Accusations of corruption and financial misconduct — in any business, but perhaps especially in the global development and humanitarian aid business — are often seen as a black and white issue in the court of public opinion. If the executives of a global nonprofit are doling out baseball game tickets, retreats and heady bonuses, often among themselves, the assumption is that they must not be reducing poverty and increasing shared prosperity effectively.
Last week when the U.S. Agency for International Development lifted its suspension against nonprofit International Relief and Development, I was surprised to find myself typing the words into a headline. Most everyone I’d spoken to — from objective law firms to former officials of now-defunct nonprofits — had predicted the exact opposite.
IRD would go the way of the dodo, they said. Or rather, IRD would go the way of the Academy of Educational Development, which was suspended in 2010 for financial misconduct and absorbed by the nonprofit now known as FHI 360.
But IRD — for the moment, at least — lives to fight another day. The events behind its survival are remarkable, but somewhat diluted by the strong public vitriol for IRD. This, after all, is an organization that, under founder Arthur Keys Jr.’s leadership, produced a lot of ill feeling, financial shade and more than its fair share of disgruntled ex-employees (many of whom you’ll find contributing to the comments section of IRD-related articles).
What’s lost in the fray is what IRD’s suspension and resulting lawsuit has spurred at the agency: change.
“It’s surprising,” said David Robbins, a former U.S. Air Force debarment official and contracts lead at a D.C. law firm, of the tidal change. “I’ve never seen anything like it related to a suspension.”
USAID spokesman Ben Edwards told me last week that an “issue was raised while preparing to respond to the [IRD] lawsuit.” The issue, according to my legal sources, amounts to a conflict of interest.
Back in March 2015, the agency moved the head of one department to another to “improve operations.” IRD’s suspension predated the correction, so naturally USAID overturned the suspension, with the commitment to re-examine IRD’s financial responsibility. USAID wasn’t required to make the change but thought it best. Its lifting of IRD’s suspension was thus a side effect of progress, not an admission of guilt.
USAID’s “sorry, not sorry” could be chalked up to its desire to improve suspension and debarment protocol while flying under the radar of a high-profile and highly scorned nonprofit’s “Road to Damascus” moment. As Steven Shaw, senior counsel at Covington and Burling LLC and a former debarment and suspension official who had overseen more than 25,000 debarments for the U.S. Air Force pointed out, USAID has less experience with suspensions and debarments compared with other government agencies. This, he said, was a sign that there could be room for improvement.
With so many initiatives in USAID’s pipeline that favor smaller, local organizations — which might have less capacity for oversight than the big international players — it might be time for USAID to hone its suspension and debarment process, in order to use the mechanisms to “solve problems” rather than “punish,” as Shaw said could happen with less experienced agencies.
One thing’s for certain: IRD will remain in the limelight. Now 150 employees and $10 million lighter and with a new president and board of directors at the helm, IRD will continue to push its original suit against USAID demanding “injunctive relief” against what it views is an “unlawful suspension,” IRD spokesman Dan Dupont told Devex. Despite allegations of financial misconduct, IRD claims programs benefitting more than 1.3 million people, most of them refugees in conflict zones in the Middle East, “have been ended or significantly disrupted.”
The question remains: With IRD’s future in limbo and, as the spokesman claims, those beneficiaries still without services, what does the development community stand to lose if IRD becomes the highest-profile debarment in USAID history?
Debarred or not debarred, maybe the old IRD will help set the bar for a new USAID.
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