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Open Technology Fund Sues USAGM, Alleges Breaching $18 Million in Contracts

FILE -- The U.S. Agency for Global Media logo at Voice of America, in Washington, D.C., Nov. 22, 2019. (VOA)

The Open Technology Fund, a group that uses federal grants to promote internet freedom technologies worldwide, filed a lawsuit late Thursday against the U.S. Agency for Global Media (USAGM), alleging it has breached its contracts by withholding $18 million in funding.

Filed in the U.S. Court of Federal Claims, the suit asks the court to award OTF the funds it claims are due from USAGM, the parent of Voice of America.

“We really see this as a last resort,” Laura Cunningham, acting CEO and president of OTF, said. “We have tried numerous ways to prevail upon USAGM to release our funds so we can resume our operations. As a result, we have no other choice but to move forward with legal action at this point.”

A spokesperson for USAGM did not respond to a request for comment about the lawsuit by the time of publication.

Earlier Thursday, a USAGM spokesperson said the agency “has already provided $10.9 million in U.S. taxpayer funding this year to OTF, including $1.6 million in July. Given that, USAGM was both stunned and deeply concerned to learn that OTF has decided to cancel or freeze dozens of contracts.”

A running battle

The lawsuit is the latest twist in a monthslong battle between OTF, an independent non-profit organization and USAGM, a federal agency with a mission to “inform, engage, and connect people around the world in support of freedom and democracy.”

At issue is whether USAGM, under its new chief executive Michael Pack, can control OTF, decide who runs the organization, how it spends money and if it receives funds.

On Tuesday, OTF received an emailed letter from USAGM that gave the organization 10 days to come into compliance with its contracts, after a series of letters from USAGM asking for records, according to the suit.

OTF’s leadership viewed the 10-day deadline as a threat to terminate the contract, which would mean the end of the organization and its projects.

$1.6 million deposit

On Wednesday, OTF leaders saw a $1.6 million deposit in the organization’s bank account.

On Thursday, Rep. Michael McCaul, the lead Republican on the House Committee on Foreign Affairs, tweeted about the $1.6 million, saying it came after both Republicans and Democrats expressed “serious concern” about the funding delay for July.

“USAGM & Pack have a long way to go to restore our trust, & the first step is immediately transferring funding to OTF for August,” he tweeted.

Internet freedom projects

Founded in 2012 at Radio Free Asia, another USAGM grantee, OTF became an independent nonprofit grantee of USAGM in November 2019. Its budget for fiscal year 2020 is $20 million, plus $9.8 million that USAGM had awarded to OTF but had been held by Radio Free Asia, according to the lawsuit.

When Pack took the helm of USAGM after receiving Senate confirmation, he attempted to install new leaders at OTF. A U.S. appeals court in July blocked the staff changes.

Earlier this week, USAGM announced it was reviving its Office of Internet Freedom and making two grants to firms that work on internet firewall circumvention technology. The two recipients had received contracts from OTF.

“OTF is obligated to spend money that is allocated to it for internet freedom on internet freedom,” a USAGM spokesperson said Thursday.