Cuba democracy groups facing audits after reports of faud

Campaign News | Wednesday, 23 July 2008

By Christopher Lee for The Washington Post

The U.S. Agency for International Development will begin conducting financial reviews of about a dozen Cuba democracy groups that receive federal money to answer concerns in Congress about possible fraud totaling at least $500,000.

The reviews follow the agency's suspension of a grant to the Miami-based Grupo de Apoyo a la Democracia after a recent audit turned up $11,000 in irregular spending. The group's executive director did not return an e-mail and a telephone call seeking comment yesterday. The matter has been referred to the agency's inspector general.

In March, agency officials suspended a $2.3 million grant to the Center for a Free Cuba after the group disclosed that a former employee, who later became a White House staffer working on Cuba issues, allegedly had used more than $500,000 in grant money for illegitimate purposes. The former employee, Felipe Sixto, resigned from his Bush administration job March 20 after the allegations came to light.

The case is under investigation by the Department of Justice and the USAID inspector general.

"USAID has decided to conduct an immediate review of all the grants to determine where financial vulnerabilities exist and how best to address these vulnerabilities to strengthen the program for future success," Stephen Driesler, a deputy assistant administrator, wrote in a memo Friday.

The two grantees with cases before the inspector general will receive only partial funding until their audits are completed, while the others will receive their full budget, according to USAID spokeswoman Portia Palmer.

USAID has a history of financial mismanagement of grants. In 2006, the Government Accountability Office found that nearly all of the $74 million USAID awarded in contracts to promote democracy in Cuba over the previous decade had been distributed without competitive bidding or oversight. In one case, a grant recipient used government money to purchase video games, leather coats, cashmere sweaters and Godiva chocolates.

USAID has installed additional financial controls in the last two years, according to Driesler.

They include quarterly reviews of grantees, more training for agency staff and a new contract for outside audits. The new financial reviews are in addition to such efforts.

"I applaud this expanded oversight," Rep. Howard L. Berman (D-Calif.), chairman of the House Foreign Affairs Committee, said in a statement issued yesterday. "I received assurances that USAID and the State Department are seized with the gravity of the problems in these programs and that they are actively working to correct the problems."

Berman had sought to block the Cuba program funding until the agency addressed his concerns about financial oversight. USAID told him in a letter Friday that it would begin the new reviews.

Lynne Weil, a committee spokeswoman, said in an e-mail that USAID officials told the panel that between $500,000 and $700,000 in Cuba democracy grants had been stolen from the program.

Sarah Stephens, executive director of the Center for Democracy in the Americas, which favors lifting the travel ban to Cuba, noted that funding for grantees grew fourfold to $45 million this year. The misspending raises the question of "whether this program should be receiving any money at all," she said.

Frank Calzón, executive director of the Center for a Free Cuba, said he welcomes the added scrutiny, noting that it was he who discovered the possible fraud at his group and reported it to USAID.

The attention is simply part of the long-standing political battle over U.S. policy toward Cuba, a conflict bound to intensify as the Bush administration ends, he said.

"The folks who do not like the Cuba policy of the United States and have not been able to win a change [of it] in the Congress are going after the execution of the policy," Calzón said.

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