Nearly 600 former Peace Corps volunteers and three PC country directors who served in the Dominican Republic wrote an open letter to Secretary Kerry urging the suspension of aid to the Dominican Republic due to its treatment of Dominicans of Haitian descent:
It is due to our deep and abiding concern for the most vulnerable members of Dominican society that we are writing to you about the crisis of statelessness among Dominicans of Haitian descent. We urge you to end U.S. involvement in the violation of their human rights: enforce the Leahy Amendments to the Foreign Assistance Act and annual Department of Defense appropriations.
The Leahy laws state that no U.S. assistance shall be furnished to any unit of the security forces of a foreign country if there is credible information that such a unit has committed a gross violation of human rights. Given the Dominican government’s disregard for international law with respect to the status of its citizens of Haitian descent; the violent track record of Dominican security forces receiving funding and training from the United States; and the Dominican Armed Forces’ readiness to execute a potentially massive campaign of rights-violating expulsions, we ask that the United States suspend its military aid to the Dominican government.
In 2013, the Dominican Constitutional Court issued a ruling (168-13) that effectively stripped hundreds of thousands of people, primarily those of Haitian descent, of their Dominican citizenship. This ruling stands in direct contravention of international human rights law—specifically the American Convention on Human Rights,which the Dominican government ratified in 1978. This convention enshrines the right to a nationality and prohibits its arbitrary deprivation. Many Dominicans of Haitian ancestry, including those whose families have resided in the
Dominican Republic for generations, were rendered stateless and face forcible deportation to a country where many have no ties whatsoever. A subsequent Dominican law (169-14), which addressed the court’s ruling, further entrenched the negation of the right to citizenship on the basis of one’s place of birth, and retroactively conferredcitizenship on the basis of the immigration status of one’s parents.
The volunteers’ letter specifically cites the security forces that “appear poised to carry out mass deportations within the country, including the U.S.-trained border patrol agency, CESFRONT, which has received more than $17.5 million in assistance from the United States since 2013.”
“If the United States is serious about protecting universally recognized human rights, we must no longer abet such actions in the Dominican Republic, much less be complicit in an impending intensification of human rights abuses. In our view, it appears impossible for the Dominican government to move forward with the implementation of its human rights-violating, internationally condemned citizenship laws without involving its security forces in yet more widespread and severe abuses.”
A small group representing the volunteers has requested a meeting with Assistant Secretary for Western Hemisphere Roberta Jacobson.
I’m on CNN… Signature #319… “Ex-Peace Corps volunteers unite for U.S. action on Dominican immigration policies” http://t.co/KF604pM7wZ
State’s past and planned capital construction investments in Kabul from 2002 through March 2015 total $2.17 billion in project funding, which includes awarded construction contracts and other costs State incurs that are not part of those contracts. Examples of other State project costs include federal project supervision, construction security, security equipment, and project contingencies.12 Figure 3 shows these investments.
US Embassy Kabul Capital Projects FY2002-2015 Past and Planned Capital Investments (via GAO) | click image for larger view
In fiscal years 2009 and 2010, State awarded two contracts originally worth $625.4 million in total to meet growing facility requirements at the U.S. embassy in Kabul. The first contract, awarded to Contractor 1 in September 2009 for $209.4 million, was for the design and construction of temporary and permanent structures to include
temporary offices and housing,
office annex A,
apartment building 1,
cafeteria and recreation center,
perimeter security and compound access facilities,
warehouse addition, and
utility building.The second contract, awarded to Contractor 2 in September 2010 for $416 million, was for the design and construction of:
office annex B,
apartment buildings 2 and 3,
expansion of existing apartment building 4,
compound access and perimeter security facilities, and parking facilities—to include a vehicle maintenance facility.
State’s plans called for sequencing construction under the two contracts and demolishing older temporary facilities to make space available for new facilities. State’s plans also entailed acquiring the Afghan Ministry of Public Health site adjacent to the compound to build parking facilities for approximately 400 embassy vehicles. In September 2011, after the U.S. and Afghan governments did not reach agreement to transfer that site, State had to remove the parking and vehicle maintenance facilities from the project.
In September 2011, State partially terminated elements of the first contract—specifically the permanent facilities, including office annex A and apartment building 1—for the convenience of the U.S. government, in part, due to concerns about contractor performance and schedule delays. Contractor 1 completed the temporary offices and housing units, but in September 2011, State transferred contract requirements for the permanent facilities not begun by Contractor 1 to Contractor 2’s contract.
The estimated completion of project has now been moved from summer 2014 to fall 2017.
Over and over, the United States has touted education — for which it has spent more than $1 billion — as one of its premier successes in Afghanistan, a signature achievement that helped win over ordinary Afghans and dissuade a future generation of Taliban recruits. As the American mission faltered, U.S. officials repeatedly trumpeted impressive statistics — the number of schools built, girls enrolled, textbooks distributed, teachers trained, and dollars spent — to help justify the 13 years and more than 2,000 Americans killed since the United States invaded.
But a BuzzFeed News investigation — the first comprehensive journalistic reckoning, based on visits to schools across the country, internal U.S. and Afghan databases and documents, and more than 150 interviews — has found those claims to be massively exaggerated, riddled with ghost schools, teachers, and students that exist only on paper. The American effort to educate Afghanistan’s children was hollowed out by corruption and by short-term political and military goals that, time and again, took precedence over building a viable school system. And the U.S. government has known for years that it has been peddling hype.
USAID program reports obtained by BuzzFeed News indicate the agency knew as far back as 2006 that enrollment figures were inflated, but American officials continued to cite them to Congress and the American public.
As for schools it actually constructed, USAID claimed for years that it had built or refurbished more than 680, a figure Hillary Clinton cited to Congress in 2010 when she was secretary of state. By 2014, that number had dropped to “more than 605.” After months of pressing for an exact figure, the agency told BuzzFeed News the number was 563, a drop of at least 117 schools from what it had long claimed.
The Government Accountability Office (GAO) recently released its report on Embassy Kabul Construction. Below is a a quick summary:
Since re-opening in 2002, the U.S. embassy in Kabul, Afghanistan, has experienced a dramatic increase in staffing, followed by a gradual drawdown. State has invested or plans to invest a total of $2.17 billion in U.S. facilities to address current and projected space needs. State awarded two contracts in 2009 and 2010 to construct additional on-compound housing and office facilities. State partially terminated one contract for the convenience of the U.S. government, and expanded the construction requirements of the second, affecting cost and schedule.
Schedule and cost: The Embassy Kabul project was originally scheduled for completion last summer but is now projected to be completed in fall of 2017. The cost has also increased from $625.4 million to $792.9 million.
Where two is better than one: Instead of building one temporary vehicle maintenance facility, the State Department ended up funding two new, temporary vehicle maintenance facilities—one at Camp Sullivan (built by OBO) and one at Qasemi Lot (to be built by DS). Apparently, post officials reported that there are security concerns with using the Sullivan vehicle maintenance facility. And if that’s the case, one wonders why OBO did not scrub the other one, hey?
Which five overseas posts have hardened trailers? According to DS officials, hardened trailers could be required as part of State’s containerized housing and office unit task orders. State reported to the GAO that the hardened trailer specification has been applied to temporary facilities at five overseas posts.
Temporary facilities: As of February 2015, temporary facilities on the embassy compound provided nearly 1,100 desks and 760 beds.
Permanent facilities: Once the current construction is completed, the Kabul embassy’s permanent facilities—both older and newly constructed office and apartment buildings—will contain 1,487 desks and 819 beds. Those totals do not include the desks or beds in temporary offices and housing facilities.
The never ending story: State planning documents, as well as post and OBO officials, identify a continued need for some of the temporary facilities following completion of the permanent facilities in 2017. That would be 875 temporary desks and 472 to 640 temporary beds. The GAO notes that even with the permanent construction completion “temporary housing will continue to provide between 37 and 44 percent of the available beds on-compound” at Embassy Kabul.
Image via gao.gov
What the GAO found:
Cost and schedule have increased for the Kabul embassy construction project, in part due to incomplete cost and risk assessment. Cost for the 2009 and 2010 contracts has increased by about 27 percent, from $625.4 million to $792.9 million, and is likely to increase further. Projected completion has been delayed over 3 years to fall 2017. The Department of State (State) did not follow its cost containment and risk assessment policies, resulting in lost opportunities to mitigate risks. These risks, such as delays in the sequencing of the two contracts, eventually materialized, increasing cost and extending schedule. Unless State follows its policy, it may be unable to avoid or mitigate risks to cost and schedule on future projects.
Since 2002, State has built over $100 million in temporary buildings (intended for no more than 5 years’ use) to meet space needs on-compound but has no security standards tailored to those facilities. On completing the project in 2017, all temporary facilities will be 5 to 10 years old, and their continued use is likely.
State does not have a strategic facilities plan for Kabul that documents current and future embassy needs, comprehensively outlines existing facilities, analyzes gaps, provides projected costs, and documents decisions made. Lack of such a plan has inhibited coordination and undermined the continuity necessary to address emergent needs at the Kabul embassy.
Too many cooks and constant personnel turnover:
According to State officials in Kabul and Washington, coordination to address the Kabul embassy’s future needs is particularly difficult due to the large number of stakeholders in Kabul and in Washington. Additionally, the constant personnel turnover caused by the 1-year tours served by most management, facilities, and security staff in Kabul results in lack of continuity in decision making. As far back as January 2006, the State Office of Inspector General also identified “the near total lack of institutional memory” stemming from the lack of staff continuity and a “never-ending” learning curve as the most serious impediment to good executive direction at the U.S. embassy in Kabul.
Post and Inter-Bureau Cooperation: Embassy Kabul, DS, OBO
Without a comprehensive plan that provides a strategic framework to document mission needs, catalog existing facilities, analyze gaps, provide projected costs, and document recommendations, the competing proposals of the post’s many stakeholders are difficult to manage, prioritize, and reconcile. As a result, State officials in Kabul said that these meetings suffer from no common vision and a lack of decision making. Consequently, State has been challenged to efficiently address changing embassy needs in several instances on- and off-compound. For example:
Interference with on-compound construction—OBO officials in Kabul expressed frustration that proposals for new projects would often conflict with plans previously agreed to by previous post management staff. For example, during our fieldwork, post management proposed to locate a helicopter landing zone near the embassy warehouse. However, according to OBO officials on-site, they had arranged with the previous management team to reserve that space as a staging area for the contractor to build the warehouse expansion. When asked about this, post management officials stated that they had no continuity document that informed them of this earlier decision.
On-compound physical security upgrades—DS first requested changes to the embassy compound’s security perimeter in December 2010 and added more requirements in response to attacks against the compound in September 2011. In February 2013, the post urged OBO to provide a project schedule and expedite the upgrades. However, that was not done and as of March 2015 OBO and DS had not reached agreement on schedules and costs for some security upgrade projects.
Camp Seitz—In 2013, DS and post management decided to relocate the Kabul Embassy Guard Force from Camp Sullivan and the Protective Security Detail (movement protection) Guard forces from another camp to sites closer to the embassy compound due to security concerns. To facilitate this, DS initiated the acquisition of the Camp Seitz site through OBO. However, according to State officials, DS then began construction of temporary housing at Camp Seitz without submitting the design to OBO for review or applying for a building permit. After OBO became aware of the completed construction, it identified fire safety deficiencies that DS had to correct.
Camp Sullivan, Camp Eggers, Qasemi Lot Vehicle Maintenance Facility—As part of the security contractor relocation, post management and DS proposed removing several support facilities, including a vehicle maintenance facility, from an ongoing construction project at Camp Sullivan and transferring them to Camp Eggers. Post management and DS officials stated that once the temporary vehicle maintenance facility on-compound is demolished to make way for apartment buildings 2 and 3, it would be better for security and logistics to build the replacement vehicle maintenance facility close to the compound rather than at Camp Sullivan. However, OBO proceeded to build the Sullivan vehicle maintenance facility because negotiations for the 30 leases required at Camp Eggers were not complete, and OBO was concerned that if an alternative vehicle maintenance facility was not in place, construction of apartments 2 and 3 could be delayed and their costs increased.56 Discussions continued among OBO, DS, and post management, and the proposed vehicle maintenance facility was shifted to Qasemi Lot, a site adjacent to Camp Seitz. OBO decided not to descope the Camp Sullivan vehicle maintenance facility until plans for a replacement facility at Qasemi Lot were approved by OBO and DS had awarded a construction contract with a scheduled completion date prior to the demolition date for the existing vehicle maintenance facility on- compound. As a result, State is funding two new, temporary vehicle maintenance facilities—one at Camp Sullivan (built by OBO) and one at Qasemi Lot (to be built by DS).57
Last week, State/OIG released its inspection report of the U.S. Embassy Antananarivo in Madagascar. It’s one of those report that you read and you want to pull your hair in frustration. By the time the OIG came for a visit, there’s a new chargé d’affaires, a new staff rotated in and a new team is tasked with correcting the mess left by the previous officials assigned to post. The previous CDA identified fuel as a management control deficiency but did not see the rest of the good stuff. The OIG report notes that other vulnerabilities discussed in the report “would have been apparent if embassy leadership had conducted a comprehensive, office-by-office review of all activities with management control implications.”
The report highlights non-use of record email to effectively track important exchanges on policy and programs, use of social media to reach a mainly urban, youthful, and elite audience where only 2 percent of the Madagascar population has access to the Internet, and Meritorious Honor Awards without proper documentation. Beyond the more problematic public affairs grants and purchases discussed below, post also spent more than $10,000 on computer equipment for use in Comoros, even if — get this — there is no U.S. Government office space in Comoros in which to place that equipment.
And here’s one that’s going to make you unfriend this fella on Facebook: “The previous chargé d’affaires departed the embassy without completing six interim evaluation reports for American employees he supervised, as required for periods of 120 days or more under 3 FAM 2813.4. He did not respond to email reminders from the embassy human resources office and the Bureau of African Affairs. ”
A quick look at US Embassy Antananarivo:
The mission has a total staff of 296, with 57 U.S. direct-hire positions. In April 2010, the embassy occupied a new embassy compound (site acquisition was $3.6 million, and construction was $102.3 million), consisting of a chancery, a warehouse/shops facility, a Marine security guard quarters, and a swimming pool. Embassy housing consists of 38 leased and 2 government-owned residences, 1 of which is the Ambassador’s residence.
The good news: A recently arrived chargé d’affaires
Stephen Anderson arrived in August 2014, about two months before the OIG inspection. The OIG inspectors write:
The recently arrived chargé d’affaires has made a good start in leading the embassy during a period of profound change in the political situation in Madagascar and the subsequent restart of the bilateral relationship between Madagascar and the United States. … The chargé d’affaires, working with a collegial country team, has also demonstrated interpersonal engagement within the embassy…..The chargé d’affaires has also demonstrated his commitment to management controls within the embassy. He directed that each Department section conduct a self-assessment of its management deficiencies. At the time of the inspection, the mission had completed corrective action on 73 of the 122 action items identified and was working to close the others.
Some other good news:
1) The information management office is led by a seasoned information management officer. The section received good scores on ICASS customer surveys and OIG questionnaires, as well as A+ ratings from the Department’s network and systems monitoring software. 2) Community liaison office operations received high marks, exceeding both regional and worldwide scores in the 2014 ICASS customer satisfaction survey. 3) OIG surveys noted that parents are satisfied with the quality of education; and 4) The health unit’s ICASS customer satisfaction scores are above worldwide averages.
Now for that American Center boondoggle:
According to State/OIG, the American Center was funded with embassy public affairs funds (approximately $116,328) and by two large allotments provided in June 2012 by the Office of American Spaces in the Bureau of International Information Programs (totaling $559,062). The OIG report is careful to point out that though current staff members will play a key role in identifying a path forward on this project, they are not responsible for the existing situation. But all those responsible and accountable for this project are left unnamed in the OIG report presumably because they are no longer at post and have been successfully recycled to other posts. And since IERs (inspector’s evaluation reports) are no longer in season, none of the details from this report will ever make it anywhere near a promotion board.
A former embassy public affairs officer in 2011 proposed an American Center for the capital on the basis of a public-private partnership model. The concept initially envisioned a partnership of the English Teaching Program (ETP), a restaurant, Voice of America, a telecommunications company, and a publisher of a free entertainment monthly. A memorandum of understanding was drafted and signed by some of the prospective partners in June 2013 after lengthy delays. However, two prospective partners failed to sign on and a final partnership memorandum never entered into force.
Disregard of policies and procedures concerning grants and cooperative agreements have put at risk the embassy’s approximately $700,000 project to establish an American Center in Antananarivo. The OIG team noted that the decisions and actions that led to the American Center problems predate the arrival of the employees presently assigned to the embassy.
The embassy initiated a massive public relations campaign and announced the start of construction at a press conference in April 2012 attended by the former chargé d’affaires and the deputy coordinator of the Bureau of International Information Programs.
Welcome to the new American Center. In a few months time this space will be transformed into the most modern and technologically advanced space that Madagascar has ever seen. It will be a place to learn, to explore, and to connect. It will not be your traditional cultural center. This initiative is an innovative collaboration between the American Embassy, our private sector partners, and the English Teaching Program. It is this ambitious vision for a cultural center based entirely on the model of a public-private partnership that has brought the person in charge of American centers worldwide for the State Department to Madagascar. I would like to acknowledge Michelle Logsdon, the Deputy Coordinator for International Information Programs who has joined us today to learn more about this important initiative.
As you will see in the presentations that each partner will be delivering shortly, they have not only embraced the potential of this center, they have developed it in ways we would have never dreamed possible. VIMA plans to put on some of the most spectacular shows Antananarivo will have ever seen. Orange and Teknet will make the latest technology accessible to a new generation of Malagasy, while the Cookie Shop will create a new environment for learning, exchanging, and of course some great brownies.
We will organize trainings, cultural programs, and conferences with our partners that connect them and their clients to individuals, information, and opportunities from around the globe. We will also have a team dedicated to finding the latest information, technology, and developments for the Center. While many of the services at the Center will be fee-based, just like at an internet café or a theatre, the Embassy will ensure that there will be more resources and events than ever that are available to the public for free.
This is going to be a fee-based center in a country where the per capita gross domestic product is only $1,000 (2013 est.), with 92 percent of the population living on less than $2 a day. Who’s going to be the audience for these programs? The same urban, youthful, and elite audience that belongs to the 2 percent of the Madagascar population with access to the Internet?
I Dreamed a Dream … a Cookie Shop and Some Great Brownies
The OIG team inspected Embassy Antananarivo from October 7–29, 2014. At that time, the team visited the proposed American Center site in a shopping mall and observed the following:
[A]fter almost 2 years of construction, the site, covering 1,200 square meters (or 12,917 square feet), was a shell. Rooms were laid out, but lighting, flooring, doors, and other infrastructure were absent. A small bathroom shared with the rest of the mall was located at some distance from the site on the other side of the mall. Other problems included the lack of storage space, ceilings below standard height on the mezzanine level, and inadequate provision for air conditioning. On a weekday afternoon, some minor construction work was underway. However, no agreement had been reached on a final design or construction plan, including where the U.S. Government portion of the facility might be located.
Storage in seven 40-ft container for nearly two years?
As the American Center is not ready for occupancy, much of the furniture and equipment ordered for it has been stored in seven 40-foot containers located in the embassy parking lot, some of it for nearly 2 years. The OIG team spot-checked the contents of the containers and did not observe water or insect damage.
The embassy did not have a plan (which details needed resources, deadlines, partners, and costs) that could lead to a decision whether to close or salvage this project. Without such a plan, the embassy runs the risk of repeating past mistakes and failing to make the best use of funds already expended.
No Bona Fide Need for Much of Equipment Procured for American Center
According to information the embassy provided the OIG team, the embassy has expended approximately $400,000 to date on furniture and equipment for the American Center project. However, the embassy failed to establish a bona fide need for many of these procurements. This failure—and the subsequent misuse of some of the furniture and equipment—constitutes a management control weakness.
A notable example of a questionable procurement is a $47,938 telescopic theater-style seating system, which the embassy purchased even though the prevailing wage of workers who could set up and remove chairs is $10 a day. The shipping cost for this item alone was estimated at $19,175.
Other examples of questionable procurements abound and include the following (costs are rounded and do not include shipping):
Twenty-five 46-inch televisions ($21,500) and six 70-inch televisions ($24,600).
A motorized theater curtain system ($7,150).
Twenty iMacs ($22,935), 16 HP TouchSmarts ($14,247), 20 Wii stations ($4,230), 20 Apple TVs ($1,920), and 10 iPods ($1,790).
Fifty home theater chairs ($26,600).
A replica of the Seattle Space Needle, painted wall mural, and totem pole ($4,810).
Decorations, including more than a dozen fish and turtle sculptures ($5,400).
Whatsadoing with a $5,500 coffee grinder/espresso maker?
The OIG report says that records the team reviewed indicate that the public affairs section recommended specific vendors to the procurement unit, most often identified through Amazon.com. Looks like no one bothered to make a distinction between government shopping and personal shopping, and folks were in a hurry to spend end-of fiscal year funds:
No documentation in the procurement files shows that procurements greater than $3,000 were properly competed, as required. A number of the items ordered were not part of the original equipment lists submitted in support of the request for funds. For example, the original request did not include any food preparation equipment, yet the embassy purchased items such as a wine cooler, a $650 residential blender, grills, a $5,500 coffee grinder and commercial espresso maker, refrigerators, and other kitchen items.
Property Control Does Not Comply with Regulations, No Kidding
The amazing thing here is there is no discussion why USG properties were lent to two private businesses without documentation. Who signed them out? Who approved these loans? What did the USG get for this sweet arrangement? Did those companies just come by the embassy, pick up the USG properties and the embassy guards just waved “bye, come back soon?”
As the American Center was (and still is) not ready for occupancy, much of the furniture and equipment has been stored in seven 40-foot containers located in the embassy parking lot, some of it for nearly 2 years.
Other furniture and equipment was loaned to two private businesses for their use without any documentation. The embassy loaned at least $42,000 of computers and office equipment to one telecommunications firm alone. These items included 12 iPads, 16 iMacs, and 2 70-inch and 3 46-inch televisions. The embassy purchased a $6,700 eBoard from this company and then lent the item back to it. The embassy told the OIG team that these items were retrieved from the firm in February 2014 after a year or so in use, though the lack of documentation makes the timing unclear. The other firm, a restaurant chain, was lent at least $5,000 worth of U.S. Government property. The embassy warehouse unit retrieved these items, including a refrigerator installed in the restaurant owner’s private residence, on September 15, 2014—3 weeks prior to the OIG team’s arrival. These deficiencies were not, but should have been, included in the 2014 chief of mission statement of assurance signed by the previous chargé d’affaires on August 11, 2014.
Who Bears Responsibility For This Project, Anyways?
Short answer from OIG: Bureau of African Affairs, Bureau of International Information Programs, and Embassy Bear Responsibility. Here is the longer answer:
The lack of accountability for the American Center project extends beyond the embassy because additional management controls exist for projects of this scale. The Bureau of International Information Programs and its regional information resources office in Nairobi approved two large American Spaces funding requests despite warning signs. These included the requests’ hyperbolic language (“the possibilities are endless”) and the questionable suitability of such a large, public-private project in a very poor country, especially when the project would be managed by a public affairs officer and section lacking the necessary business and accounting acumen and grants management experience. The Bureau of African Affairs approved the project despite the fact that it had not received the necessary project details from the embassy and despite the many flaws in the grants documents that they did receive. The embassy did not caution the Department that the project’s prospective partners had never cooperated in such a joint venture, had no understanding of its public purpose, and had no record of such cooperation with the embassy in the past. The Department should have drawn on its technical and regional expertise and understanding of public-private partnerships to identify flaws in the initial plan before it was approved and funds were allotted.
Note that the new Ambassador to Madagascar Robert Yamate was only confirmed by the Senate in November 2014, and did not get to post until December 2014, five months after his nomination was announced and two months after this OIG inspection. The previous ambassador appointed to Madagascar was R. Niels Marquardt who departed post in June 2010.
A 2011 ranking of private USAID partners by devex.com lists LBG as the third largest USAID private-sector partner that has contracted some of the government’s largest post-conflict redevelopment projects in Iraq and Afghanistan. According to Bloomberg, Louis Berger International, a unit of Louis Berger Group, got about $736 million to modernize a power system and rehabilitate the Kajakai Dam in Afghanistan. Whoa! We thought that dam only cost $305.5 million! Plus cost of fuel that US taxpayers also had to shoulder.
What is missing from this announcement? How much was the total contracts that LBG received in the last 20 years? Who’s paying the independent monitor? And for heaven’s sake, what lessons are we sending to other reconstruction capitalists doing awesome work for love of god and country?
The former president, chief executive officer, and chairman of the board of a New Jersey-based international engineering consulting company was sentenced today to 12 months of home confinement and fined $4.5 million for conspiring to defraud the U.S. Agency for International Development (USAID) with respect to billions of dollars in contracts over a nearly 20-year period, U.S. Attorney Paul J. Fishman announced.
Derish Wolff, 79, of Bernardsville, New Jersey, previously pleaded guilty before U.S. District Judge Anne E. Thompson to a superseding information charging conspiracy to defraud the government with respect to claims. Judge Thompson imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
Wolff, the former president and CEO of Morristown, New Jersey-based Louis Berger Group Inc. (LBG), and the former chairman of LBG’s parent company, Berger Group Holdings Inc. (BGH), led a conspiracy to defraud USAID by billing the agency on so-called “cost-reimbursable” contracts – including hundreds of millions of dollars of contracts for reconstructive work in Iraq and Afghanistan – for LBG’s overhead and other indirect costs at falsely inflated rates.
USAID, an independent federal government agency that advances U.S. foreign policy by supporting economic growth, agriculture, trade, global health, democracy, and humanitarian assistance in developing countries, including countries destabilized by violent conflict, awarded LBG hundreds of millions of dollars in reconstruction contracts in Iraq and Afghanistan as well as in other nations. LBG calculated certain overhead rates and charged USAID and other federal agencies these rates on cost-reimbursable contracts, which enabled LBG to pass on their overhead costs to the agency in general proportion to how much labor LBG devoted to the government contracts.
From at least 1990 through July 2009, LBG, through Wolff and other former executives, intentionally overbilled USAID in connection with these cost-reimbursable contracts. The scheme to defraud the government was carried out by numerous LBG employees at the direction of Wolff.
Wolff targeted a particular overhead rate, irrespective of what the actual rate was, and ordered his subordinates to achieve that target rate through a variety of fraudulent means. From at least as early as 1990 through 2000, Wolff ordered LBG’s assistant controller to instruct the accounting department to pad its time sheets with hours ostensibly devoted to federal government projects when it had not actually worked on such projects.
At an LBG annual meeting in September 2001, Salvatore Pepe, who was then the controller and eventually became chief financial officer (CFO), presented a USAID overhead rate that was significantly below Wolff’s target. In response, Wolff denounced Pepe, called him an “assassin” of the overhead rate and ordered him to target a rate above 140 percent, meaning that for every dollar of labor devoted to a USAID contract, LBG would receive an additional $1.40 in overhead expenses supposedly incurred by LBG.
In response, Pepe and former controller Precy Pellettieri, with Wolff’s supervision, hatched a fraudulent scheme from 2003 through 2007 to systematically reclassify the work hours of LBG’s corporate employees, including high-ranking executives and employees in the general accounting division, to make it appear as if those employees worked on federal projects when they did not. At his plea hearing on Dec. 12, 2014, Wolff admitted that Pepe and Pellettieri, at Wolff’s direction, reclassified these hours without the employees’ knowledge and without investigating whether the employees had correctly accounted for their time, and at times did so over an employee’s objection.
In addition to padding employees’ work hours with fake hours supposedly devoted to USAID work, Wolff instructed his subordinates to charge all commonly shared overhead expenses, such as rent, at LBG’s Washington, D.C., office to an account created to capture USAID-related expenses, even though the D.C. office supported many projects unrelated to USAID or other federal government agencies.
On Nov. 5, 2010, Pepe and Pellettieri both pleaded guilty before then-U.S. Magistrate Judge Patty Shwartz to separate informations charging them with conspiring to defraud the government with respect to claims. Also on that date, LBG resolved criminal and civil fraud charges related to Wolff’s and others’ conduct. The components of the settlement included:
a Deferred Prosecution Agreement (DPA), pursuant to which the U.S. Attorney’s Office in New Jersey suspended prosecution of a criminal complaint charging LBG with a violation of the Major Fraud Statute; in exchange, LBG agreed, among other things, to pay $18.7 million in related criminal penalties; make full restitution to USAID; adopt effective standards of conduct, internal controls systems, and ethics training programs for employees; and employ an independent monitor who would evaluate and oversee the company’s compliance with the DPA for a two-year period;
a civil settlement that required the company to pay the government $50.6 million to resolve allegations that LBG violated the False Claims Act by charging inflated overhead rates that were used for invoicing on government contracts; and an administrative agreement between LBG and USAID, which was the primary victim of the fraudulent scheme.
In the settlement, the government took into consideration LBG’s cooperation with the investigation and the fact that those responsible for the wrongdoing were no longer associated with the company.
Looking at an American intervention that’s going to end, not with a bang, but on a deadline, it can be tough to find the silver lining.
This week Forbes contributor Loren Thompson tried to do that in a piece called “Five Signs Afghanistan Is Becoming An American Success Story,” making the case that staying the course in Afghanistan is “paying off.” His premise that Americans can hold their head high on Afghanistan is based on five points: the solid performance of Afghan forces, the country’s improved political climate, Islamabad’s renewed interest in cooperating with Kabul, a booming Afghan economy, and popular support for Afghanistan’s national institutions. It’s a concise, readable assessment, with one problem: The country Thompson describes doesn’t exist.
Gary Owen is a veteran, development worker, and blogger at “Sunny in Kabul.” He is also a regular contributor to the Afghan Analysts Network and Vice News. Gary Owen is a pseudonym. Follow Gary Owen on Twitter @elsnarkistani.
The U.S. Government never discusses the fact that flows of cocaine to the U.S. and the coca crop in Colombia do not correlate. Since there is no science behind this, why is INL [Bureau of International Narcotics and Law Enforcement Affairs] so enamored with spray? What interests are driving this program?
Last week, the Colombia Health Ministry recommended that the aerial fumigation in the country be suspended. The Colombian Defense Ministry was quick to pushed back.
This is the same week when Deputy Secretary of State Antony Blinken was in Colombia for the U.S.-Colombia High-Level Partnership Dialogue and the Steering Committee for the U.S.-Colombia Action Plan on Racial and Ethnic Equality, and joined the High-Level Strategic Security Dialogue.
Colombia is the only coca-growing country that allows aerial herbicide fumigation. Faced with the possibility that it may be aerially spraying carcinogens over its own citizens, Colombia’s Health Ministry issued a statement late Monday recommending that the aerial fumigation program be suspended.
Whether to suspend the program is up to Colombian President Juan Manuel Santos, who has yet to make or schedule an announcement. Meanwhile, Colombian government agencies that carry out the fumigation program have been quick to push back. “We cannot permit losing the benefits [of spraying] on delinquency, crime and terrorism,” said Defense Minister Juan Carlos Pinzón, who oversees Colombia’s National Police and its counternarcotics division, which performs the spraying. “We will continue using all our tools that help maintain security for Colombians.”
U.S. government officials say that while they will respect Colombia’s sovereign decision, they insist that glyphosate is safe and that they’d rather not see the spray program end. The State Department’s International Narcotics and Law Enforcement bureau has spent somewhere between US$1 billion and US$2 billion on herbicides, contractor pilots and mechanics, police escort helicopters, fuel, search-and-rescue teams, and related fumigation costs since the program began in 1994.
The lesson of Colombia’s fumigation program is that there is no substitute for economic development and government presence in national territory. The opposite—flying anonymously above without any presence on the ground—causes the coca trade to migrate and alienates populations whose support is necessary amid an armed conflict. When not coordinated with food security and alternative livelihoods, fumigation also gives guerrillas a powerful propaganda tool: the FARC and ELN have heavily employed the argument that the spraying is proof that Colombia’s “oligarchy” either doesn’t care about peasants, or wants to use the spraying to dispossess them of their lands.