Suspended IRD responds to allegations that it mismanaged US funding

The nonprofit International Relief and Development — once the U.S. Agency for International Development’s largest contractor in Iraq and Afghanistan — responded today to USAID’s suspension of its projects over allegations that IRD misused U.S. taxpayer funds and engaged in “serious misconduct.” The last month has seen an overhaul at IRD — 21 employees were laid off last week and the entire board of directors was dismissed — following the resignation of several top executives, including founder and former President Arthur Keys. While many question whether the organization will be able to survive the fallout, those left standing continue to look forward and plan for the future. “This is a pretty unprecedented situation,” an IRD representative told Devex, “and an extraordinary opportunity going forward to build a 21st century [nongovernmental organization] that is really going to be setting some new standards in the development landscape.” USAID raised three areas of concern when it suspended IRD from receiving any new U.S. government contracts: questionable expenses, accountability of senior management and the organization’s oversight capacity. IRD’s “very, very comprehensive” response takes each of them on in turn, according to the representative. Regarding “questionable expenses,” the response includes details from an “expedited audit,” which IRD claims shows half of those expenses were actually allowable. IRD addresses the issue of senior management directly. The organization’s decision to dissolve its board of directors was made to ensure those responsible for financial mismanagement are no longer part of the organization. USAID took issue with the fact that senior managers responsible for misconduct were still part of the organization at the time of its suspension. “None of them are now,” the representative told Devex. “Going forward, I will work with our new senior management team and reconstituted board of directors to make the new IRD a model of transparency, accountability and impact,” recently appointed IRD President and CEO Roger Ervin said in a statement. Finally, IRD points to an independent audit it commissioned from the consulting firm Ernst and Young in its response to USAID concerns about systems and oversight capacity. The details of that audit’s findings are included in the response and, according to the representative, provide “ample evidence” of IRD’s capacity and the adequacy of its internal controls. USAID will now have 45 days to submit a final debarment decision, according to regulations for nonprocurement debarment. IRD leaders hope the process will move quickly, and that USAID will help to avoid an “ambiguous” situation regarding the organization’s ability to continue its programs, many of which operate in time-sensitive, crisis situations like the Syrian border. “This is not something that can remain unresolved for any period of time without having a significant impact well beyond IRD headquarters or inside the beltway,” the representative said. The deadline for a response — originally Feb. 25 — was already extended once by USAID, due to inclement weather in Washington, D.C. How do you think USAID should handle IRD’s response? Let us know by leaving a comment below. Stay tuned to Devex for more news and analysis of U.S. aid, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you FREE every business day.