Sunday, November 30, 2008

Audit: Cuba democracy program still risks misuse

Posted on Monday, 11.24.08

Audit: Cuba democracy program still risks misuse
AP Legal Affairs Writer

MIAMI -- The U.S. program that spends millions of dollars each year
promoting democracy and human rights in communist Cuba is improving
controls on grants, but still faces a risk that money could be misused,
according to a federal audit released Monday.

The U.S. Agency for International Development has made strides in the
Cuba Program since a highly critical 2006 audit, but the Government
Accountability Office found its "ability to ensure the appropriate use
of grant funds remains in question."

Earlier this year USAID suspended grants for its two largest democracy
aid recipients - the Center for a Free Cuba and Support Group for
Democracy - after irregularities by some individual employees were

At CFC, a former senior employee allegedly used companies he controlled
to sell shortwave radios at artificially high prices to CFC, then
pocketed the difference of more than $578,000, according to the audit.
The problem at the Support Group for Democracy was a former employee's
misuse of a credit card to buy more than $21,000 in personal items. In
both cases, the money was recovered.

In a statement, USAID told GAO, which is the investigative arm of
Congress, that both cases came to light because of improvements in
oversight of the Cuba Program.

"It is precisely because of these additional oversight actions that
cases of alleged fraud and questioned costs were detected," said Sean R.
Mulvaney of USAID's management bureau.

The CFC grant of $7.2 million was reinstated in September for six more
months. The Support Group for Democracy's $10.9 million grant was
extended through March so that an investigation can be completed.

Between 1996 and 2008, the Cuba Program has awarded about $83 million in
grants to organizations and universities working to bring democracy to
Cuba. The money goes for things such as humanitarian aid, uncensored
books, human rights training and advocacy for human and worker rights.

Another $20 million has been requested in 2009 for the Cuba Program to
be split between USAID and the State Department.

Since the critical 2006 audit, the GAO found:

-All of the Cuba Program's new democracy assistance money has been
awarded competitively. Between 1995 and 2005, only 5 percent of the
grants were based on competitive bidding.

-Staffing at USAID has been boosted, but is still below levels auditors
said were necessary to monitor the grants.

-Several recommended actions to improve oversight of the money are now
in place, but were only begun in 2007 and 2008 and have yet to produce
measurable results.

Mulvaney said USAID is seeking to hire three additional staffers for the
Cuba Program and beef up reviews of entities getting the grants "to
address and reduce grantee risk."

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