USAID inspector general warned of oversight failures before aid shutdown

A day before the U.S. Agency for International Development’s global programming was brought to a grinding halt, a memo from the agency’s watchdog shed light on the government’s criticisms of its programming. The memo, written by Paul Martin, USAID’s inspector general since 2024, was sent to then-Acting Administrator Jason Gray — who has since been demoted — and chief of staff Matt Hopson, who has since resigned. The Office of Inspector General, or OIG, which provides oversight of USAID’s personnel, programs, and activities, outlined several concerns, including the lack of cooperation from United Nations agencies and foreign nongovernmental organizations in investigations, as well as limited vetting of partners for ties to terrorism and corruption. The memo was sent to USAID leadership on Jan. 23, three days after President Donald Trump ordered a pause in disbursements of foreign aid for 90 days. This was then followed on Jan. 24 by a stop-work order for existing grants and contracts, as the government reviews programming to ensure foreign assistance is aligned with the president’s “America First” foreign policy agenda. “I think partners may have to change the way they are accountable to USAID and [the U.S. government] under this administration,” a USAID employee told Devex. “And that makes sense.” UN, NGO resistance to sharing potential misconduct The leading concern listed in the memo was resistance from U.N. agencies and foreign-based nongovernmental organizations to share information with OIG about potential misconduct such as fraud, sexual exploitation, abuse, corruption, and aid diversion. It noted that USAID funds billions in humanitarian aid and development programming through U.N. agencies. In fiscal year 2024, about a quarter of that funding — $8 billion — was funneled mostly through U.N. agencies and multilateral banks. USAID relies on mandatory self-reporting of potential misconduct. When an award recipient becomes aware of credible allegations, they’re expected to promptly inform OIG, and then provide further information, when disclosures are allowed. “Despite these obligations, direct reporting to OIG from UN agencies is limited and at times significantly delayed if not altogether absent,” Martin wrote. USAID, more generally, often gets more reports about potential misconduct than OIG. For example, between October 2019 and June 2024, the World Food Programme, which gets USAID funding, disclosed 29 instances of potential misconduct to OIG, whereas WFP disclosed 519 instances of potential misconduct to USAID. This is “delaying our ability to initiate critical initial investigative steps such as preserving evidence and obtaining witness testimony,” Martin wrote. OIG has also encountered “long delays or outright refusal” by U.N. agencies in providing requested investigative information to its special agents, he said. While OIG has legal grounds to ask for this information from a USAID-funded NGO or contractor, the U.N. often declines cooperation due to "privileges and immunities." “We believe invocation of privileges and immunities is premature in the fact-finding investigative stage, as the information requested by OIG agents is not connected to an ongoing legal proceeding in the United States,” Martin wrote. He said this has hampered their ability to investigate concerns that U.N. Relief and Works Agency, or UNRWA, employees believed to be associated with Hamas may be recirculated to other USAID-funded organizations; concerns WFP staff have been involved in food diversion in Ethiopia; allegations the U.N. Office for the Coordination of Humanitarian Affairs employed a senior official accused of sexual assault to lead humanitarian efforts in Ukraine, and mismanagement of humanitarian assistance in Yemen. The problem is “exacerbated by a lack of standard policies to prevent employees terminated for misconduct from circulating to other UN agencies also funded by USAID,” Martin wrote. While there’s a U.N. system for vetting employees terminated for sexual misconduct, there’s not currently a similar system for fraud or corruption. For example, when officials at the World Health Organization were found to have sexually assaulted women and girls while performing USAID-funded Ebola response activities in the Democratic Republic of the Congo, “it took significant time and convincing, including by senior U.S. government officials, for WHO to cooperate with OIG investigators seeking specific names of employees so that they could be independently investigated and referred to USAID for suspension/debarment,” he wrote. OIG also faces resistance in investigating and holding accountable foreign USAID-funded NGOs, which often cite domestic data privacy laws. USAID also has challenges in holding foreign-based implementers believed to have engaged in fraud accountable in American federal courts. Limited vetting for ties to terrorism and corrupt entities Martin also noted that there are limitations on USAID’s ability to vet aid organizations for ties to designated terrorist organizations and corrupt parties. USAID requires applicants for assistance awards to declare that, to the best of their knowledge, they’ve not engaged in transactions or provided support to those sanctioned by the U.S. for terrorism in the past three years. “However, the current pre-award antiterrorism certification only applies to prospective grantees, not contractors,” Martin wrote. There’s also no pre-award certification around disclosing previous relationships with parties deemed by the U.S. to have engaged in corruption in countries where USAID programming exists. Currently, USAID also doesn’t maintain a comprehensive database of subawardees. For example, in areas such as Ukraine where safety is a concern, subawards can be removed from the system or not reported to protect identities. “The lack of a centralized and comprehensive internal database of subawardees delays OIG investigative activity and our ability to check with trusted foreign law enforcement partners to see if fraud allegations or findings against a local entity involve USAID funds,” Martin wrote.