many times you get back up that counts.
Below is a report of a very difficult time at Solar Sister. I am sharing with you in a spirit of openness and learning. We remain firmly committed to our work supporting women entrepreneurs. We have recently reached a milestone of 10,000 women entrepreneurs, and through our strong, data-centered evaluations, we know that the ripple effect of Solar Sister’s work means positive lasting change for the women entrepreneurs, their families, and communities. The challenges and occasional failures that we encounter only increase our dedication to building a stronger and more resilient organization. We hope your dedication remains as well.
— With gratitude for your support, Katherine Lucey, CEO, Solar Sister
Summary
- We’ve learned members of our team in Tanzania conspired to defraud the Tanzanian entity of Solar Sister. Upon discovering this fraud, we immediately took action to prevent further losses and initiated an extensive and thorough investigation to determine the extent of loss.
- According to our investigation, an aggregate of approximately TZS 619,808,967 ($266,517) was misappropriated from our Tanzania operation in 2022 and early 2023. This total represents approximately 2.8% of our 2022/2023 budget.
- This fraud was possible because individuals who held both authority and responsibility for operational and financial management at the top of our Tanzanian entity colluded to subvert the policies and procedures that exist to prevent such fraud.
- The fraud was detected by our staff members in US headquarters who monitor our financial and operational data and noticed irregularities. We then engaged an independent forensic auditor to investigate the transactions and confirm our findings.
- Through the investigation, we learned the misappropriation of funds was hidden by falsifying records and documents to cover up the diversion of funds.
- The individuals responsible for this gross misconduct are no longer employed by Solar Sister, they have acknowledged their actions, and we are taking disciplinary and legal action against those involved. As an organization, we have also taken immediate steps in policy and practice changes across our operations to prevent this type of fraud from happening again.
- We currently have no reason to suspect that this fraud extends beyond our Tanzania programs, but in response are reviewing our procedures and updating policies across Solar Sister. We will use this loss to further improve our controls.
We apologize to our entrepreneurs, our team, and our donors for the damage done.
We apologize first and foremost to all of the entrepreneurs with whom we have worked and built a thriving clean energy distribution network in sub-Saharan Africa. This fraud scheme has indirectly diverted funds that would have otherwise gone to support new entrepreneurs. To our donors reading this post, we apologize for any damage this has done to your faith in us and reaffirm our commitment to the Solar Sister mission.
Below, we outline the specifics of how this fraud occurred and how we are responding:
The fraud occurred when our Tanzania staff conspired to divert legitimate payments and provide falsified documentation to present them as having been paid.
While simple on the surface, this scheme involved corrupting our policies and procedures at many levels and included systematic and deliberate falsification of documentation and data to cover up the misappropriation. This included creating fake documents to appear to come from suppliers, tax authorities, and other government entities in Tanzania and going to great lengths to falsify payment documents. As a result, this fraud diverted pension funds for current employees and prevented access to resources to train new entrepreneurs, which we consider a grievous offense and are working to rectify.
Our own staff identified this fraud and then confirmed it with third-party independent investigators.
In June of 2023, financial irregularities were discovered through our standard monthly reconciliation process. Our data systems provided detailed information that allowed us to detect a series of falsified data entries that led us to uncover the pattern of fraud. As soon as the irregularities were discovered, they were shared with our internal finance team, our board of directors, and with external auditors. We immediately launched an investigation.
In the weeks that followed, with the support of an external forensic auditor and a local law firm we were able to confirm that payments that were intended to be sent to the local tax and pension funds were misappropriated and falsified documents were used to cover up the missing payments. As a result, Solar Sister accumulated a growing liability of payments due to the tax and pension agencies, which our organization is working to rectify and address.
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We’ve made immediate changes to prevent this type of fraud.
The employees directing this scheme are no longer employed by Solar Sister. We have updated and reinvigorated our company-wide ethics training, including mandated individual commitments to comply with the Solar Sister Code of Ethics. We have instituted more rigorous cross-checks in our financial management procedures, and have appointed new leadership at country and global operations levels within the organization
We’ve updated our data to ensure this fraud incident has not altered the accuracy of our impact data.
We are thankful that Solar Sister’s culture of rigorous data monitoring and evaluation uncovered this fraud, and also provided us with a road map to reset our financial data and impact data. We have taken the appropriate write-offs to reconcile our financial accounts, and have restated our impact data so that both reflect accurate values. It has been a tedious and thorough reconciliation process, and we are confident the data that supports our financial statements is solid.
Although this incident has been a setback for Solar Sister, the company remains committed to its mission of providing access to clean energy to women living in energy poverty. With this in mind, Solar Sister will continue its efforts to bring light and hope to the people it serves.
We remain committed to our mission and to the important work of supporting our Solar Sister Entrepreneurs.
It is our commitment to continue to support the Solar Sister Entrepreneurs at the heart of our work. We are determined that the behavior of a few bad actors will not deter us from our thirteen-year mission of light, hope, and opportunity for these women, their families, and their communities. We commit to using the lessons learned to build a stronger and more resilient organization. Our core values of Trust, Sisterhood, and Grit have helped us navigate this difficult period; we hope you will continue on this journey alongside us to support women entrepreneurs and increase clean energy access across Sub-Saharan Africa.