From: wolda002@umn.edu
Date: Fri Jul 31 2009 - 00:49:57 EDT
USAID siphoned to Iraqi insurgents
Admin - Jul 27, 09 09:45 PM
WASHINGTON July 27, 2009 (USA Today) — The top U.S. aid agency has
suspended a $644 million Iraq jobs program after two outside reviews raised
concerns about misspending, including an inspector general's audit that
found evidence of phantom jobs and money siphoned to insurgents.
The Community Stabilization Program, launched in 2006, was designed to tamp
down the insurgency by paying Iraqis cash to do public works projects such
as trash removal and ditch digging. International Relief and Development
(IRD), a Virginia-based non-profit corporation, ran the program, one of
many it manages for the U.S. government.
It is rare for the U.S. Agency for International Development to suspend an
ongoing aid program, particularly involving one of its major contractors.
More than 80% of IRD's $500 million annual budget comes from USAID, company
tax filings show.
The stabilization program "is generally thought of as one of the most
effective counterinsurgency efforts in Iraq," Deputy Secretary of State
Jacob Lew told USA TODAY.
In a little-noticed March 2008 audit, however, USAID's inspector general
reported evidence that the program was being defrauded through overbilling
and payments to ghost Iraqi employees.
The audit included a letter from an unnamed U.S. official working with a
Provincial Reconstruction Team in Baghdad asserting that "millions of
dollars from these projects were fraudulently going to insurgents, as well
as to corrupt community leaders and (program) representatives." That fraud,
the official wrote, could potentially put American troops at risk.
Much of the evidence of fraud, the audit said, came from "a number of
classified and unclassified intelligence reports."
The inspector general did not cite corruption allegations against the
American employees of IRD. However, it found that IRD's records were
replete with "irregularities that call into question not only" the reported
jobs "but also the validity of payments made to project contractors." Asked
why IRD claimed credit for creating jobs when timesheets were incomplete or
missing, one IRD official said the military was "pushing for job creation,"
the audit said.
In the wake of the audit, which focused mostly on problems in Baghdad,
USAID and IRD put in place new financial monitoring.
In February, Donald Gambatesa, USAID's inspector general, told the Wartime
Contracting Commission that "investigations of fraud in the community
stabilization program are ongoing." That month, USAID hired another
company, International Business and Technical Consultants, which reviewed
the program's youth job component. On June 30, that company reported
"inconsistencies" in the northern Iraqi city of Mosul, USAID said in a
statement to USA TODAY.
"USAID suspended payments" to the program on July 4, the agency said.
Lew said he would await the results of the investigation before deciding
what actions to take.
"IRD takes any allegation of fraud extremely seriously," said Arthur Keys,
the company president. IRD delivered a written report on the matter to
USAID last week, Keys said.
Lew, Keys and USAID declined to say how much money went astray in Mosul.
Four former IRD employees, who investigated the irregularities or were
briefed on them, told USA TODAY that at least $10 million was spent
questionably in that city. The four declined to give their names because
they said it would hurt their ability to get new jobs in the aid field. One
of the former staffers who was assigned by IRD to assess the damage said
that as much as tens of millions worth of projects didn't exist and the
documents for them were faked.Nearly $600 million has been spent in the
program across Iraq. USAID says the program created 45,000 jobs, though
Gambatesa said those numbers cannot be verified because data and oversight
were poor.
Robert Stross, an accountant who publishes a monthly newsletter about
foreign assistance contracting, said it is "extremely rare" for USAID to
suspend a major program before completion.
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