Interactive Telephone Services (ITS) receives 50p for each call giving a credit-card donation it takes on Rwanda Crisis hotlines, the Red Cross said. It has handled tens of thousands of calls prompted by newspaper advertisements and televison appeals from members of the Disasters Emergency Committee, an umbrella organisation for seven charities including the Red Cross, Christian Aid and Actionaid.
The company's approach differs from that of the high street banks, which also handle large numbers of donations. A spokesman for Barclays said yesterday that the banks passed on every penny and met the administration costs themselves.
Tom Clarke, Labour's overseas development spokesman, said he would be writing to the Prime Minister about the issue. 'Even if this is within the regulations, people have a right to know where their money is going,' he said. 'Many would choose to go to a bank if they knew these fees were being paid to companies like this.'
ITS became the object of a Hampshire police fraud squad inquiry after it began the Telemillion telephone prize-draw game in February. The Labour Party alleged that the company, whose chairman was Tim Renton, the Conservative MP for Mid-Sussex and a former Arts Minister, was running a private, illegal lottery set up to compete with the national lottery. When he was a minister Mr Renton had supported the creation of a national lottery whose proceeds would go into public funds.
The ITS game, in which callers rang a premium-rate 0891 number and had a remote chance of winning a pounds 250,000 jackpot if they answered a simple question, was suspended after police began their inquiries. A spokesman for the Hampshire fraud squad said last week that the investigation into whether the ITS draw was a game of chance - and therefore an illegal lottery - was still continuing.
Mr Renton resigned as chairman of ITS last Monday and severed all links with the company. He was unavailable for comment last week but an ITS spokesman said: 'We both came to the view that it would be better for him and better for the company if he resigned.'
The Telemillion lines are now being used on behalf of charities and media organisations. Callers are charged at local rate. The company makes its money from fees paid by the aid agencies for each call taken. Staff said calls had been running at 25,000 a day. After the launch of the Rwanda appeals, managers said that the company had had its most successful week yet. Having made substantial losses on the Telemillion game, ITS had gone into profit for the first time.
Nigel Linacre, the company's marketing manager, accepted that the company had made a 'substantial investment' in the game which it had not recouped. 'We have 2,280 lines here,' he said. 'We are very pleased to have the chance to help the charities.'
John Gray, public relations director for the British Red Cross, said that the 50p fee the charities paid for each call, was 'satisfactory' and fell within Charity Commission guidelines.
'About 6 per cent of the money raised in our appeal is going on the telephone costs,' he said, 'and the Commission's limit is 7 per cent. We need specialist companies because there's a danger that if people cannot get through after a television appeal they'll put down the phone and not bother again. This way we get lines at our disposal and our staff are free to concentrate on other matters. It's an efficient system.'
Postal donations towards the Rwanda emergency funds can be made direct to, among others, the British Red Cross, Room 331, Freepost, London SW1X 7BR; Oxfam, Room BB55, Freepost, Oxford, OX2 7BR; Save the Children, Dept 4050247, Freepost, London SE5 8DR.
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