Amid ongoing investigation from independent agencies, International Relief and Development has now been barred from receiving U.S. government funds.
On Monday, the U.S. Agency for International Development announced it was suspending IRD, one of its longtime contractors, saying a review “revealed serious misconduct in IRD's performance, management, internal controls and present responsibility.”
The review was separate from the investigation now being undertaken by the agency’s Office of the Inspector General into how IRD conducts its business. Apart from OIG, the Office of the U.S. Special Inspector General for Afghanistan Reconstruction and Federal Bureau of Investigation are conducting their own probes.
IRD landed itself in hot water last year following a Washington Post article scrutinizing its effectiveness in Afghanistan and Iraq and its practice of awarding lavish bonuses to the nonprofit’s founding family and senior employees, hiring former USAID staffers and asking former IRD employees to sign confidentiality agreements that caution them against making “critical” remarks about the organization to “officials of any government.”
As previously reported by Devex, OIG had started the investigation even before the Post came out with its expose. USAID promises to continue working closely with the office on the probe.
“USAID has a zero tolerance policy for mismanagement of American taxpayer funds and will take every measure at our disposal to recover these funds,” USAID said in a statement. The agency further notes its increased oversight of contracts and contracts over the years and “the suspension of IRD demonstrates USAID's continued commitment to accountability.”
According to the Post’s analysis, IRD founder and former President and CEO Arthur Keys, his wife, Jasna Basaric-Keys, and other family members received more than $7.2 million between 2008 and 2012. In 2013, Keys was due to earn $690,000 on top of $900,000 for his retirement account, while his wife, IRD co-founder who leads the nonprofit’s operations, took home $1.1 million in pay and bonuses.
The Post noted that the new IRD managers “balked” at the pay size and demanded the couple “surrender” a substantial chunk of the payouts and, knowing USAID was contemplating suspension, have made efforts to revamp the organization and curb the enormous remuneration.
Speaking with the Post, new IRD President and CEO Roger Michael Ervin said he will take USAID’s decision as “an opportunity to make some changes,” many of which he added are already in progress. He noted that the organization is now undergoing restructuring and has been cooperating with USAID and federal investigators.
See more on the IRD investigation
“I think we can show in short order that we can demonstrate that we are a good service provider for USAID, and I think we can address this pretty quickly,” he told the Post.
USAID’s action presents a huge blow to IRD, which depends heavily on USAID funding to support its operations. The Post noted that USAID funds accounted for 76 percent of its $3 billion revenue from 2007 to 2013.
The decision came more than a week after Republican Sen. Bob Corker of Tennessee, chairman of the Senate Foreign Relations Committee sent a letter to outgoing USAID Administrator Rajiv Shah questioning USAID’s continued relationship with IRD as well as with the Louis Berger Group Inc., whose former CEO pleaded guilty of conspiring to defraud the agency.
“Given that USAID programs in Afghanistan are a critical component of U.S. national security policy in the region, including addressing issues of governance, rule of law and corruption, USAID's continued reliance on such organizations is highly questionable at best,” Corker said in a Jan. 16 letter addressed to Shah. “As a result, surely you will review whether continuing forward with these two partners is at all appropriate.”
Corker requested Shah to report back the result of the review “including whether suspension and debarment proceedings should immediately be initiated against LBG, IRD or other similarly situated contractors and describe in detail your plan for getting USAID's oversight of its contractors back on track.”
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