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@StateDept v. @USAID: Reconciling Interagency Priorities Remains a Top Management Challenge

Posted: 2:14 am ET

 

USAID/OIG reported on its Top Management Challenges for FY2017.  The following is an excerpt on one of its challenges, reconciling interagency priorities with examples from the Arab Spring and operations in Pakistan:

Contingency operations and other efforts require coordination with multiple U.S. Government agencies, yet USAID’s development priorities do not always align with other agencies’ priorities, making it difficult for USAID to achieve its core development mission. In particular, coordination with the State Department, which leads multiagency operations that respond to political and security crises, has presented challenges to USAID’s project planning and execution. Despite broad interagency guidance on State’s role in politically sensitive environments, USAID employees are sometimes unclear as to how to manage additional layers of review, respond to changing priorities, and balance short-term and long-term priorities. Lack of knowledge about other agencies’ processes exacerbates these challenges.

Arab Spring

To identify the challenges USAID faced during the early part of the protest movement that came to be known as the Arab Spring (December 2010-June 2014), we surveyed 70 USAID employees working on programs for Egypt, Tunisia, Libya, and Yemen.1 According to USAID staff, the State Department’s influence over USAID programs increased after the Arab Spring began, creating additional challenges. For example, a USAID employee in Egypt noted that State’s control “severely constrains USAID’s ability to design and execute technically sound development projects,” stating that agreed-upon steps to design activities and select implementation mechanisms abruptly change. USAID staff pointed out that State’s added layer of review slowed operations, and USAID employees had to dedicate additional time to building consensus and gaining external parties’ approval. USAID employees also said State officials, unfamiliar with the Agency and its different types of procurement, made requests that were difficult to accommodate under USAID procedures.

In a more recent audit in Pakistan, we also found challenges in reconciling short-term political goals with long-term development goals.

Pakistan

Our audit of the $7.5 billion aid package authorized under the Enhanced Partnership for Pakistan Act (EPPA) found that USAID’s programs there have not achieved intended development objectives, in part because of competing priorities between State and USAID. The State Department has the lead role for assistance activities in Pakistan, making it responsible for budget and project decisions.2 At the outset, USAID/Pakistan followed State’s initial strategy, which lacked long-term development outcomes and goals. In 2013, USAID/Pakistan implemented a formal strategy that linked activities to a long-term development goal but lacked indicators to measure progress. The strategy also focused on repairing and upgrading Pakistan’s energy infrastructure—mirroring State’s focus on energy as key to long-term growth—but not on other priority areas, such as health, education, and economic growth. According to USAID staff, implementing a development strategy under State Department control was challenging.

As a result of our EPPA audit, we made recommendations to improve USAID’s development implementation in an interagency environment, including that USAID revise its policies to (1) clearly define USAID’s roles and responsibilities for designing and implementing development when it is subject to State Department control and (2) provide alternate development strategies when a country development cooperation strategy3 or a transitional country strategy is not an option. We also recommended that the Agency institute an interagency forum where USAID can better present its development per- spective in countries where the State Department takes the lead. In response, USAID’s Administrator has engaged the State Department leadership to discuss solutions, including better reconciling interests at the beginning of planning and programming, so that USAID and State leadership can help staff pursue both agencies’ objectives simultaneously.

USAID/OIG notes that USAID has begun actions to address OIG’s recommendations to address this challenge. However, until corrective actions are fully implemented and realized, reconciling interagency priorities to advance inter- national development will remain a top management challenge.

USAID/OIG indicates that it interviewed 31 USAID officials who worked on activities in these countries, and administered a questionnaire. In all, 70 employees from USAID either had interviews or responded to the questionnaire.

 

Related OIG items:

  • “Competing Priorities Have Complicated USAID/Pakistan’s Efforts to Achieve Long-Term Development Under EPPA” (G-391-16-003-P), September 8, 2016
  • “Most Serious Management and Performance Challenges for the U.S. Agency for International Development,” October 15, 2015
  • “Survey of USAID’s Arab Spring Challenges in Egypt, Tunisia, Libya, and Yemen” (8-000-15-001-S), April 30, 2015

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23 Days to Inauguration: Kerry Delivers Middle East Peace Speech, Netanyahu Looks to Trump

Posted: 5:13 pm PT

 

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Peace Corps OIG: 53% of Rapes Perpetrated on Volunteers Not Reported, See Why

Posted: 2:18 am ET

 

The Inspector General for the Peace Corps released its final evaluation report of the Peace Corps’ Sexual Assault Risk Reduction and Response Program.  The report notes that there were 513 sexual assaults entered into the Peace Corps’ Consolidated Incident Reporting System between September 3, 2013 and September 29, 2015.

In 2014, Volunteers reported 251 sexual assaults and there were 241 sexual assaults in 2015. The assaults in 2015 included 52 rapes, 35 aggravated sexual assaults, and 154 non-aggravated sexual assaults.

The main findings are:

  • The Peace Corps largely complied with the requirements in the Kate Puzey Act.
  • Compared to our SARRR evaluation in 2013, the Peace Corps markedly improved how it supported Volunteers who had reported a sexual assault. However we found individual cases where the Peace Corps did not meet its standard to respond effectively and compassionately to victims of sexual assault, including a few instances of victim blaming and improperly sharing confidential details with staff.
  • Some applicants were either not aware of the crime and risks previous Volunteers had faced in their country of service or they did not understand the information that was provided to them.
  • The SARRR program did not fully utilize some staff with SARRR expertise. The SARRR program would also benefit from a risk reduction strategy that tailors training to the country of service, addresses the risks of sexual harassment, and identifies factors that make sites unsafe.
  • Finally, the SARRR training’s design and delivery may have detracted from Volunteer comprehension and learning.

The Kate Puzey Peace Corps Volunteer Protection Act of 2011 (the Kate Puzey Act) required the Peace Corps to undertake a number of reforms, including providing sexual assault risk reduction and response (SARRR) training for Volunteers, developing a comprehensive SARRR policy, and training overseas staff on that policy. The Act directed the Peace Corps OIG to evaluate the effectiveness and implementation of the training and policy, and to review a statistically significant number of sexual assault cases.

peace-corps2

Stats on Rapes and Sexual Assaults

Peace Corps Volunteers and trainees reported 251 sexual assaults in 2014 and 241 sexual assaults in 2015. The assaults in 2015 included 52 rapes, 35 aggravated sexual assaults, and 154 non-aggravated sexual assaults.  Female Volunteers reported the majority of these sexual assaults (228 cases). Male Volunteers reported 13 sexual assaults including 1 rape, 6 aggravated sexual assaults, and 6 non-aggravated sexual assaults.

Starting in 2014, the Peace Corps began surveying Volunteers at the close of their service regarding crimes they had experienced and not reported to the agency. Survey results indicated that the proportion of Peace Corps victims who did not report one or more rapes or aggravated sexual assaults was similar to the proportion of Peace Corps victims who did not report other crimes: roughly 50 percent of crimes against Volunteers were not reported. This Peace Corps analysis indicated that 53 percent of rapes and 49 percent of aggravated sexual assaults were not reported. It also showed that 85 percent of surveyed respondents who experienced at least one non-aggravated sexual assault had not reported one or more of them to the Peace Corps.

Available Help and Agency Reporting

The evaluation found that the agency had provided contact information for: the Peace Corps Inspector General, a 24-hour sexual assault hotline for Volunteers, the Peace Corps Office of Victim Advocacy, and the Sexual Assault Response Liaison in the Volunteer’s country of service as required by the Act.
[…]
The Kate Puzey Act required the Peace Corps to create a system “for restricted and unrestricted reporting of sexual assault.” Volunteers may file either a “restricted” or a “standard” report, depending on which response services they would like the agency to provide. According to MS 243 Procedures, the restricted reporting option “allows Volunteers to request certain specific services without dissemination of personally identifying information about the Volunteer or the details of the sexual assault beyond those who are directly providing the services, and without automatically triggering an official investigative process.” The agency treats all reports as restricted until the Volunteer decides to choose a standard report, and a Volunteer may elect to convert his or her restricted report to standard at any time.

peace-corps1
Some Volunteers had not learned important information in the sexual assault risk reduction and response sessions, including the difference between restricted and standard reporting, the services available to a victim of a sexual assault, how to report a sexual assault incident, and the identity and role of Sexual Assault Response Liaisons at post. The training was insufficiently tailored to the country of service (as required by the Act), was not responsive to the needs of diverse Volunteers, and did not address the problem of sexual harassment. In addition, some staff delivered the training inconsistently due to poor training skills. Furthermore, the Peace Corps’ approach to assessing the Volunteer training was incomplete and did not provide a useful measure of training effectiveness.
[…]
[T]he agency often accommodated Volunteers’ requests to change sites for safety and security reasons, in some cases Volunteers were separated from the Peace Corps rather than relocated to another site. Volunteers we interviewed felt disenfranchised from the discussions regarding their safety and continued service.[…]We found that staff and Volunteers had a mistaken belief that they were limited to six or fewer counseling sessions after a sexual assault. As a result, some Peace Corps Medical Officers provided incorrect information about the availability of counseling. We concluded that some Volunteer sexual assault survivors could have been deterred from reporting their need for counseling.

Non-Reporting Analysis

The analysis summarized the primary reasons Volunteers had not reported their sexual assaults, which included: embarrassment, self-blame, not perceiving the sexual assault as a crime or serious event, and believing that there was nothing the Peace Corps could do about the assault. For non-aggravated sexual assaults—which were both the most frequently reported type of assault, as well as the most under reported—surveyed Volunteers had not reported them for three main reasons: they did not think the incidents were serious or threatening; they perceived the incident as commonplace in the environment where they served; and they did not believe there was anything the Peace Corps could do to address it.

Other reasons that surveyed Volunteers said they had not reported their sexual assaults included concerns about how Peace Corps staff might respond, such as blaming the victim for their assault, failing to respect the victim’s privacy and confidentiality, or simply not responding to the victim in a timely and supportive manner. Volunteers also indicated in their survey responses that they had not reported a sexual assault because they anticipated adverse consequences, such as being required to change their site, sent home, or punished for having violated a Peace Corps policy. These concerns were significantly more pronounced for rape victims and aggravated sexual assault victims than for non-aggravated sexual assault victims.

Among surveyed Volunteers who had not reported their assaults to the Peace Corps because they were concerned about how staff would respond to them or the potential adverse consequences of reporting, a relatively high percentage had served at a small number of posts. Two of the 54 posts in the survey constituted almost 25 percent of the Volunteers who did not report their assaults because of these concerns. Nine posts represented nearly 50 percent of the Volunteers who had not reported an assault for similar reasons.

 

The PC/OIG review includes interviews with 127 staff, 72 Volunteers, visits to 6 countries, and review of 138 sexual assault cases.  The report also includes 36 recommendations for the Peace Corps.

The report is a crucial reference as the State Department task force works on FAM guidance for sexual assault in the Foreign Service. NSVRC also notes that supporting survivors means assisting them with financial burdens as well as physical & emotional ones. Read here: 

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US Mission New Zealand: USS Sampson Supports Kaikoura Earthquake Relief Efforts

Posted: 1:55  am ET

On November 13 we blogged that the US Embassy in Wellington issued an emergency message for New Zealand following a 7.8 earthquake and tsunami warning.  Citing New Zealand’s prime minister, John Key, the USG said that there were 1,200 tourists in Kaikoura — a town of about 3,800 — when the earthquake struck. The tourist town has reportedly been completely cut off from the rest of the island due to landslides and flooding.

On November 15, the US Embassy’s updated message says to direct anyone with friends or family in Kaikoura to make their way to the Takahanga Marae Welfare Centre to register with the Red Cross to be on the evacuation list. On November 16, the amphibious sealift vessel HMNZS Canterbury evacuated around 450 people out of Kaikoura to Christchurch. The NZ Defence Force said that the Royal New Zealand Air Force’s 3 Squadron evacuated another 60 people and delivered two tonnes of aid to Kaikoura, bringing to about 660 the total number of people evacuated from the quake-damaged town.  Surveillance aircraft from the United States Navy and the Japan Maritime Self-Defense Force also conducted surveys of quake-damaged areas, focusing particular attention on inland and railway routes.

Ships from Australia, Japan, Canada, Singapore including the the United States’ USS Sampson were already traveling to New Zealand to take part in the International Naval Review to celebrate the 75th anniversary of the Royal New Zealand Navy. When the earthquake struck, the ships were diverted from the planned celebration to assist in humanitarian efforts.

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No Drama Obama Gets Lots of Drama in Asia, Plus Special G20 Surprise in South China Sea

Posted: 3:24 am ET

 

President Obama’s trip to Asia this week got off on a wrong foot. See POTUS in China: A ‘Staircase Snub’, Shouting Matches, and an Apology For a ‘Mistaken’ Tweet. Then on Monday, Philippine President Rodrigo Duterte got foul-mouthy with his early warning threat to President Obama potentially discussing the drug killings in the Philippines (also see Philippine President Calls the US Ambassador to Manila WHAT?). According to the CRS,  the Philippines has been one of the largest recipients of U.S. foreign assistance in Southeast Asia in the past decade, including both military and development aid. It also relies heavily upon the United States for its external security.  According to this 2015 piece, “the archipelago’s sailing force is made up of half-century-old antiques—and is falling apart.” And yet, here is President Duterte with his lovely manners.

 

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Security Assistance to Egypt: End-Use Monitoring and Leahy Vetting

Posted: 12:03 am ET

Via gao.gov:

U.S. agencies allocated approximately $6.5 billion for security-related assistance to Egypt in fiscal years 2011 through 2015. As of September 30, 2015, over $6.4 billion of the $6.5 billion total had been committed or disbursed. The majority of the funding (99.5 percent) was provided to Egypt through the Department of State’s (State) Foreign Military Financing (FMF) account. The funds from this account were used to purchase and sustain a wide variety of military systems, including F-16 aircraft, Apache helicopters, and M1A1 tanks.

Screen Shot

via goa.gov

via gao.gov

The Departments of Defense (DOD) and State implemented end-use monitoring for equipment transferred to Egyptian security forces, but challenges including obtaining Egyptian government cooperation hindered some efforts. DOD completed all required end-use monitoring inventories and physical security inspections of storage sites for missiles and night vision devices (NVD) in fiscal year 2015, but DOD lacked documentation showing that it completed physical security inspections for these sensitive items in prior years. Despite agreeing to give access, the Egyptian government prevented DOD officials from accessing a storage site to verify the physical security of some NVDs prior to 2015, according to DOD officials and documents. State conducted 12 end-use checks of U.S. equipment exported to Egypt in fiscal years 2011 to 2015, but State data indicate that the Egyptian government’s incomplete and slow responses to some inquiries limited U.S. efforts to verify the use and security of certain equipment, including NVDs and riot-control items. Despite this lack of cooperation, since 2008, State has not used outreach programs in Egypt that are intended to facilitate host country cooperation and compliance with State’s monitoring program. According to State officials, this was due to the small number of end-use checks conducted in Egypt and the lower priority assigned to Egypt than to other countries.

The U.S. government completed some, but not all, human rights vetting required by State policy before providing training or equipment to Egyptian security forces. State deemed GAO’s estimate of the percentage of Egyptian security forces that were not vetted to be sensitive but unclassified information, which is excluded from this public report. Moreover, State has not established specific policies and procedures for vetting Egyptian security forces receiving equipment. Although State concurred with a 2011 GAO recommendation to implement equipment vetting, it has not established a time frame for such action. State currently attests in memos that it is in compliance with the Leahy law. However, without vetting policies and procedures, the U.S. government risks providing U.S. equipment to recipients in Egypt in violation of the Leahy laws.

Read in full here.

 

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Americans Targeted in South Sudan, a Country That Gets $1.5B in American Humanitarian Aid

Posted: 3:36 am ET

 

The AP report says that “the attack on the Terrain hotel compound in Juba last month shows the hostility toward foreigners and aid workers by troops under the command of South Sudan’s President Salva Kiir, who has been fighting supporters of rebel leader Riek Machar since civil war erupted in December 2013.”  (See How the World’s Youngest Nation Descended Into Bloody Civil War).  The State Department’s official spox declined to say whether Americans were targeted but the Daily Beast piece includes the beating of an American “with belts and rifle butts for about an hour, accusing him of hiding rebels. “You tell your embassy how we treated you,” one soldier told him as he fled to a nearby UN compound.”  During the attack on the Terrain, several survivors also told the AP that soldiers specifically asked if they were Americans.

The attack on the Terrain compound occurred on July 11.  On July 17, the Special Envoy to South Sudan tweeted that the U.S. is not going to take “offensive action” against South Sudan.

On August 15, over a month after this horrific incident, USUN Ambassador Samantha Power released a statement that the United States is “outraged of the assaults and rapes of civilians … last month.” The US Embassy in Juba received distressed calls, so officials knew this happened before it became  front page news. Still, it took the US over a month to publicly acknowledge this outrage.

A brief backgrounder here — South Sudan gained independence on July 9, 2011, after being at war with Sudan for nearly 40 of the past 57 years. USCG Juba became the US Embassy at the same time.  In early 2013, State/OIG conducted an inspection of the USG’s newest embassy in the world.  One of the OIG’s key findings at that time is the Department inability to staff Embassy Juba adequately, “preventing the embassy from functioning as effectively as it should.”  The embassy operates out of a small chancery deemed too small to accommodate additional staff and the new embassy is not scheduled for construction until 2018. The report warns that the current facility puts embassy employees at risk. The inability to add more staff also leaves assistance programs vulnerable to failure or misuse of funds. The report indicates that the Department has decided to keep the mission with its current footprint until construction of a new embassy, which won’t happen until 2018. It will be a number of years, however, until the new embassy is ready. The OIG concludes that personnel and the integrity of our programs will remain at risk.  (see US Embassy Juba: Dear Congress, This Facility Puts Employees “At Risk” But Hey, Waivers) and US Embassy Juba: An All-in-One Consular Officer on First Rodeo Works Out of a Storage Closet.

The US Embassy in Juba has a small U.S. force guarding it but its ability to function as an embassy is only possible with the protection of the host country.  With South Sudan government troops targeting Americans, how is it that the US Embassy in Juba is still open?

Below is an excerpt from the Daily Press Briefing with the spox addressing what Embassy Juba did during and following the attack. It also show the limits of what the US Government can do despite being the largest donor in South Sudan.

Via DPB on August 15, 2016:

MS TRUDEAU: Yes. And I’m glad for this. Please.

QUESTION: There was a fairly disturbing account put out today of the July 11th attack on the Terrain hotel compound. And as part of it, survivors are saying that they waited for hours after calling for help from the U.S. embassy as well as other embassies in the area, with no one responding. Do you dispute that, and do you have any timeline that you can share with us about what occurred during the time of the assault?

MS TRUDEAU: Okay. So I think we’ve all seen those horrific reports. I want to say at the top that privacy considerations will prevent me from talking about any specific part of this in detail. But as I go through this, I do not in any way want to minimize in any way, shape, or form what people might have gone through during that crisis in South Sudan.

So in terms of the timeline: In the midst of the ongoing fighting throughout the city between government and opposition forces, Embassy Juba actively responded to the July 11 assault on a private compound hosting U.S. citizens, among others. Upon learning about the attacks at Terrain camp, Ambassador Phee immediately – herself – immediately contacted South Sudanese government officials, including officials in the presidential guard and National Security Service. National Security Service sent a response force to the site and put a stop to the attack. Presidential guard forces also went to the scene, but they arrived after the National Security Service.

Following the attack and in the midst of ongoing fighting and violence throughout Juba, including in the immediate vicinity of the embassy, the U.S. embassy ensured that U.S. citizens and foreign nationals affected by the attack were moved to safety and provided emergency medical assistance. The U.S. embassy also facilitated the rapid departure of those involved from South Sudan by air ambulance.

As part of its response to the crisis in South Sudan, the U.S. embassy provided emergency services for those in need and assisted in the departure of more than 80 U.S. citizens during last month’s crisis.

We’ve stated we condemn these attacks. We have called for accountability for those who are involved in the violence.

Anything more on South Sudan?

QUESTION: So you can’t confirm that Americans were singled out and were specifically assaulted due to the fact that they were American in the course of the assault?

MS TRUDEAU: I’m not in a position to say that any particular nationality was singled out.

QUESTION: And as part of the report, it suggests that it was South Sudanese soldiers who were in fact committing this assault. So how was the U.S. embassy – how could they be assured that the people that they were calling were the ones who were actually going to help rather than contributing to the ongoing —

MS TRUDEAU: So what I can say is that the attackers in this incident wore uniforms and they were armed. There were both opposition and government troops in Juba at that time. Armed clashes were occurring throughout the city. The area where Terrain is located was controlled by the SPLA on July 10th and 11th.

Matt.

QUESTION: Yeah, I just wanted – you said that the – in the midst of the ongoing attack at Terrain, you said Embassy Juba actively responded.

MS TRUDEAU: We did.

QUESTION: So the active response, though, as far as I can tell from what you said, was that the ambassador made a phone call. Is that —

MS TRUDEAU: The ambassador made several phone calls.

QUESTION: Several phone calls?

MS TRUDEAU: When we were assured that people would go out and bring people in, then we actively ensured that those people were safe. So yeah.

QUESTION: But in the midst of – while it was going – I understand what —

MS TRUDEAU: Yeah.

QUESTION: — you’re saying after it was over what you did, but during it, was there —

MS TRUDEAU: When we received reports, we called the people who are best poised to go out and make it stop, which was the National Security Services as well as the presidential guard.

QUESTION: But – yeah, I understand that, but I mean – but was it just the ambassador or did other people – did other staffers do anything? I mean, I’m just trying to get an idea of what the active response was.

MS TRUDEAU: Yeah, in terms of sequence, it was – it was reaching out to the government officials who were in a position at that place to intervene.

QUESTION: So I think that the point that at least the survivors of this or some of the survivors of the attack is, is there wasn’t any kind – any attempt to intervene. Is that not appropriate or —

MS TRUDEAU: I – it’s – again, there was an immediate response from the U.S. embassy to identify and dispatch the people who could intervene immediately in the attack.

QUESTION: Right. But the embassy itself was not in a position to do anything?

MS TRUDEAU: Was not in a position to do that.

 

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Contractors Settle False Claims Allegations Related to USAID Food Aid Storage/Redelivery For $1.075M

Posted: 3:55 am ET

Via USDOJ:

Jacintoport International LLC and Seaboard Marine Ltd Agree to Settle False Claims Allegations Related to Delivery of Humanitarian Food Aid

The Justice Department announced today that Jacintoport International LLC (Jacintoport) and Seaboard Marine Ltd. (Seaboard Marine) have agreed to pay $1.075 million to settle a lawsuit alleging that the companies violated the False Claims Act in connection with a warehousing and logistics contract for the storage and redelivery of humanitarian food aid. Jacintoport is a cargo handling and stevedoring firm headquartered in Houston, Texas, and Seaboard Marine, an affiliate of Jacintoport, is an ocean transportation company headquartered in Miami, Florida.

In its lawsuit, the United States alleged that Jacintoport executed in 2007 a warehousing and logistics contract with the United States Agency for International Development (USAID) for the storage and redelivery of emergency humanitarian food aid. This contract contained explicit caps on the rates Jacintoport could charge ocean carriers to load humanitarian food aid onto ships (referred to as “stevedoring” charges) bound for crisis areas around the world. The complaint alleges that beginning around January 2008 and continuing through at least October 2009, Jacintoport, under the supervision and control of Seaboard, charged ocean carriers more for stevedoring than permitted to load over 50,000 tons of humanitarian food aid. These inflated stevedoring charges were subsequently lumped into other costs for delivering humanitarian food aid and passed on to the United States.

“USAID’s humanitarian food aid program provides critical assistance to starving people all over the world,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Justice Department will hold accountable those who seek to abuse this important program.” ‪

“It is unacceptable for companies that do business with the federal government to inflate their costs,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “This settlement demonstrates our determination to protect the taxpayers’ dollars – and humanitarian programs – from abuse.”

The allegations resolved by this settlement were initially brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by John Raggio, a shipping contractor who allegedly received an invoice from Jacintoport that contained the excessive stevedoring charge. Under the Act’s qui tam provisions, a private citizen, known as a “relator,” can sue on behalf of the United States and share in any recovery. The United States is permitted to intervene in the lawsuit, as it did here. Raggio will receive $215,000. Earlier today, the government requested that the case be dismissed.

This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Columbia, with assistance from the USAID Office of the Inspector General. The claims resolved by this settlement are allegations only and there has been no determination of liability. The case is United States ex. rel. Raggio v. Jacintoport International, LLC, et al. Case No. 1:10-cv-01908 (D.D.C.).

 

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USAID Reconstruction Contracts in Afghanistan and Iraq Bites Former Louis Berger Executives

Posted: 4:05 am ET

 

In May 2015,  the former president, chief executive officer, and chairman of the board of USAID contractor Louis Berger Group Inc. (LBG) was  sentenced 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.  See Conspired to Defraud Uncle Sam? Be Very Afraid. We’re Gonna Put You in Home Confinement! Last week, USDOJ announced that it has filed a lawsuit under the False Claims Act against the former LBG CEO Derish M. Wolff  and former CFO Salvatore J. Pepe “for conspiring to overbill the U.S. Agency for International Development (USAID) and other government agencies for costs incurred performing reconstruction contracts in Afghanistan, Iraq, and other countries.”

Via USDOJ: United States Sues Former Executives of Government Contractor for Making False Claims in Connection with Reconstruction Contracts in Afghanistan and Iraq

The Justice Department announced today that the government has filed suit under the False Claims Act against Derish M. Wolff and Salvatore J. Pepe, respectively the former CEO and CFO of Louis Berger Group Inc. (LBG), for conspiring to overbill the U.S. Agency for International Development (USAID) and other government agencies for costs incurred performing reconstruction contracts in Afghanistan, Iraq, and other countries, the Justice Department announced today.  LBG is based in East Orange, New Jersey.

“Those who do business with the U.S. government should expect appropriate consequences if they do not deal fairly,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “As this case demonstrates, the government will hold both corporate entities and individuals accountable if they misuse taxpayer funds.”

The government’s complaint alleges that Wolff and Pepe designed and directed various accounting schemes that resulted in LBG billing the government for indirect overhead costs at inflated rates.  According to the complaint, for example, Wolff and Pepe shifted portions of salaries of LBG executives and accounting personnel from contracts paid for by foreign and state governments and private entities to contracts paid for by the United States.  Wolff and Pepe allegedly certified the false rates and submitted them to the government in annual financial reports.

The United States resolved criminal and civil claims against LBG arising from this conduct on Nov. 5, 2010.  At that time, LBG entered into a Deferred Prosecution Agreement and paid $50.6 million to resolve False Claims Act allegations.  Pepe pleaded guilty on that date to a charge of conspiracy to defraud the government and was later sentenced to one year probation.  Wolff pleaded guilty to the same charge on Dec. 12, 2014, and was later sentencedto 12 months of home confinement and required to pay a $4.5 million fine for his role in the scheme.  The complaint filed today asserts civil claims against Wolff and Pepe.

The United States filed its complaint in a lawsuit originally brought under the qui tam, or whistleblower, provisions of the False Claims Act, by Harold Salomon, an LBG accountant from March 2002 to October 2005.  Under the Act, a private citizen can sue on behalf of the United States and share in any recovery.  The United States is also entitled to intervene in the lawsuit, as it has done in this case.

This matter is being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Maryland, with investigative support from the FBI, USAID’s Office of Inspector General, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.

“I applaud the dedication of USAID-OIG special agents, along with special agents of the FBI and the Defense Criminal Investigative Service,” said USAID Inspector General Ann Calvaresi Barr.  “Their joint investigative work has helped the Justice Department take action against those responsible and signals our continuing commitment to protecting public funds from fraud, waste, and abuse.”

The case is United States ex rel. Harold Salomon v. Derish M. Wolff & Salvatore J. Pepe, Civ. No. RWT-06-1970 (D. Md.).  The claims asserted against Wolff and Pepe are allegations only to the extent not admitted in their criminal pleas, and there has been no determination of civil liability.

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