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Probe of Suspended USAID Contractor Deepens

One of its biggest contractors tied to the U.S. Agency for International Development [USAID] faces increasing troubles amid allegations of mismanagement and impropriety.

USAID last month suspended its association with International Relief and Development [IRD] and the action means the group will not be given any new USAID contracts.

The suspension came after years of reports questioning IRD’s performance and cost claims. In 2012, then-Deputy USAID Inspector General Michael Carroll testified before a Congressional committee on IRD shortcomings in Iraq.

“Auditors determined that projects completed under the program did not target identified, prioritized needs of Iraqi communities,” he said. “Of the 146 completed projects we surveyed, 34 percent did not match any needs identified by the corresponding community, and an additional 31 percent did not match the needs communities identified as top priorities,” said Carroll.

Questions abound

Investigations turned up other questionable items involving IRD and its contracts.

In an October 2014 audit by the Special Inspector General for Afghanistan Reconstruction [SIGAR], IG John Sopko “identified 14 material weaknesses and significant deficiencies in internal controls and 12 instances of material noncompliance with the cooperative agreement terms.”

IG Sopko’s report also said an outside auditor, Crowe Horwath, identified $1.8 million in questionable costs.

The Washington area aid group has received more than $2.4 billion in contracts and cooperative agreements through USAID since 2007.

Last July, Sopko raised another issue with IRD: its confidentiality agreements signed by departing employees. Sopko wrote IRD that “I remain concerned that IRD is acting improperly to limit the rights of potential whistleblowers to report instances of waste, fraud, and abuse.”

Medical supplies

The latest USAID Inspector General’s report, covering April to September 2014, cited the NGO’s February 2014 distribution of US$12.2 million in drugs and medical supplies to seven Afghan Ministry of Public Health hospitals. The OIG report says that in reality, orders were given that the aid should be distributed to non-government community health clinics.

International Relief and Development was created in 1998 by Arthur B. Keys and his wife, Jasna Basaric-Keys. The group’s website describes IRD as “a nonprofit humanitarian and development organization.”

While IRD enjoys the tax breaks allowed for non-profit organization, the NGO has been profitable to Arthur and Jasna Keys, according to The Washington Post. The newspaper reported that between 2007 and 2013, IRD’s revenue was slightly more than $3 billion - with just over three quarters of that coming from USAID.

The Post also reported that from 2008 to 2012, the Keys were paid more than $5.9 million. During the same period, their daughter, and a brother of Jasna Keys received $1.3 million. In 2013, a new management team and board decided to reduce the Keys’ compensation - and the couple reportedly gave back some $1.7 million. The Keys retired from IRD in 2014.

IRD did not respond to requests for comment from Voice of America.

But in a statement last month, IRD said it “is cooperating fully with USAID, remains in close and continuous dialogue with the agency regarding these issues, and is committed to addressing them comprehensively.”

Ongoing probe

IRD’s Chief Executive Officer, Roger Ervin, said in that statement “it is clear from the suspension notice that USAID has determined that much more remains to be done in certain areas. We are working on a response to USAID that will directly address the agency’s concerns, and re-establish confidence that federal taxpayer funds are being prudently managed by IRD to accomplish USAID’s critical missions.”

Meanwhile, USAID continues to probe the contractor.

“Depending on the results of USAID’s ongoing review of IRD’s document submissions and management controls, and, if further information is obtained by the Agency (USAID) as the result of the OIG’s investigation, the suspension could lead to debarment,” a senior USAID official who asked not to be identified because he is not authorized to speak publicly, told VOA.

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    Jeffrey Young

    Jeffrey Young is a Senior Analyst in VOA’s Global English TV.  He has spent years covering global strategic issues, corruption, the Middle East, and Africa. During most of 2013, he was on special assignment in Baghdad and elsewhere with the Special Inspector General for Iraq Reconstruction (SIGIR).  Previous VOA activities include video journalism and the “Focus” news analysis unit. He also does journalist training overseas for VOA.