Friday, February 8, 2013

No Godiva chocolates: Sweet news for USAID

The latest GAO report on the U.S. government’s democracy programs in Cuba faults the State Department for weak financial oversight while commending USAID for progress it has made toward tighter internal controls.
The report says the State Department failed to properly review the internal accounting practices of two-thirds of its contractors for Cuba work from Oct. 1, 2009, through Sept. 30, 2012.
USAID, on the other hand, hired an outside contractor to review its programs and found “questionable charges and weaknesses in partners’ financial management, procurement standards, and internal controls.”
The 58-page report does not name names. It does not say what happened, if anything, to the contractors who submitted questionable expenses. Nor does it give any details about those charges - nothing like the GAO's 2006 report which criticized the taxpayer-financed purchase of such democracy-enhancing items as a gas chainsaw, Nintendo Game Boys, leather coats, a mountain bike, crab meat, cashmere sweaters and, yes, Godiva chocolates.
The lack of any scandalous revelations was no doubt a relief to USAID officials, who said in a memo to GAO:
...we are proud of the continuous progress that USAID has achieved since your previous reports...
Financial oversight measures have led to the identification of $6.8 million in questioned costs. Of those amounts, $5.1 million in questioned costs have been adequately resolved; and $1.7 million in questioned cases are in the process of being resolved. Overall, there was approximately $50,000 in refunded amounts to USAID.
Systematic monitoring and evaluation help us establish targets, monitor progress, and determine ways to improve our programs.
GAO, or General Accountability Office, is the investigative arm of Congress. It released the results of its 17-month investigation on Feb. 7, three days after John Kerry began as Secretary of State.
Kerry requested the investigation in 2011 while he was chair of the Senate Committee on Foreign Relations.
The report dings the State Department, but I don’t believe it is damaging enough to impact the Cuba programs in any significant way. A more important question is whether Kerry will have interest in making changes to the programs and he hasn't said anything publicly about that.
The GAO’s investigation is a notable step toward improving accountability in the Cuba programs, but falls short of fulfilling Barack Obama’s 2009 promise to “usher in a new era of open government.”
Obama made that pledge on Jan. 21, 2009, the day he took office, writing:
A democracy requires accountability, and accountability requires transparency. As Justice Louis Brandeis wrote, "sunlight is said to be the best of disinfectants."
Yet both the State Department and USAID remain secretive in their handling of democracy programs in Cuba, and the GAO report does not change that.
In 2009 and 2010, USAID paid an outside auditor more than $1.4 million to examine its Cuba programs, but in response to a Freedom of Information Act request the agency released only 10 heavily redacted pages that omit most findings, recommendations and other key information, including the identity of the aid recipients named in the audit. See "USAID audit cost taxpayers nearly $150,000 per page?"
The business of bringing democracy to Cuba remains a closed, cottage industry of government officials and contractors who resist broader international trends toward greater transparency and accountability in aid programs.
Phil Peters, creator of the Cuban Triangle blog, points out that the GAO report focuses on "management and financial accounting as opposed to measuring impact and effectiveness in Cuba."
Indeed, the GAO report is limited in scope. Among its goals were to:
  • Identify “the types and amounts of assistance that USAID and State have provided, as well as characteristics of their partners, subpartners, and program beneficiaries
  • Review “USAID’s and State’s efforts to implement the program in accordance with U.S. laws and regulations and to address program risks
  • Examine “USAID’s and State’s monitoring of the use of program funds.”
As part of its investigation, GAO examined six of the top 15 recipients of program funding from Oct. 1, 2006, through Sept. 10, 2010.
The unnamed partners received 10 awards and contracts - five from State, five from USAID - during the time GAO was carrying out its investigation.
Federal regulations require State and USAID to give written guidance to partners that hire subcontractors. USAID generally met that requirement, but the State Department failed to follow the guidelines while overseeing contractors’ distribution of “at least 91 subawards and subcontracts,” GAO said.
Alan Gross
The report refers to the case of Alan Gross, but does not mention him by name.
...Cuban law prohibits citizens from cooperating with U.S. democracy assistance activities. In December 2009, a subcontractor working for one of USAID’s partners was arrested in Cuba while delivering computer equipment to provide Internet access to Jewish communities on the island. He was subsequently sentenced to 15 years in prison for “acts against the independence or the territorial integrity of the state.”
Peters wrote:
So the dollars are well accounted for, but as to whether they are being spent in ways that make a positive difference, well, that’s outside the scope of the report.
Which is worth noting because in the case of USAID’s satellite Internet program run by Alan Gross and other grantees, the dollars may have been perfectly managed and 100 percent accounted for, but they were 100 percent wasted because these operations were rolled up by Cuban intelligence.
Sometime after authorities jailed Gross, employees of the U.S. Interests Section in Havana stopped delivering democracy assistance to activists in Cuba. The GAO report said:
Conditions in Cuba continue to pose substantial challenges for U.S. assistance. Cuba is a Communist state that restricts nearly all political dissent on the island; tactics for suppressing dissent in Cuba include surveillance, arbitrary arrests, detentions, travel restrictions, exile, criminal prosecutions, and loss of employment.
The United States, which maintains an embargo on most trade with Cuba, does not have diplomatic relations with the Cuban government. Consequently, USAID does not work cooperatively or collaboratively with Cuban government agencies, as it does in most other countries receiving U.S. democracy assistance. Because of heightened security concerns, USINT no longer has a role in implementing assistance for USAID and State/DRL partners.
USAID and State program staff have been unable to obtain visas to visit Cuba over the past decade, which poses challenges for program implementation, monitoring, and evaluation.
Among other facts in the report:
  • From Oct. 1, 1995, through Sept. 30, 2011, Congress appropriated $205 million for Cuba democracy aid.
  • Since 2004, USAID has received 68 percent of the funding and State, 32 percent.
  • From Oct. 1, 2005, through 2012, USAID and State gave 111 awards and contracts to 51 partners.
  • Programs in recent years have increased their focus on “information technology, particularly on supporting independent bloggers and developing social networking platforms on the island.”
  • Aid to political prisoners and their families dropped after the number of political prisoners in Cuba decreased.
  • The Interests Section does not provide any humanitarian aid on the island.
The report said the U.S. government's programs "generally focus on developing an independent civil society and promoting freedom of information in Cuba."
The overall goal and guiding principle of U.S. democracy assistance for Cuba is to improve the effectiveness of citizens to participate in activities affecting their lives and to increase access to information.
Efforts to develop Cuban civil society include training in organizational and community development, leadership, and advocacy. Related material assistance may include the provision of books, pamphlets, movies, music, and other materials that promote democratic values. In addition, efforts to promote freedom of information have included the following, among other activities:
  • Information technology training for Cuban nationals, ranging from basic computing to blogging
  • Support for independent publications
  • Provision of material assistance.
A sensitive but unclassified version of the GAO report was issued in December.
David Gootnick. Photo: GAO
The main contact for the report is listed as David Gootnick, director of international affairs and trade at GAO. Those assisting with the report included:
Leslie Holen, Elisabeth Helmer, Heather Latta, Joshua Akery, Laura Bednar, Beryl Davis, David Dayton, David Dornisch, Ernie Jackson, Crystal Lazcano, John Lopez, Reid Lowe, Kim McGatlin, Etana Finkler and Jeremy Sebest.

Note: This article was shared with the Center for Democracy in the Americas as part of a six-month collaborative project with non-profit group. See more about our collaboration here.

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