Busted
The US Government is accusing AED, “a nonprofit organization working globally to improve education, health, civil society and economic development” of serious financial misconduct and conflicts of interest:
The U.S. government Wednesday took the unusual step of banning an American firm from being awarded new federal contracts due to evidence of “serious corporate misconduct” uncovered in an investigation of the company’s work on aid programs in Pakistan and Afghanistan…
The investigation revealed evidence of collusion between vendors and AED, resulting in overpayment for certain goods, the report said. The investigation also discovered that AED had inappropriately hired relatives of a person hired by USAID to oversee the program.
This is quite a big deal. AED’s operating budget is about $400,000,000 and I doubt it can survive without USG funding. The optics of this aren’t real good at the moment, either. Congress always loves to bash USAID and there’s never a better time to do it then when it needs to look like it’s doing something to control “wasteful government spending”.
Update: The rumor mill reports that the Chief of Party for the project will be charged with embezzlement and has fled to Russia. Developing…
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Based just on what’s in this post, the only surprising/interesting fact is the CoP’s flight to Russia. When it comes to contracting, there’s a blurry line between collusion and getting things done. Finding jobs for relatives through your extant work connections isn’t abnormal either, especially if the beneficiary is a spouse you want to accompany you on the road. But, yes, the story is “developing,” as you say…
It’s huge because AED is such a significant, wide-reaching, and respected organization that we know this isn’t just USAID flexing its (minimal) oversight muscle to prove a point. The allegations must be rooted in truth, which will be very sad indeed when we get more information.
Again though, this marks a key milestone in government contractor oversight, which has long been an unresolved issue even as their popularity ramped up post-Iraq and Afghanistan invasions.
I actually just wrote a post on this issue for The Will and the Wallet yesterday that was already drafted pre-AED news, check it out: http://thewillandthewallet.org/2010/12/09/national-security-for-sale-private-contractors-remain-crucial-to-us-overseas-engagement/
Jack, I actually think the surprising thing is that there are accusations flying/the issue is actually being addressed. There definitely seem to be a blurry line regarding the ethics of contracting. That blurry line seems so well known however, that there’s an air of tacit acceptance on the part of government. So addressing evidence of “serious corporate misconduct” is pretty noteworthy imo.
[...] Busted [...]