Planet Aid's charity work draws worldwide scrutiny

Boston Globe/April 7, 2002
By Farah Stockman

Beneath the yellow awning of Planet Aid's nonprofit store in Harvard Square, the idea on display is as attractive as the mannequins: The $7 you pay for someone's castaway corduroys might help fund an aid project in Zambia or Angola. That outgrown overcoat you donate could end up sheltering a refugee from the rain.

Planet Aid's model of economic idealism found such a welcome in Massachusetts that suburban Holliston became the group's headquarters in the United States. And rural Williamstown became the site for a campus that launches volunteers all over the world.

In 2000, three years after the organization began scattering its clothes collection containers across New England, Planet Aid brought in more than $3.6 million in clothes and cash, much of it from people who had been told in a brochure that half of their used clothes would be donated to the needy in Africa.

But almost none of the clothes donated to Planet Aid are given away, and only about 6 percent of the money the group raises is spent on charity, a Planet Aid official acknowledged a week ago.

Fred Olsson, the group's New England general manager, called the figure of a 50 percent donation ''an error.'' ''We sell it to the highest payer,'' he said. ''That's how we raise money for our development programs.''

It was not the first time that activists behind Planet Aid have been questioned about how much they donate to the poor. Unbeknownst to authorities in Boston, the British government took a recycled clothes operation run by Humana People to People, Planet Aid's parent organization, into receivership in 1998, after investigators could not determine what had happened to money from the clothing sales.

And elsewhere, Humana's recycled clothing operations in France and the Netherlands were reclassified as commercial businesses, according to a prosecutor in Europe.

And in February, the FBI arrested Mogens Amdi Pedersen, Humana's founder. He now awaits extradition to Denmark in a Los Angeles jail, on charges of tax fraud and embezzlement of millions of dollars from a vast international network of charities and for-profit companies.

Pedersen's arrest is part of an international tale of charity and profit, and involves an investigative trail that stretches to Massachusetts, and a group of activists so secretive and dedicated that some goverments have classified them as a cult. ''They are in operation all over Europe and they are very active in the US, especially on the East Coast,'' said Poul Gode, a deputy prosecutor in Denmark's Division of Serious Economic Crimes, part of the Justice Ministry. ''There is no doubt in my mind that Amdi is linked to Planet Aid in Massachusetts. ... The charges against Amdi are not focused on what is happening with Planet Aid, but the people involved are the same.''

But Olsson said the jailed charity founder has nothing to do with Planet Aid. ''You can't find this person on any payroll or board of directors,'' Olsson said, of Pedersen. ''They are talking about something which is not possible to prove.''

The local presence of a world 'cause'

The public face of Planet Aid can be found in Harvard Square, where music from the Rolling Stones blasts from a radio as teens in bell bottoms drift in past a world map surrounded by literature about Humana's work in Africa and Central America.

At Planet Aid's tonier location on Newbury Street, second-hand orange trench coats fetch $35 apiece from shoppers who are told how their purchases help aid projects abroad. Store employees listen to talks given by volunteers who return from overseas development projects with the Williamstown-based International Institute for Cooperation and Development, another Humana group.

''We're all doing it because we care about the cause,'' said Amy Lewis, store manager for three years, who reiterated figures from a brochure that 50 percent of all donated clothing is given to the needy in developing countries.

But at Planet Aid's more private headquarters in wooded Holliston, where colorful bales of sorted clothing are stacked up to the warehouse ceiling, workers freely say that ''almost all'' of the clothing is sold to pay for Humana-run development projects.

Planet Aid spent just about all of the $3.6 million it raised in 2000, the last year for which complete records are available. It gave out just 6 percent of that income, or about $217,000 that year, to projects including AIDS seminars, small-scale farming groups, and AIDS research. The rest went to salaries, rent, administrative fees, and costs associated with collecting the clothing and fund-raising.

Olsson, a Swedish activist who oversees the Holliston headquarters, called it the cost of doing business.

''When you run a nonprofit in the US, you have to pay your bills,'' Olsson said, adding that the stores themselves serve a worthy purpose as job providers. ''I bet somewhere between 200 to 400 people get their living off of this.''

Planet Aid's form to the IRS states that ''the operating of four thrift shops ... is an environmental purpose. ... Collection and recycling of 14+ million pounds of used clothes, thus relieving local waste facilities.''

But the Web site of Garson & Shaw, the for-profit company that buys Planet Aid's clothes and resells them in Eastern Europe, talks about recycled clothing as big business. Stranger still, Garson & Shaw's other major US supplier, the for-profit company U'SAgain, is listed as a company controlled by Pedersen in an evidence summary filed by Danish prosecutors.

Olsson acknowledged that some of Humana's recycled clothing operations in Europe have raised suspicions, have been shut down, or have been declared commercial businesses, but he said the allegations had nothing to do with Planet Aid here.

''I know there is a lot going on overseas, and I can't answer for that,'' Olsson said. ''I know what I am doing here.''

The story that Humana people tell about the group's genesis starts 30 years ago, when a charismatic aspiring teacher in Denmark named Mogens Amdi Pedersen was dismissed from an academy for having long hair.

Disillusioned, he founded the Traveling Folk Schools, persuading young idealists to travel to Africa and Asia to aid in anticolonial struggles and live among the poor.

The Danish farm origins of a world organization

When they returned to Denmark, these activists pooled their resources and bought a farm in a place called Tvind. Under Pedersen's leadership, they launched a string of schools, farms, and charities that now spans 55 countries. In 1977, these activists - known as ''Tvind'' - launched the International Humana People to People Movement, an umbrella organization, which eventually moved its headquarters to Zimbabwe.

In 1979, Pedersen gave up all formal positions with the organizations and withdrew from public life.

The members of the group's inner circle, known as the Teachers Group, commit to staying with the movement for life, donating their salaries to a communal fund, and relocating anywhere they are needed, according to Danish prosecutors and former members.

At first, the group's efforts gained renown in Denmark, attracting thousands of volunteers. But as the schools and charities spread across Europe, critics accused group leaders of negligence, cloudy finances, and a near-fanatical demand for loyalty from members. Denmark passed a law forbidding state funding for the organization. French authorities classified the group as a nonreligious cult.

''It's huge, and nobody can really work out what's at the bottom of it,'' said Michael Durham, a British freelance journalist who created a Web site aimed at exposing Pedersen and the dozens of charities and for-profit companies he allegedly controls. ''Is it about money? Is it about power? Is about this one man? Or is it about left wing politics?''

In 1997, Stuart Crookshank, an investigator with the Charity Commission in the United Kingdom, traveled to Zambia to find out what had happened to the used clothes that well-wishers had donated to Humana UK, Planet Aid's sister organization.

He found six stores selling used shoes and shirts at European prices.

''It's very good business,'' Crookshank said. ''The question is: What happened to the money?''

Humana UK could not prove that their profits had been donated to charity, so the group was taken into receivership. But nothing stopped its leaders from changing the organization's name and resurfacing elsewhere, Crookshank said.

''Because they straddle the world and they exploit people's emotions and national views about charities, legally ... it's very hard to crack,'' he said. ''There are so many firewalls, smoke screens. To unravel it is going to take some very special investigators.''

Last year, Danish authorities tried to be just that. They swooped down on the Teachers Group headquarters, cracked the codes on computers, and uncovered letters Pedersen had allegedly written describing how to hide funds of one humanitarian organization from ''theft, taxation and prying from unauthorized persons,'' according to Danish prosecutors.

They found evidence that Teachers Group members ''forgo their personal rights, such as their right to start a family according to their own wish.'' Prosecutors also reported signs that the group had diverted humanitarian funds to for-profit ventures, including a television station, commercial farms, and a Brazilian plantation engaged in ''intense forest cutting,'' according to papers filed by Gode.

Pedersen, who had been living in a multimillion-dollar condominium in Florida, has hired Robert Shapiro, the lawyer who led the O.J. Simpson defense, to defend him from extradition charges in a Los Angeles court.

''It's been very difficult to go worldwide,'' said Gode, the Danish prosecutor, who said he plans to investigate only those crimes related to Denmark. ''Our impression is that Amdi Pedersen controls this whole network of funds and companies due to his personal authority. He is the undisputed leader.''

But Jamie Katz, chief of the public charities division of the Massachusetts Attorney General's office, said he was not aware of any complaint against Planet Aid and was not sure if he would investigate it.

''We have somewhere over 30,000 charities registered in Massachusetts and ... the large majority of them are doing good work,'' Katz said. ''I have a staff of five lawyers and three paralegals. A lot of our time is spent on complaints.''

Planting their roots in an old 4-H camp

Humana came to Massachusetts in 1986. Ted Lewis, a University of Massachusetts graduate, and Eric Newman, a student at Hampshire College, had just returned from England, where they had volunteered with a Humana organization and joined the Teachers Group. Back home, they used a rundown 4-H camp in Western Massachusetts to launch, under Humana's umbrella, the International Institute for Cooperation and Development.

They worked nonstop, donated their salaries to the Teachers Group's communal pool, and soon recruited their first batch of overseas volunteers. The enthusiastic recruits each paid $5,000 in tuition, and raised much more for the opportunity to volunteer abroad.

''As we became successful in North America, the Danish folks that we worked with got more and more eager,'' Ted Lewis said in a telephone interview from the San Francisco-based nonprofit group, Global Exchange, where he now works. ''I was summoned to a meeting on a visit to Denmark and there was Amdi,'' he said of Pedersen.

''There is sort of a mysterious quality to this guy,'' Lewis said. ''He traveled secretly. He was introduced to me as a comrade. It was obvious from the way that he was treated and the things that he was saying and the way that he moved that he was a very special person.''

At that meeting, Lewis said, Pedersen motivated him to stay another year at the International Institute for Cooperation and Development, even though he had become increasingly disillusioned.

In the end, Lewis resigned, because Humana kept calculating the institute to be in debt, and because of the strange way that he said his supervisors had interfered with his private life. ''I've never been certain if it's any more evil than an ordinary American corporation,'' he said of the group. ''But what I've always resented the most is that fundamentally, the resource that they were exploiting was young people's idealism.''

The man who came from Denmark to take over Lewis's job was Mikael Norling, who later founded Planet Aid. Norling brought on Fred Olsson, who had been running a Humana recycled-clothing operation in Sweden, to help oversee the new Massachusetts group.

''The aim is to change people's lives,'' Olsson said, recalling how he learned of Humana when he joined a Traveling Folk School in 1978, and traveled from Sweden to Afghanistan to build a school. ''I have chosen to spend my life on trying to make the world a better place.''

Olsson said that he had met Pedersen ''a few times,'' and acknowledged that he is himself a member of the Teachers Group. But he declined to say more. ''It's a private matter,'' he said. ''The Teachers Group is not a legal entity. It has no influence on Planet Aid.''

A 19-year-old makes a disillusioning trip

Those comments came as a surprise to Sarah Bullentini, a 19-year-old who rode a train from Minnesota to work under Olsson at the Holliston warehouse so that she could earn her way to Zambia as an International Institute volunteer.

''The Teachers Group runs Planet Aid, under various names, all over the world,'' she said, adding that she didn't think it was a secret.

Bullentini spent two months sorting clothes for Planet Aid, and even attended a Humana conference in Denmark before her trip to Zambia.

''I learned about the bad press and the controversy,'' she said. ''But I said, `As long as I get to Africa, as long as I do good work.'''

But in Zambia, everything went wrong, she said. She found Humana development projects having to pay $200 a bale for used clothes. Funding for her own project stopped completely. And then came Pedersen's arrest.

''When I joined ... they said all these rumors about him being rich and living in Miami were false,'' she said. ''But when he was arrested they said he had no ties to the Teachers Group and this will not affect the projects at all.''

So, three weeks ago, Bullentini flew home.

''I know the organization has a lot of potential,'' she said. ''But nobody knows where the money goes ... I decided it would be better for me to come home and go to school, because there's not going to be much future for Humana.''