GAO Audit Finds Waste In Cuban Aid Program

By Karen DeYoung
Washington Post Staff Writer
Thursday, November 16, 2006

Nearly all of the $74 million a federal agency has spent on contracts to promote democracy in Cuba over the past decade has been distributed without competitive bidding or oversight in a program that opened the door to waste and fraud, according to a report released yesterday by the Government Accountability Office.

In one of the more extreme cases of apparent abuse, the GAO said a Miami-based group used government money to purchase "a gas chainsaw, computer gaming equipment and software (including Nintendo Game Boys and Sony PlayStations), a mountain bike, leather coats, cashmere sweaters, crab meat, and Godiva chocolates."

The group said in its grant application to the U.S. Agency for International Development that it would use the money "to provide humanitarian assistance and information to [Cuban] dissidents and their families." The director of the grant recipient, Accion Democratica Cubana, told the Miami Herald that all the luxury items -- but not the chainsaw -- were sent to Cuba. But GAO author David Gootnick said the lack of documentation made that impossible to determine.

Rep. Jeff Flake (R-Ariz.), who requested the audit along with Rep. William D. Delahunt (D-Mass.), said the lack of oversight and the failure to follow government rules led to creation of a money trough that existed largely to provide jobs and operating funds to Miami-based activists who oppose Cuba's communist government.

"I think that this administration and to some extent the last wanted simply to curry favor with the Cuban American exile community," Flake said. "It's been kind of a bipartisan thing, and you haven't had anybody really challenge it. We just kind of turned away."

Delahunt, currently the ranking minority member of the House International Relations subcommittee on oversight and investigations, said at a Capitol Hill news conference that he would hold hearings on issues raised in the audit when the new Congress convenes under Democratic leadership.

Flake and Delahunt chair the bipartisan Cuba Working Group, which has pushed unsuccessfully for changes in long-standing travel restrictions and economic sanctions -- tightened by the Bush administration -- that prohibit sending virtually anything to Cuba. "What is striking about this," Flake said of the democracy program, "is we're basically spending money to beat our own embargo."

Under Clinton-era legislation, USAID distributes money to U.S. groups to send surreptitious aid -- including food, medicine and office supplies -- to Cuba and non-monetary assistance to political dissidents and independent journalists trying to operate within the island's tightly controlled communist system. The administration has promised an additional $80 million in funding over the next two years and expanded the program to include detailed plans for a transition to democracy in Cuba. Planning has accelerated with President Fidel Castro's relinquishment of power to his brother, Raul. Although the official Cuban government position is that Fidel Castro is recovering from surgery and will return to office, U.S. intelligence officials have said they believe he has terminal cancer.

In its official response to the 59-page GAO report, USAID said that it was "taking issue" with unspecified findings but that it would "seek to improve agency performance in managing, monitoring and evaluating this assistance."

GAO auditors began with a cursory examination of the 50 grants that were made under the program from 1996 to 2005. Twenty-eight of the grants, it said, were "modified" after the fact in ways that extended agreed-upon completion dates by an average of one to three years and "increased the aggregate value of these agreements nearly eight-fold -- from about $5.9 million to nearly $50.1 million."

Auditors then conducted an in-depth examination of 10 grantees that account for more than three-quarters of the aid money. Although the GAO acknowledged the difficulty of operating effective aid programs in Cuba, it found that many of the grantees lacked records that would make it possible to determine how the aid money was used and what it accomplished.

Proposals for funding for virtually all the 10 grantees had been unsolicited and not offered for competitive bids by USAID. The government in most cases failed to comply with its rules requiring pre-award examinations, contract specificity, monitoring and formal audits at the end of a program. The GAO said it had referred three of the contracts for further investigation.

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