Investigations Significant Activities

April 1, 2018 – September 30, 2018

OIG Launches ‘Make a Difference’ Hotline in Guinea for Reporting Diversion of Malaria Commodities

In September 2018, we launched our latest “Make a Difference,” or “Faire la Difference,“ reward hotline in Guinea, in coordination with the country’s government. Representatives from the Government of Guinea, implementers under the U.S. Government’s Presidential Malaria Initiative (PMI), and other stakeholders attended the OIG-hosted launch event. The new hotline offers rewards for previously unknown, usable information about theft, resale, or other abuses of U.S. Government-funded antimalarial commodities. The hotline operates locally and is toll-free in Guinea. We monitor and assess incoming complaints and may refer tips received through the hotline to local authorities and others. We will pay rewards to callers for valuable and previously unknown information received throughout the hotline. In Guinea, the hotline is advertised through billboards, posters and radio announcements reminding Guineans that they can make a difference in their community by fighting theft and abuse within the country’s public health system.

October 1, 2017 – March 31, 2018

USAID FSN Employee Terminated for Disclosing Procurement-Sensitive Documents During Bidding Process for $48 Million Contract

We conducted an investigation generated by a USAID implementer in Africa that reported receiving a copy of the independent government cost estimate for an upcoming $48 million solicitation. The investigation confirmed that the implementer obtained the estimate from a USAID Foreign Service National (FSN) employee who had access to the confidential data. We reported our findings to USAID officials who terminated the FSN employee after 29 years of service.

OIG Investigation of A Cash Thefts Led to Resignation of Local USAID/Honduras Employee

An OIG investigation into allegations of multiple thefts of personal and USAID funds from a USAID/Honduras office space led to an FSN employee being placed on administrative leave. During the investigation, OIG coordinated with the regional security office and determined that the FSN employee stole cash from other USAID employees in January 2018. Prior to further administrative action, the employee resigned.

Two Separate OIG Investigations in Yemen Resulted in Written Reprimands for USAID FSN Employees

Two unrelated OIG investigations in Yemen revealed that two FSN employees had unapproved external employment in violation of USAID policy. In November and December of 2017, each employee was suspended for 5 days as a result of the investigations.

OIG Investigation in Lebanon Resulted in Resignation of USAID FSN Employee

A USAID FSN employee was allowed to resign in lieu of termination after an OIG investigation determined that they inappropriately used inside knowledge to compete for a promotion within the USAID mission in Lebanon. They resigned on October 12, 2017.

Ongoing Investigation in Southeast Turkey Led to Debarment of Individual Involved in Kickbacks and Bid-Rigging

An ongoing OIG investigation into bid-rigging, collusion, bribery, and kickbacks between Turkish vendors and procurement staff from four nongovernmental organizations in southeast Turkey has resulted in a 3-year debarment for a key coconspirator in the scheme.

Joint OIG Investigation With UNDP Resulted in Nearly $150 Million in Suspended Funds and New Internal Controls To Protect Taxpayer Funds

A joint OIG investigation with the UNDP Office of Audit and Investigation found indications of fraud and corruption in an Iraqi stabilization project. In July 2017, the United States pledged $150 million to the UNDP Iraq stabilization program but due to fraud allegations, it was placed on hold. The project assists Iraqis in returning to their communities that have been freed from conflict and occupation by ISIS. As a result of the investigation, USAID and UNDP agreed to include additional award requirements to strengthen internal controls by expanding monitoring of stabilization activities; controlling information sharing on contract details; enhancing training and capacity building on fraud prevention; and dedicating a full-time UNDP investigator focused on Iraq in order to prevent fraud.

Corruption Investigation Resulted in Cancellation of Nearly $264 Million in Power Generation and Transmission Projects

In February 2018, USAID revoked nearly $264 million for planned and current infrastructure projects funded through an Afghan Government owned power infrastructure company. The Agency made this funding decision based on investigative developments in a joint USAID OIG and Special Inspector General for Afghanistan Reconstruction criminal investigation. The investigation involves an alleged contract steering scheme wherein high-level Afghan Government officials colluded with a number of contractors to exchange $2 million in kickbacks for a $134 million power transmission infrastructure contract. USAID’s $264 million funding cancellation is in addition to the Agency’s previous funding de-obligation for the $134 million contract.

$44.6 Million Award Suspended Due to Diversion of USAID Commodities to Militant Organization

An ongoing OIG investigation found that employees of a U.S.-based nongovernmental organization knowingly diverted USAID-funded food kits to a militant organization operating in northern Syria called Hay’at Tahrir AlSham (HTS). HTS is a militant group formed in 2017 by a merger of five other Syrian militant groups, and has since grown further. Under duress after being threatened by members of HTS, employees allowed HTS fighters to be included among program beneficiaries in the Idlib Governorate and submitted falsified beneficiary lists to USAID to conceal the fighters’ participation in the food assistance program. USAID suspended the $44.6 million program, which delayed approximately $30.2 million in program funding until appropriate controls are implemented.

Investigation Uncovered Years of Poor Accounting and Gross Mismanagement at American University of Afghanistan

In the fall of 2016, USAID OIG and the Special Inspector General for Afghanistan Reconstruction launched a joint investigation into allegations of widespread fraud, waste, and abuse in USAID-funded programs at the American University of Afghanistan. In consideration of information disclosed during the investigation, along with information from an independent review ordered by the Agency, USAID decided to stop providing funding advances to the university. In addition, the agreement was modified to require the university to submit reimbursement vouchers with supporting documentation for expenses for $3.4 million in currently available project funds, rather than be provided funding upfront.

Logistics Service Company and Local Procurement Logistics Manager Debarred for 3 Years

In October 2017, USAID imposed a 3-year debarment on a procurement and logistics manager at International Executive Service Corps after an OIG investigation disclosed that he steered more than $400,000 in procurements to his brother-in-law’s company in exchange for more than $315,000 in kickbacks. His brother-in-law’s company was also debarred for 3 years for its role in the scheme.

USAID/South Sudan Supervisory Foreign Service National Employee and Subordinate Resign in Lieu of Termination for Attempting to Steer $305,000 Contract

OIG investigated an allegation involving two USAID local national employees who were reportedly steering contracts to personal contacts. The investigation confirmed that the supervisory local employee was sharing procurement-sensitive information from several companies competing for a $305,000 contract. When interviewed, both employees confessed to sharing confidential bidding information. As a result of OIG’s investigation, USAID cancelled the contract’s bidding process and both employees resigned in lieu of termination.

Six Individuals Arrested for Illicit Sale of HIV/AIDS and Antimalarial Products in Zambia

Between June and October 2017, OIG worked on a proactive initiative in Zambia and visited markets and pharmacies in the capital to determine if stolen USAID-funded commodities were being illicitly sold. Within days, the investigative team identified individuals involved in the illegal sale of stolen HIV and malaria test kits, which were later confirmed to have been supplied by USAID and the Global Fund. In December 2017, we worked an operation with the Zambia National Task Force, which resulted in the arrest of six individuals who were charged with the illicit sale of stolen HIV and malaria test kits. The investigation is ongoing.

Four Individuals Arrested for Diverting and Distributing USAID-Funded Mosquito Nets

After months of fieldwork, OIG presented to the Nigerian National Agency for Food and Drug Administration and Control interim findings of an investigation into diversions of antimalarial commodities. In February 2018, officers from the agency and the Nigeria Police Force arrested four sellers of stolen USAID-funded lifesaving commodities and seized over 800 illegally diverted long-lasting insecticidal nets provided to the Nigerian National Malaria Elimination Programme by USAID under the President’s Malaria Initiative. OIG investigators were present and provided technical guidance to support this arrest operation. The investigation is ongoing.

Three Individuals Convicted for Diverting and Distributing USAID—and Global Fund—Donated Antimalarial Medicine in Malawi

During the reporting period, OIG and the Malawian Drug Theft Investigative Unit pursued investigative leads provided to the OIG’s cash-for-tips “Make a Difference” Malaria hotline in Malawi. The leads were conducted at various health facilities and markets purportedly selling stolen U.S. Governmentfunded antimalarial commodities. The verification efforts prompted three arrests in September 2017 and resulting convictions of the same Malawians in December 2017. The investigation is ongoing.

USAID/Vietnam Recovered $42,208 From Health Project Implementer for Kickbacks on Employee Salaries

An OIG investigation into an allegation of mismanagement at the Centre for Community Health and Development, a local Vietnamese organization implementing USAID’s Community HIV Link program, required at least one employee to pay back a portion of their salary. In addition to taking kickbacks from employee salaries, the organization allegedly withheld portions of employee per diems during business travel. The organization’s managers allegedly told its staff that because foreign donors do not understand that Vietnamese organizations have to pay under the table expenditures, the returned salary was used to cover those and other potentially non-allowable costs.

Further investigation found that employees were encouraged by managers to return a portion of their salaries by making contributions to an “employee fund” recorded and controlled by the organization’s management. The rate of pay varied per employee and position. The organization refused to produce complete records or comply with a USAID OIG subpoena, thereby complicating a determination of how much funding had been embezzled.

In response to the investigative findings, USAID issued a letter of determination to the organization for $96,279. USAID ultimately accepted recoveries of $42,208.

OIG Investigation Led to Systemic Changes on $20 Million USAID-Funded Education Award in Dominican Republic

OIG responded to an allegation from the USAID/Dominican Republic that an implementer of a $20 million award reported false information about its work to the mission. The investigation determined that USAID failed to provide the implementer with clear guidance in the cooperative agreement, causing the implementer to report inaccurate information in order to be compliant with USAID’s requirements. The investigation also determined that an implementer staff member acted as a principal employee on the project without proper designation under the award. We referred our findings to USAID/Dominican Republic, which initiated a modification to the agreement to include adding the senior staff member as a principal on the project and clarified expectations in reporting to USAID.

Contract for USAID Consultant Responsible for Oversight at Construction Sites in Gaza Is Terminated for Salary Kickbacks

An OIG investigation revealed that Al Madina Consultants, a construction firm in Gaza subcontracted by AECOM Technical Services (AECOM) to oversee USAID—and World Bank Group—funded construction activities in Gaza, forced its employees to pay a substantial percentage of their USAID-funded salaries to Al Madina’s owners. The investigation confirmed that most of Al Madina’s employees in Gaza, as a condition of employment, had to agree to withdraw a percentage of their monthly salaries (up to 40 percent) in cash and provide it to Al Madina’s owners. As a result of the OIG investigation, AECOM terminated its $3.5 million subcontract with Al Madina in November 2017. In January 2018, we referred the case to USAID’s Compliance Division for possible suspension and debarment. We will also refer the case to the Palestinian Authority Anti-Corruption Commission for possible criminal or civil prosecution.

USAID-Funded Implementer Agreed to Pay $2 Million for Engaging in Prohibited Activities With State Sponsors of Terrorism and Entities Designated as Foreign Terrorist Organizations

In June 2015, a False Claims Act complaint was filed in the Southern District of New York against a USAID-funded implementer, Norwegian People’s Aid. Norwegian People’s Aid had previously certified under a USAID award that it did not provide material support to state sponsors of terrorism or terrorist organizations designated as such on the Specially Designated Nationals and Blocked Persons List published by the Office of Foreign Assets Control. OIG opened an investigation and determined that the organization provided material support to Iran, a designated state supporter of terrorism, through its participation in oil development programs in the country from 2001 through 2008. Additionally, from 2012 to 2015, Norwegian People’s Aid was involved in a youth leadership development program that included support for Hamas, the Popular Front for the Liberation of Palestine, and the Democratic Front for the Liberation of Palestine. In March 2018, a settlement agreement was reached to resolve the U.S. Government’s claims against Norwegian People’s Aid. Under the settlement, the organization will be required to pay injunctive relief and a monetary penalty of approximately $2 million to the United States in addition to revising its internal policies to ensure that, henceforth, it complies with applicable U.S. laws.

USAID Issued Africare $3.9 Million Bill of Collection Pursuant to Internal Control Weakness

A self-disclosure of internal control weakness by the USAID implementer, Africare, in 2015 led to a coordinated fact-finding effort between USAID and OIG investigations. Through witness interviews and record reviews, OIG confirmed material weaknesses in the accounting systems and grossly lacking supporting documentation at Africare’s Washington, DC, headquarters and field offices that persisted for several years. A USAID-initiated audit confirmed the investigative findings. Citing the lack of adequate and complete supporting documentation, the USAID-initiated audit questioned $3.9 million.