USAID Responds to 'Life in the Aid World'

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Kudos to the USAID press office for replying to us quickly when we sent them our post on the USAID Inspector General’s report of misuse of funds in Afghanistan. They replied with this statement: The USAID IG severely criticizes the United Nations Development Program (UNDP) and the UN Office for Project Services (UNOPS) for their management of the Quick Response Program in Afghanistan, conducted between 2003-2006. We recognize that Afghanistan is a difficult place to work, but we still expect all of our partners to maintain recognized standards of accountability and transparency.

We have implemented additional control and oversight mechanisms to ensure this type of activity does not occur again. We are also seeking reimbursement for $7.6 million of unsubstantiated UN expenses.

Q) How much money was lost to "contractor abuses"?

USAID is seeking reimbursement of $7.6 million in funds drawn-down by UNDP in 2007 that have not been fully substantiated. A bill of collection for that amount was referred to the U.S. Treasury for action.

At present we are working with the UNDP and UNOPS to fully account for the funds. USAID's Acting Administrator met with UN leadership in New York on Monday, April 13, 2009 to discuss this issue and the way forward.

Q) What programs does USAID still have with UNDP/UNOPS? What measures has USAID taken to ensure accountability and quality of work?

Now we have three active grants with UNDP and one with UNOPS. The active awards for UNDP include support for the 2009 Afghan Presidential elections.

UNOPS: Kabul School Construction Program – This program has been well managed from the beginning and is working well. Access to the schools here by inspectors and USAID staff has helped keep this program accountable with good quality of work.

Q) What changes have been made to the USAID/UNDP/UNOPS relationship?

USAID committed to continue working with UNDP to resolve questions over $7.57 million in unaccounted for USAID funds and to improve collaboration between these agencies in Afghanistan and elsewhere. Mr. Melkert pledged UNDP’s full cooperation with USAID in reforming UNDP’s project management practices, improving financial accountability and in recovering any missing QIP funds.

Q) What changes has USAID put into place as a result of the IG report?

Over the past year, USAID has adopted significant safeguards to protect U.S. taxpayer resources. Safeguards on our UNDP projects include:

- Amending the traditional Letter of Credit (LOC) method of financing by requiring additional financial documentation and USG review and approval prior to each disbursement;

- Mandating the hiring by UNDP of an additional dedicated financial management staff member on the project;

- Requiring that all USAID funds be separately tracked and reported on a monthly basis; and,

- Increasing technical oversight by Mission staff.

In addition, the Kabul Schools Program, implemented by UNOPS, has been carefully overseen by USAID. This program is under the advance/liquidation method of financing (as opposed to the traditional letter of credit), thus providing USAID with greater financial management oversight. Additionally, USAID has two full-time staff overseeing the Kabul Schools program. These engineers are at the worksite at all times when work is being performed.

Q) Is UNDP managing the 2009 Afghanistan Presidential elections?

The 2009 Afghan elections are being managed by the Independent Election Commission of Afghanistan with the assistance of the UN. USAID is working with the UN in preparing for those elections. It is critical that the upcoming elections be perceived as independent, so the donor community has agreed to pool funds in a UNDP-managed project to support the elections. USAID is participating in this pool, but is imposing significant additional safeguards on UNDP.

Summary of IG Report

  • In August of 2007, the USAID/Inspector General’s office received an anonymous complaint about abuses by the UN with regard to grants in Afghanistan. The subsequent investigation by the IG office was completed in the summer of 2008, and confirmed several serious problems with financial management and overall performance.
  • UNDP withdrew an approximate $6.7 million in 2007-after the Quick Impact Project ended and without consultation with USAID. No supporting documentation was provided to explain the reasons for these withdrawals.
  • UNOPS has provided a letter accounting for approximately $1.9 million of the amount drawn down in 2007.
  • Due to the refusal of the UN to cooperate with the investigation of the USAID, questions remain unanswered with regard to the overall conduct of UNDP and UNOPS in Afghanistan.
  • On February 5, 2009, USAID referred three Bills of Collection against UNDP and UNOPS to the U.S. Treasury Dept for a total of $7.6 million dollars. As of March 3, 2009 those Bills of Collection had been referred to a private collection agency which has 270 days to do collection efforts.