Central America: Humanitarian Assistance to the Nicaraguan Democratic Resistance

Published by the Government Accountability Office on 1990-01-23.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                   Assistance to the
                                   Democratic Resistance

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(;/I( 1 --NSl-ili:!to   Ci%   -   - --
     United States
     General Accounting Office
A0   Washington, D.C. 20648

     National Security and
     International Affairs Division

     January 23,199O

     The Honorable Patrick J. Leahy
     Chairman, Subcommittee on Foreign
     Committee on Appropriations
     United States Senate
     The Honorable Christopher J. Dodd
     Chairman, Subcommittee on Western
       Hemisphere and PeaceCorps Affairs
     Committee on Foreign Relations
     United States Senate
     The Honorable David R. Obey
     Chairman, Subcommittee on Foreign
       Operations, Export Financing and
       Related Programs
     Committee on Appropriations
     Houseof Representatives
     The Honorable GeorgeW. Crockett, Jr.
     Chairman, Subcommittee on Western
       Hemisphere Affairs
     Committee on Foreign Affairs
     House of Representatives

     In responseto your request, we reviewed the Agency for International Development’s
     administration of $27.14 million in humanitarian assistanceto the Nicaraguan Resistance.
     These funds were appropriated under the fiscal year 1989 DefenseAppropriations Act (P,L.
     100-463) for the period of October 1, 1988, to March 31, 1989.
     We are sending copies of this report to other interested congressionalcommittees; the
     Administrator, Agency for International Development; the Secretariesof Defenseand State;
     and the Director, Office of Management and Budget.

     This report was prepared under the direction of Joseph E. Kelley, Director, Security and
     International Relations Issues,who may be reached on (202) 276-4128 if you or your staff
     have further questions.

     Frank C. Conahan
     Assistant Comptroller General
P ecutive Summq

                           The Congresshas been concernedthat assistanceprovided to the Nica-
  I                        raguan Resistancein Central America be spent as it intended. As a
                           result, GAO was asked to examine the Agency for International Develop-
                           ment’s (AID) administration of $27.1 million in humanitarian aid to this
                           group. GAO'S objectives were to determine whether AID provided only
                           those goods and services authorized under legislation and adopted ade-
                           quate controls to administer procurement and monitor deliveries of
                           goods,services, and payments.

                           The fiscal year 1989 DefenseAppropriation Act (P.L. 100-463) provided
                           $27.14 million in humanitarian assistanceto the Nicaraguan Resistance
                           for the period of October 1, 1988, to March 31,1989. Thise funds
                           reflected the secondphase of humanitarian assistance.Unlike the first
                           phase, consisting of $17.7 million authorized from April through Sep-
                           tember 1988 (P.L. lOO-276),the second-phasefunds were not subject to
                           monthly ceilings and certain earmarks. A third phase consisting of
                           $49.76 million was provided to be used through February 1990 (P.L.
                           101-14). By March 31, 1989, AID had obligated about $23.2 million of the
                           $27.14 million authorized for the secondphase and had returned the
                           remaining $3.9 million to the US. Treasury in November 1989.

                                complied with Public Law loo-463 in providing humanitarian assis-
Results in Brief           AID
                           tance to the Resistance’during the secondphase and applied adequate
                           controls in administering the procurement and delivery of goods and
                           services.The lifting of monthly spending ceilings increasedAID'S flexibil-
                           ity to procure items. AID improved medical assistanceand provided
                           training through the use of contractors and other support and increased
                           the number of recipients of cash payments.

Principal Findings

AID Complied With          In accordancewith the law, AID provided only authorized assistanceto
Legislative Requirements   the Resistanceand suspendedfamily assistancepayments for four
                           Resistancemembers convicted or accusedof human rights abuses.In

                            ‘Resistance refers to members of the Nicaraguan Democratic Resistance and an Indian Resistance
                           force known as Yatama.

                           Page 2                                                        GAO/NSIALWO-62     Central   America
c   ,
    ,                          Executive8ummsry

                               Costa Rica, an intermediary designated to deliver family assistancepay-
                               ments to Resistancemembersimproperly paid out someof these funds.
                               As a result, AID adopted new guidelines for transferring funds to

         Adopted Adequate      AID'S procedures for administering and controlling purchases and deliv-
        :edures                eries of cash, commodities, and supplies ensured that expenditures could
                               be adequately tracked and verified. Further, AID officials implemented
                               controls to ensure that purchaseswere permissible and to verify suppli-
                               ers’ legitimacy and reasonablenessof prices. Finally, auditors from AID'S
                               Regional Office of the Inspector General and the private accounting firm
                               of Price Waterhousemaintained closeoversight of the program.

Lif iing of Monthly Ceilings
In+ easedAID’s Flexibility
                               The legislation for the first phase of assistanceincluded monthly spend-
                               ing ceilings that limited AID'S flexibility to procure commodities. These
                               limits were lifted during the secondphase. As a result, AID wits able to
                               procure larger quantities of clothing and medical supplies and reduce
                               the frequency of deliveries.

U& of Contracts and            AID relied heavily on others during the secondphase to improve medical
Gralnts Improved Medical       assistanceand provide training. Under an AID contract, the International
                               Medical Corps, a private voluntary organization, provided technical
As$istance and Provided        assistanceto the Resistancemedical corps and provided medicines,
Trai ning                      equipment, and medical supplies and servicesto Resistancemedical
                               facilities. AID contracted with Creative AssociatesInternational, Inc., a
                               U.S. consulting firm, to train Resistancepersonnel in health, sanitation,
                               and supply managementpractices and vocational skills and to help
                               improve literacy. With grants from AID, the Nicaraguan Association for
                               Human Rights, a nonprofit organization, and the Resistanceconducted
                               human rights training authorized under the legislation,
                               The two contractors initially encountered difficulties in carrying out
                               their responsibilities in Honduras, Initially, the International Medical
                               Corps faced a lack of skilled medical personnel, deteriorating medical
                               facilities, an inadequate supply of medicines and a lack of a reliable
                               inventory system. By the end of the phase, the contractor had recruited
                               skilled personnel and significantly upgraded facilities, but continued to
                               have problems maintaining reliable inventory data and an adequate sup-
                               ply of medicines.

                               Page 3                                        GAO/NSIAD-9062   Central   America
                          Creative Associatesinitially experienced problems in recruiting trainers,
                          obtaining materials from the United States, and constructing training
                          facilities. By the end of the phase, however, the contractor had hired
                          staff, constructed adequate facilities, and directly or indirectly trained
                          approximately 6,000 Resistancepersonnel,
                          The two organizations that received grant funds to conduct human
                          rights training provided instruction regarding treatment of civilians and
                          other armed forces personnel and the Resistancemilitary code of con-
                          duct. By the end of the phase, about 8,600 Resistancemembershad been

  mber of Recipients of   During the first phase of assistance,AID made two types of cash pay-
  h Payments Increased    ments to the Resistance:family assistancepayments and cash-for-food
                          payments. The legislation authorizing the first phase of assistance
                          established no limits on cash payments; however, criteria developed by
                          AID in consultation with congressionalrepresentatives limited family
                          assistancepayments to the samenumber of recipients and amount paid
                          under a previous US. government assistanceprogram. In the second
                          phase, AID, in consultation with congressionalrepresentatives, slightly
                          increased the number of Resistancemembers receiving family assistance
                          payments by 6 percent. AID also began paying salaries to Resistance
                          medical and training personnel.

                          GAO   makes no recommendations.

                          In commenting on a draft of this report (see app. I), AID suggestedminor
Agency Comments           modifications to someof the report language,which GAO has incorpo-
                          rated where appropriate.


                          Page 4                                        GAO/NSIAD-9082   Central   America



         Page 6       GAO/NSIAD4W62   Central   America

El:xjecutive Summary                                                                                      2

E tjapter 1
Inltroduction           Program Elements of Humanitarian Assistance
                        AID’s Operations
                        Objectives, Scope,and Methodology

Ei                                                                                                    12
A:                      Compliance With Legislative Requirements                                      12
                        Program Management and Monitoring                                             16
Le                      Conclusions                                                                   16
E iapter 3
ClTangesin Assistance   Improvement in Procurement Flexibility
                        Changesin Cash Payments to ResistanceMembers
  pgrm Operations       Use of Contract and Other Support
                        Increase in Helicopter Use                                                   26
                        Conclusion                                                                   26

Cfiapter 4                                                                                           27
AID’s Operations in     Elements of Assistance
                        Program Management and Monitoring
Costa Rica              Conclusions                                                                  29

Appendix                Appendix I: CommentsFrom the Agency for International                        30

Tsibles                 Table 2.1: AID’s Obligations for Humanitarian Assistance                     14
                            Provided Under Public Law loo-463 (As of July 31,
                        Table 2.2: AID Obligations for Transportation (As of April                   14
                        Table 3.1. Training Provided to ResistanceMembers(As                         22
                            of April 30,1989)

                        Page 0                                       GAO/NSIAD90-62   Central   America

        Table 4.1: AID’s Obligations for Costa Rica (As of July 31,                  27

        Figure 3.1: ResistanceMembersAttending Computer                              23
        Figure 3.2: ResistanceMembersAttending Human Rights                          24
        Figure 3.3: Air Cargo Handlers Preparing for an AirDrop                      26
        Figure 3,4: ResistanceMembers Loading an AID                                 26
            Contractor’s Helicopter

        AID        Agency for International Development
        DOD        Department of Defense
        GAO        General Accounting Office

        Page 7                                       GAO/NSIAD8O-62   Cmtral   America

                The Department of Defense(DOD) Appropriations Act, 1989 (P.L. lOO-
                463, Oct. 1,1988), authorized the transfer to the Agency for Interna-
                tional Development (AID) of $27.14 million from unobligated DOD appro-
                priations to provide funding for humanitarian assistanceto the
                Nicaraguan Resistancefor the period October 1, 1988, through March
                31, 1989. The legislation also provided AID with up to $4 million for
                administrative expensesand an unspecified amount of funds to pay for
                transportation expenses.It prohibited the use of funds to provide or
                transport any type of assistancenot specifically authorized, including
                military assistance.Additionally, AID was restricted from providing
                assistanceto any group that retained in its ranks any individual found
                to be engagedin gross human rights violations, drug smuggling, or mis-
                use of public or private funds.
                Public Law loo-463 also provided $5 million for medical assistancefor
                the civilian victims of the Nicaraguan civil strife. The law required the
                Catholic Church in Nicaragua to administer these funds, but the Nicara-
                guan government has not permitted the use of these funds in Nicaragua.
                Thus, AID has not expended them.

                The $27.14 million reflected the secondphase of humanitarian assis-
                tance funding. Under Public Law 100-276,Congressprovided $47.9 mil-
                lion to support peaceand democracy in Central America, including
                $17.7 million for the first phase of humanitarian assistanceto the Resis-
                tance, $17.7 million to aid children who were victims of the Nicaraguan
                civil strife, $10 million for activities of a Verification Commission, and
                $2.6 million for AID administrative expenses.The initial humanitarian
                assistancefunds were available from April to September 1988.
                In April 1989, Congressprovided funding under Public Law 101-14 con-
                sisting of $49.75 million for a third phase of humanitarian assistance,an
                additional $4.166 million for medical assistancefor the civilian victims
                of the Nicaraguan civil strife, and $5 million for AID’S administrative
                expenses,The humanitarian assistancefunds will remain available
                through February 1990, and the funds for administrative expenseswill
                remain available until March 1990. The $4.166 million for medical assis-
                tance was available until October 1989.
                We issued a report in June 1989l on our review of the expenditure of
        Y       $17.7 million for the first phase of humanitarian assistance.Separate

                ‘Central America: Humanitarian Assistance to the Nicaraguan Democratic Resistance (GAO/
                       - 9_162, June 1,1989).

                Page 8                                                      GAO/NSIAD-9062     Central    America
                       Chapter 1

      I                reports will be issued on the expenditure of the $10 million provided for
                       activities of the Verification Commission and the $17.7 million to aid
                       children injured in the Nicaraguan civil conflict. GAO is currently review-
                       ing the third phase of funding and will report separately on these

                       During the secondphase of assistance,Congressauthorized AID to pro-
                       vide humanitarian assistanceconsisting of
                   .   food, clothing, and shelter;
                   .   medical services,medical supplies, and nonmilitary training for health
                       and sanitation;
                       nonmilitary training regarding treatment of civilians and other armed
                       forces personnel in accordancewith internationally acceptedstandards
                       of human rights;
  ,                .   payment for such items and services;and
                   .   replacement batteries for existing communications equipment.

                       Under Public Law 100-463,funds for the secondphase were available
                       from October 1, 1988, through March 31, 1989. In consultation with con-
                       gressional representatives, AID ceasedobligating funds on March 3 1,
                       1989, but continued to expend previously obligated funds and provided
                       assistancethrough April 30,1989, to avoid a gap in assistanceuntil
                       funding for the third phase becameavailable.

                       During the first phase, AID established a Task Force on Humanitarian
AID’s Operations       Assistance in Central America with a headquarters office in Washing-
                       ton, D.C., and field offices in Honduras and Costa Rica to implement the
                       assistanceprogram. As of March 1989, the headquarters staff consisted
                       of a program director, deputy director, and 15 staff members. In April
                       1988, AID opened an office at the U.S. Embassy in Tegucigalpa, Hondu-
                       ras, to overseefield operations during the first phase. By the end of the
                       first phase in September 1988, the staffing level had increased from 12
                       to 23 persons. In May 1988, AID opened a secondfield office in San Jose,
                       Costa Rica, with one official to overseedelivery of assistance.Chapter 4
                       provides a separate description of program activities in Costa Rica.

          Y            AID continued to increase its staff in Honduras during the secondphase
                       and by April 1989 had 31 employees.According to AID officials, addi-
                       tional staff were required to managethe increased work load that

                       Page 9                                        GAO/NSIAD-99-02   Central   America
                       Chapter    1

                      resulted from transferring the accounting function from the headquar-
                      ters office and to managespecific aspectsof assistance.The added staff
                      included a deputy director, project officers for family food and deliv-
                      eries of quartermaster gear, and a chief accountant.
                      AID augmented its capabilities by using contractors and awarding grants
                      for medical and training support. AID contracted with the International
                      Medical Corps, a private voluntary organization, to upgrade the Resis-
                      tance’s medical program and with Creative AssociatesInternational,
                      Inc., a U.S. consulting firm, to provide training in health and sanitation
                      practices, supply management,and vocational skills and to improve lit-
                      eracy. Additionally, AID awarded grants to the Nicaraguan Association
                      for Human Rights, a non-profit organization, and the Resistanceto pro-
                      vide human rights training,
                      AIDrelied on auditors from its Regional Office of the Inspector General
                      and the private accounting firm of Price Waterhouseto monitor and
                      audit program activities in Honduras and Costa Rica.

                      At the request of the Chairmen of four congressionalSubcommittees,we
jectives, Scope,and   reviewed AID’S administration of funds provided during the second
$hodology             phase, Our objectives were to determine whether AID had provided only
                      authorized goods and services and adopted adequate controls to admin-
                      ister procurement and monitor deliveries of goods,services, and
                      We met with officials from the AID Task Force and State Department and
                      reviewed pertinent documentation on the assistanceprogram in Wash-
                      ington, DC., and at the U.S. Embassy in Tegucigalpa, Honduras. We also
                      met with representatives of the Nicaraguan Resistance,International
                      Medical Corps, Creative Associates International, Inc., and the Nicara-
                      guan Human Rights Association at field sites in Tegucigalpa and other
                      locations in Honduras, At each location, we reviewed records and
                      observed the delivery of goods and services.
                      To determine whether AID adopted adequate controls and provided only
                      authorized assistance,we reviewed AID and contractor records and pro-
                      cedures for purchasing and delivering goods and services.We also
         Y            reviewed MD’S procedures for transferring cash payments to the Resis-
                      tance and monitored the Resistance’sprocedures for inventorying and
                      distributing assistanceitems and disbursing cash payments. In addition,

                      Page 10                                       GAO/NSIAD-9082   Central   America
    chapt8r 1

    we reviewed Price Waterhouse’saudit reports and monitored the distri-
    bution and usesof funds, commodities, and supplies. We made numerous
    visits to Resistancecamps to verify that deliveries of assistanceitems
    and services complied with legislative requirements and prohibitions.
    We reviewed this program from October 1988 to July 1989 in accord-
    ance with generally acceptedgovernment auditing standards.


    Page 11                                    GAO/NSIAD4O82   Central   America
                                                                                                                             r       ~~-F


Chapter 2

@I Complied With Legislative Requirements                                                                                            ’ (
dd Adopted Adequate Oversight Procedures

                           ND  complied with legislative requirements and established adequate
                           procedures to administer and control the $27.14 million in humanitarian
                           assistanceprovided to the Resistanceduring the secondphase. It
                           adopted a hands-on approach and played a direct role in administering
                           and controlling purchases and payments and in monitoring the delivery
                           of cash, commodities, and supplies. Additionally, AID and Price
                           Waterhouse auditors maintained close oversight of day-to-day

                           Public Law loo-463 authorized only certain types of assistanceand
Compliance With            restricted AID from providing assistanceto any group that included indi-
Legislative                viduals who had engagedin specified activities, such as gross violations
Requirements               of human rights. AID complied with these requirements by providing
                           only authorized assistanceand suspending family assistancepayments
                           for four Resistancemembers convicted or accusedof human rights

TylF)esof Assistance       AID   provided the following assistance:

                       . Food. AID provided food rations to approximately 46,000 Resistance
                         combatants and family members at camps in Honduras and a recupera-
                         tion center in Costa Rica.
                       l Clothing. AID provided standard military attire, referred to as quarter-
                         master gear, to Resistancemembers in Honduras. Items included trou-
                         sers, shirts, boots, and field packs, U.S. military aircraft transported
                         these goods from the United States to Honduras.
                       . Shelter. Resistancepersonnel in Honduras received items such as tents,
                         cots, and plastic sheeting.
                       l Medical supplies and services.AID purchased medicines and other medi-
                         cal supplies in the United States and Central America for treatment of
                         Resistancemembers and their families at Resistancemedical facilities*
                         in Honduras. AID also hired a medical contractor, International Medical
                         Corps, to provide specialized services and technical assistanceto the
                         Resistancemedical corps in Honduras. In Costa Rica, AID funding sup-
                         ported a private clinic, a recuperation facility and local hospital, and
                         physician services.

                            *According to AID, International Medical Corps, and Resistance officials, the Resistance medical corps
                           also provides medical care to Hondurans living in the vicinity of Resistance medical facilities in cen-
                           tral Honduras because no other medical care is available.

                           Page 12                                                         GAO/NSIAD-9042 Central America
     chapt4x 2
     AID Cbmplled With Leglslntive Requirementa
     and Adopted Adequate Oversight Procedures

     Training. Creative AssociatesInternational, Inc., under contract with
     AID,provided training in health and sanitation practices, supply manage-
     ment, and vocational skills and helped to improve literacy. AID awarded
     grants to the Nicaraguan Association for Human Rights and the Resis-
     tance to provide instruction in human rights issues.These organizations
     provided training in Honduras and Costa Rica.
     Cash payments. AID provided family assistancepayments to a limited
     number of Resistancepersonnel in the United States, Honduras, and
     Costa Rica to purchase food, clothing, and other basic needs.AID also
     provided cash-for-food payments in Nicaraguan currency (cordobas) for
     Resistancepersonnel in, or planning to return to, Nicaragua to purchase
     food, clothing, and medical care.
     Program support. AID funded administrative expensesincurred by the
     Resistancein implementing the assistanceprogram.
     Communications, Resistanceunits in Honduras received replacement
     batteries to maintain existing communication equipment.
     Roads.AID provided funds to upgrade drainage structures on existing
     roads in eastern Honduras to facilitate food deliveries to Resistance
     Public Law loo-463 authorized AID to use funds from October 1,1988,
     through March 31, 1989. Of the $27.14 million for humanitarian assis-
     tance, AID had obligated approximately $23.2 million by March 31,
     1989.2According to an AID official, these funds were sufficient to pro-
     vide assistanceuntil the third-phase funds becameavailable. Thus,
     $3.9 million was not obligated and was returned to the U.S. Treasury in
     November 1989.
     Table 2.1 shows AID’S obligations by type of assistance.

     ‘According to an AID official, the amount obligated represents the amount that AID will have actu-
     ally expended after paying all outstanding debts.

     Page 13                                                        GAO/NSIAB9O432 Central America
                                           AID Complied With Le&Ulve    Requirements
                                           and Adoptad Adequate Overeight Pracedures

Tabid 2.1: AID’8 Obiigation~ for
HumSnitrrian A88iatanoo Provided Under     rype of a#,i8t@nce                                                                              Total
PubliP Law loo-463 (As of July 31, lQ8Q)   Food                                                                                      $5,626,85Q
                                           Clothing                                                                                   4,209,066
                                           Shelter                                                                                      378,415
                                           Medical services and supplies                                                              6,338,683
                                           Training                                                                                   2,168,020
                                           Cash payments
                                             Family assistance                                                                        2,464,876
                                             Cash-for-food                                                                              914,642
                                           Program support                                                                              547,126
                                           Communications (Batteries)                                                                    55,397
                                           Roads                                                                                        504,778
                                           Total obligated                                                                          23,207,862
                                           Amount Unobligated                                                                         3,932,138
                                           Total funds available                                                                  $27,140,000

     ,                                     The $27.14 million for the secondphase exceededthe $17.7 million pro-
                                           vided for the first phase of funding by $9.44 million, Both phasescov-
                                           ered 6-month periods. AID used the additional funding available for the
                                           secondphase primarily to contract for medical and training support.

                                           By March 30, 1989, AID also obligated approximately $1.6 million of the
                                           $4 million available for administrative expenses3and about $2.6 million
                                           for transportation expenses.Transportation expensesincluded pay-
                                           ments for delivery of supplies from the United States to Honduras on
                                           U.S. military aircraft and for delivery of supplies to Resistancecamps in
                                           Honduras by local trucking firms and two aviation contractors. Two
                                           contract helicopters and a DC-6 aircraft provided air transport. How-
                                           ever, the DC-6 crashed in February 1989 and AID increased the use of
                                           the two helicopters.
                                           Table 2.2 shows AID’S obligations for transportation as of April 30, 1989.
Tabi+ 2.2: AID Obligations for
Tranpportstion (As of April 30, 1989)      Type of transportation                                                                  Obligations
                                           Air                                                                                      $1,883,111
                                           Surface                                                                                     742,485
                                           Total                                                                                    $2,625,596

                                           3According to an AID official, AID did not need the remaining $2.6 million and returned the funds to
                                           the U.S. Treasury in November 1989.

                                           Page 14                                                        GAO/NSIAD-90-62 Central America
.   I
    I                    chapter 2
                         AID CompUed With Leglolatlve Requlrementu
    !                    and Adopted Adequate Overnight Proeednrer

Sus ension of Payments   During the secondphase, AID cut off or suspendedfamily assistancepay-
                         ments to four Resistancemembers involved in human rights abuses.
                         AID’S policy was that any person who had been found guilty of a human
                         rights violation and who had exhausted the right to appeal was to be
                         barred from receiving any form of assistance.Pending investigation or
                         outcome of an appeal, persons suspendedfrom the Resistanceand their
                         family members could receive food rations; however, family assistance
                         payments were to be deferred until a final judgement was reached. The
                         Resistanceand the Nicaraguan Association for Human Rights, working
                         with the State Department, investigate allegations of human rights
                         abusesby Resistancemembers.
                         In March 1989, a Resistancetribunal convicted six persons and found
                         five others innocent in a caseinvolving abusesof prisoners held by the
                         Resistance.4At the time of our review, the tribunal had two other
                         inquiries underway. AID had been providing family assistancepayments
                         to four of these Resistancemembers,including two of the six persons
                         convicted and two involved in the pending inquiries. However, as of
                         May 1989, AID had cut off payments for the two convicted individuals
                         and suspendedpayments for the other two.

Prdgram Management       AID implemented hands-on managementprocedures, including (1) the
                         review of requisitions submitted by the Resistanceto ensure that
and Monitoring           requested supplies, quantities, and prices were both reasonable and
                         allowable under the legislation and (2) the verification of deliveries and
                         cash payments. AID’S staff also reviewed contractors’ expenditures and
                         monitored program activities. AID and Price Waterhouse auditors contin-
                         ued extensive monitoring and auditing of program operations during the
                         secondphase. Their activities included conducting inventories at Resis-
                         tance warehouses, accompanying deliveries to Resistancecamps, verify-
                         ing cash payments, and reviewing AID expenditures. They also
                         monitored the contractor and grantee operations and audited expendi-
                         tures. Their work showed that no military assistancehad been provided.


                         41nDecember 1988, the Resistance released 104 prisoners to Honduran authorities. According to State
                         Department and Nicaraguan Human Rights Association officials, additional prisoners were released
                         in December 1988 and January 1989. They stated that they found no evidence that the Resistance
                         continues to hold prisoners.

                         Page 15                                                       GAO/NSIAD9082      Central   America
             Chapter 2
             and Adopted Adequate Owwlght Promdures

             AID complied with legislative requirements by providing only specified
thclusions   types of assistanceand cutting off or suspending family assistancepay-
             ments to Resistancemembers convicted or accusedof human rights vio-
             lations. As with the first phase, AID established adequate controls and
             procedures to carry out the assistanceprogram, and we found no indica-
             tions that AID had provided military assistanceor any other type of
             unauthorized assistance.


             Page 16                                     GAO/NSIAD-9082 Central America
Chapter 3

       angesin Assistance Program Operations

                                 AID instituted a number of changesin operations during the second
                                 phase of the assistanceprogram. Becausemonthly spending ceilings
                                 were lifted, AID was able to increasethe quantities of assistancepro-
                                 cured at one time. To respond to Resistanceneeds,AID increased the
                                 number of family assistancepayment recipients, paid salaries to Resis-
                                 tance medical and training personnel, and used contract and other sup-
                                 port to improve medical assistanceand provide training. AID also
                                 increasedthe use of contractors’ helicopters to deliver assistanceto

                                 The legislation authorizing the first phase of assistanceestablished
                                 monthly spending ceilings, which limited AID’S ability to stockpile goods
                                 available locally on a seasonalbasis or to respond to emergencyrequire-
Flekibility                      ments if the monthly ceiling had been reached. The legislation for the
   I                             secondphase did not include monthly ceilings, and AID had more flexibil-
   /                             ity in procuring assistanceitems. Consequently, AID was able to pur-
                                 chaselarger quantities of military clothing and medical supplies at one
                                 time and thus reduce the frequency of deliveries from the United States.

                                 During the first phase of assistance,AID made two types of cash pay-
Chbngesin Cash                   ments to the Resistance:family assistancepayments and cash-for-food
Payments to                      payments. AID continued these payments during the secondphase. How-
ResistanceMembers                ever, in consultation with congressionalrepresentatives, AID increased
                                 the number of Resistancemembers receiving family assistancepay-
                                 ments. AID also began paying salaries to Resistancemedical and training

Increased Number of              AID provided family assistancepayments to senior Resistancepersonnel
Recipients of Family             and specialists to defray living expenses.The amounts paid varied,
                                 basedprimarily on the recipient’s military rank. The legislation provid-
As$istance Payments              ing assistancefor the first and secondphasesdid not place any restric-
                                 tions on cash payments to the Resistance.However, criteria developed
                                 during the first phase by AID, in consultation with congressionalrepre-
                                 sentatives, limited the total number of family assistancepayment recipi-
                                 ents and total amount paid to the number and amount paid under a
                                 previous U.S. government assistanceprogram. The criteria specified
                             .   the number of recipients could not exceedthe total number of recipients
                                 paid under a previous U.S. government assistanceprogram,

                                 Page 17                                      GAO/NSLAD-90432 Central America

            ‘I.        ‘./
   I                                                                                                         .

                          chapter   8
                          Chn&a     in Addance   ProfWm   Operationa

                      9 the total amount of payments could not exceedthe previous program’s
                        payroll, and
                      l wholesale changescould not be made to the list of payees.
                          In January 1989, after consulting with congressionalrepresentatives,
                          AID modified the criteria to permit a slight increase of 6 percent in the
                          number of family assistancepayment recipients. These recipients
                          included 124 Resistancemembers and 6 Yatama members in Honduras
                          and 12 Resistancemembers in Costa Rica. At the sametime, AID
                          removed 9 Resistancemedical corps doctors from the family assistance
                          payment program and began paying them salaries, as discussedbelow.
                          AID used the funds previously paid to the doctors to make payments to
                          the 141 new recipients. In accordancewith the criteria, AID did not
                          exceedthe total amount of payments provided under the previous pro-
                          gram. According to AID officials, the Resistancerequested the increase to
                          allow payment to officers who had been added due to changesin its
                          organizational structure and to members who were unable to receive
                          payments becausefunds were previously not available.

Payment of Salaries       During the secondphase, AID paid about $118,660 for the salaries of
                          39 Resistancemembers, including 12 Resistancemedical corps doctors
                          and 27 Resistancepersonnel involved in human rights training. In Janu-
                          ary 1989, AID removed 9 doctors from the family assistancepayment
                          program and funded their salaries through its contract with the Interna-
                          tional Medical Corps. Three additional doctors received salaries begin-
                          ning in February 1989 and had also previously received family
                          assistancepayments. From January to April 1989, AID had paid $77,000
                          in salary payments at a monthly range of $1,000 to $2,500 per doctor
                          under the contract with the International Medical Corps. The doctors
                          had previously received $1,000 per month under the family assistance
                          payment program.
                          According to AID officials, the Resistancemedical corps had experienced
                          a problem with retention. By paying the doctors through the contract,
                          AID was able to increasetheir salaries and provide an incentive for them
                          to remain in the Resistancemedical corps.
                          AID also paid salaries to 27 Resistancetraining personnel during the sec-
                          ond phase. In January 1989, AID awarded a grant of approximately
                          $178,000 to the Resistanceto provide human rights training. The grant,
                          effective through April 1989, authorized the Resistanceto hire Resis-
                          tance members and others to conduct the training. Beginning in January

                          Page 18                                       GAO/NSIAD-9062   Central   America
                Chapter 8
                changes in Asaietance Program operations

                1989, the Resistancehired 32 trainers, including 27 Resistancemembers
               and 6 civilians. These persons trained Resistancemembers in the organi-
               zation’s code of conduct, treatment of prisoners, and other human rights
               issues.Six of the Resistancemembers had previously received family
               assistancepayments, but AID removed them from the program as soon as
               they began receiving salaries. Price Waterhouse auditors verified that
               the 32 trainers were conducting training. From January to April 1989,
               AID paid about $66,764 in salaries to the trainers, including $41,564 to
               the Resistancemembers and $14,200 to the civilians. Monthly salaries
               ranged from about $200 to $2,000 per month.

               During the secondphase, AID relied heavily on others to help improve
               medical support and provide training to the Resistance.The Interna-
               tional Medical Corps provided medical support to the Resistanceand
               their families in Honduras by supporting the Resistancemedical corps1
               through training, technical assistance,and provision of specialized medi-
               cal services and medical equipment. It also delivered medical services
               and supplies to the Yatama and their families and provided supplemen-
               tal medical support to Resistancemembers and their families in Costa

               Creative AssociatesInternational, Inc., trained Resistancepersonnel in
               health, sanitation, and supply managementpractices and other voca-
               tional skills and helped to improve literacy. The Nicaraguan Association
               for Human Rights and the Resistanceconducted human rights training.
               In beginning their activities in Honduras, the International Medical
               Corps and Creative Associatesencountered somedifficulties, but most
               of them were quickly resolved.

Medical Care   AID initially contracted with the International Medical Corps from
Inpwovements   December1988 through April 1989 and obligated about $3 million in
               second-phasefunds for the contract. As of April 1989, the contractor
               had spent about $1.8 million of these funds. In May 1989, AID extended
               the contract through May 1990 and obligated an additional $5.1 million
               in third-phase funds.


               ‘During the first phase, AID had awarded a grant to Dooley/INTERMED Foundation to support the
               Resistance medical corps. According to AID, AID and Dooley/INTERMED decided that for subsequent
               phases it would be in the best interest of the activity for the International Medical Corps to assume
               this responsibility.

               Page 19                                                        GAO/NSIAD-90432 Central America
- -+
            chapter 3
            Change6 in A6si6tance   Program   Operations

            The International Medical Corps initially encountered difficulties in
            Honduras due primarily to the lack of skilled medical personnel, poor
            physical condition of Resistancemedical facilities, unavailability of
            Resistancepersonnel for training, shortages of medicines, and the lack
            of a reliable inventory system. By the end of the phase, the contractor
            had recruited skilled personnel and upgraded many of the facilities, thus
            improving medical assistance.However, it was able to conduct only a
            limited amount of training for Resistancepersonnel, and maintaining
            reliable inventory data and an adequate supply of medicines continued
            to be a problem.
            The International Medical Corps concentrated significant efforts on pro-
            viding technical assistanceto the Resistancemedical corps, hiring medi-
            cal specialists, and upgrading Resistancemedical facilities, including the
            main hospital at Aguacate and a rehabilitation center at Ranch0 Grande
            in Honduras. These facilities were inadequate to meet the needsof the
            Resistanceand were in a state of disrepair. Conditions were unsanitary,
            electrical power was unreliable, the water supply was inadequate, and
            shortages of medical personnel and equipment existed.
            The hospital at Aguacate had an inadequate water supply and numerous
            other serious problems. By April 1989, the contractor had installed two
            new generators, upgraded electrical systems, and repaired the water
            system to increase the water flow. In addition, the contractor hired an
            orthopedic surgeon, an ophthalmologist, a urologist, and other special-
            ists to treat patients and supplied equipment such as x-ray machines.

            Permanently disabled Resistancemembers receive physical therapy and
            vocational training at Ranch0 Grande. The facility neededrenovating
            when the International Medical Corps began its work. Its problems
            included an inadequate water supply, lack of a proper sewagesystem,
            leaking roofs, and insufficient physical therapy and other equipment.
            By April 1989, the contractor had installed a water cistern and new sep-
            tic tank and constructed new roofs. The contractor had also begun voca-
            tional training in shoemaking, auto mechanics,and other skills and
            furnished physical therapy and recreation equipment.
            The International Medical Corps also originally encountered problems in
            maintaining an adequate supply of medicine. Two of the main Resis-
        Y   tance warehouseswere in disarray. Resistancemedical corps personnel
            had stacked medicines and other items on the floor becausethere were
            no shelves. Flooding had damagedsomeitems and one warehouse lacked
            electrical service. Stocks had not been inventoried at the warehouses

            Page 20                                        GAO/NSLAD-90-62   Central   America

                      Chapter 3
                      Change8 in heistance    Program   Operationa

                      and Resistancemedical facilities, and there was no system to identify
                      usagerates. Therefore, the contractor had no reliable basis for reorder-
                      ing medicines and medical supplies.

                      By April 1989, the contractor had constructed shelves,arranged for
                      electrical service, inventoried medicines and supplies, and implemented
                      a card file inventory system at the two warehouses and Resistancemed-
                      ical facilities. The contractor subcontracted with a consultant in Janu-
                      ary 1989 to develop a computerized inventory system to track inventory
                      levels and usagerates; however, the consultant did not complete the sys-
                      tem. A secondconsultant is finalizing the system. Becausethe system
                      was not ready in April 1989 as originally expected, the International
                      Medical Corps continued to experience difficulty in estimating resupply
                      requirements and was delayed in ordering medicines and supplies for
                      the third phase.

Trz$iningActivities   In December1988, AID contracted with Creative Associatesto provide
     I                nonmilitary training for health and sanitation authorized in the second-
                      phase legislation. To address deficiencies in Resistanceadministrative
                      managementpractice@and improve the delivery of authorized humani-
                      tarian assistance,the contract also provided for nonmilitary training in
                      fields related to distribution systems’ management and administration.
                      This training included classesin warehousing, computer operations,
                      accounting, and bookkeeping. The contractor also provided training to
                      improve literacy and to teach vocational skills such as equipment opera-
                      tion and radio maintenance.
                      AIDinitially contracted with Creative Associates from December1988 to
                      April 1989 and obligated about $1 million in second-phasefunds for the
                      contract. AID subsequently extended the contract through December
                      1989 and obligated an additional $6.2 million in third-phase funds.
                      Creative Associatespersonnel begantheir activities in Honduras in Jan-
                      uary 1989 and initially encountered difficulties in recruiting trainers on
                      a short-term basis, obtaining materials, and constructing classrooms.By
                      the end of April 1989, the contractor had hired trainers and constructed
                      classrooms,and Resistancepersonnel were attending training classes.

                      %ur report on the first phase entitled Central America: Humanitarian Assistance to the Nicaraguan
                      Democratic Resistance (GAO/NSIAD-@LlSZ, June 1, 1989) identified weaknesses in the Resistance’s
                      inventory management practices, especially with the distribution and storage of medical supplies.

                      Page 21                                                     GAO/NSIAD4O62       Central   America
                                           chapter     8
                                           Changea in Assistance        Program   Operations

                                           According to Creative Associatesofficials, the training was well
                                           received and improved Resistancemembers’ skills. For example, some
                                           individuals who completed training in reading and writing becamesuffi-
                                           ciently literate to train other Resistancemembers.In addition, the offi-
                                           cials stated that skills attained through warehousing training resulted in
                                           improvements in the physical organization of Resistancewarehouses
                                           and that Resistancemembers who had attended sanitation training used
                                           their new skills to build new water and drainage systems, thus improv-
                                           ing living conditions at camp sites.

                                           According to Creative Associate’s records, 1,009 Resistancemembers
                                           attended training classesfrom January to April 1989. Table 3.1 shows
                                           the types of classesoffered and number trained.

lab 3.1. Training Provided to
Rer tance Member8 (As of April 30, 1989)   lype      of ofasa                                                               Number trained
                                           Accounting                                                                                       30
    /                                      Animal husbandry                                                                                 20
    /                                      Bookkeeping                                                                                      15
    1                                      Clerical/filing                                                                                 234
    1                                      Computers                                                                                        83
    I                                      Environmental sanitation                                                                         66
                                           First aid                                                                                        27
                                           Equipment operation                                                                              33
                                           lnventorv control                                                                                43
                                           Literacy                                                                                         74
                                           Outboard motors                                                                                  15
                                           Radio maintenance/reoair
                                                                I   I
                                           Road maintenance                                                                                 47
                                           Small motor repair                                                                               28
                                           Typing                                                                                           39
                                           Warehousina                                                                                      45
                                           Drivers education                                                                                 9
                                           Parachute packing and delivery                                                                   19
                                           Total                                                                                        1.009
                                           Note: Includes classes completed or almost completed as of April 30, 1989

                                           According to the Creative Associatesproject manager, about 5,000 other
                                           Resistancemembers benefited from the training program, including 600
                                           who were trained by those who had attended literacy courses.The
                                           remainder were beneficiaries of training provided to those who attended

                                           Page 22                                                        GAO/NSIAD-90432   Central   America
                                 Chapter 8
                                 Changes in Adi3tance   Program   Operationn

                                 clerical and filing, small motor repair, environmental sanitation, carpen-
                                 try, and road maintenance courses,Thesetrainees conducted on-the-job
                                 training, gave lectures, or used skills learned in training courses, such as
                                 road maintenance and latrine construction, to improve living conditions.
Figur+ 3.1I: Reslrtance Membe
Attendlng I Computer TIralning

                                 Resistancemembers also received human rights training during the sec-
                                 ond phase. In December 1988, AID awarded a grant to the Nicaraguan
                                 Association for Human Rights to provide training through May 1989 to
                                 about 6,000 Resistancemembers regarding treatment of civilians and
                                 other armed forces personnel. The Association has trained, monitored,
                                 investigated, and reported on the human rights record of the Resistance
                                 since October 1986. Prior to the AID grant, the organization operated
                                 with funds from a State Department grant.
                                 AID obligated $490,000 in second-phasefunds for the grant to the Asso-
                                 ciation. In May 1989, AID extended the grant through October 1989 and
                                 obligated an additional $231,000 in third-phase funds. As of May 31,

                                 Page 23                                        GAO/NSIAD-9042   Central   America
- : f
                                   Chapter 3
                                   Change6 in Aseistance Program Operation

                                   1989, the Association had expended $366,0003and trained about 4,600
     ,I                            Resistancemembers in Honduras. The training included a basic human
                                   rights course for those without any prior training and a more advanced
                                   course for officers, military police, and others who had attended previ-
                                   ous human rights courses.A special course for human rights observers
                                   was also offered.
    ube 3.2: Rerirtance Members
      dlng Human Rlghtr Training


                                   In January 1989, AID awarded a grant to the Resistanceto provide
                                   human rights training to Resistancemembersthrough April 1989. AID
                                   obligated about $178,000 in second-phasefunds for this grant. AID sub-
                                   sequently extended the grant through March 1990 and obligated
                                   $170,000 in third-phase funds for the extension. The Resistancehired
                                   civilians and someof its membersto provide instruction on the Resis-
                                   tance military code of conduct and system of military justice. According
                                   to the Resistanceofficial directing this training program, about 4,000
                                   Resistancemembers in Honduras had been trained as of April 1989.

                                   3This expenditure includes $100,000 for expenses incurred to train 1,600 Resistance members from
                                   October through December 1988, prior to AID’s grant. According to an AID official, AID reimbursed
                                   these expenses because the training was the same as provided for in the grant.

                                   Page 24                                                       GAO/NSIAJHO62       Central America

                                chapter 2
                                Changes in Aseiwance   Program   Operation8

                                AID contracted with a private Honduran air cargo company to deliver
                                assistanceto Resistancecamps located in isolated areas in Honduras
                                                            part of the secondphase. The company used
                                an old DC-6 aircraft to air-drop pallets of supplies by parachute to clear-
                                ings near the camps. A secondcontractor, Air Logistics International,
                                Inc., provided two helicopters to transport AID officials and supplies to
     Cargo Handlerr PIwparlng

                                The DC-6 crashed into the side of a mountain on February 25,1989, and
                                all 10 persons aboard were killed. The exact causeof the crash could not
                                be determined, but AID officials believe that the plane ran out of fuel. To
                                compensatefor the loss, AID increasedthe use of the helicopters to
                                deliver supplies previously air-dropped. Local trucking firms delivered
                                supplies to central Honduras where the Resistanceloaded the helicop-
                                ters with supplies to be transported to eastern Honduras. According to
                                AID and Air Logistics officials, this method worked well but placed sig-
                                nificant demands on the helicopters and the pilots. To meet the
                                increased work load, the helicopter company hired a third pilot in June
                                1989. In July 1989, AID contracted with another air cargo company to
                                provide fixed wing aircraft to resume the airdrops.

                                Page 26                                        GAO/NSLALWO62   Central   America
Fig/we 3.4: ~eo~rtan ICOMember
an PID Contractor’s Helicopter

                                 phase of the assistanceprogram to take advantage of legislative
                                 changes,to respond to Resistancerequests, to improve medical support
                                 and addresstraining needs,and to compensatefor the loss of air trans-
                                 port capability.


                                 Page 26                                     GAO/NSLAD-9082   Central   America
     * I
Chapter 4                                                                                                               ,,!
       D’s Operations in Costa Rica

                                          During the secondphase, AID provided humanitarian assistanceto Resis-
                                          tance members and their families located in Costa Rica and the southern
                                          part of Nicaragua. AID financed family assistancepayments; a medical
                                          assistanceprogram; and human rights, health, and sanitation training.
                                          Our review indicated that AID had adopted adequate procedures to
                                          administer the assistanceand had provided only authorized items or
                                          services.However, Price Waterhouseauditors found that an intermedi-
                                          ary responsible for delivering family assistancepayments to Resistance
                                          members in Nicaragua had improperly paid out about $60,000. As a
                                          result, AID implemented new guidelines for transferring funds to

                                          In May 1988, AID established an office at the AID Mission in San Jose,
Eleblents of                              Costa Rica, and assignedone staff person to administer the assistance
As$i;stance                               program. As of July 31, 1989, AID had obligated about $1.3 million for
                                          the secondphase of assistance.Table 4.1 shows a breakdown of these
                                          obligations as of July 31, 1989.
Tabld 4. 1: AID’s Obligations for Costa
Rica (As of July 31, 1989)                Type of assistance                                                    Total
                                          Payments                                                           $332,000
                                          Medical                                                             675,100
                                          Training                                                            285,000
                                          Total obligated                                                  $1,292,100

Cash Payments                             In Costa Rica, AID financed family assistancepayments for approxi-
                                          mately 130 membersto purchase items such as food and clothing. This
                                          represents an increase of 12 recipients from the number paid during the
                                          first phase.

Megical Assistance                        AID continued to fund a medical care system established during the first
                                          phase. Sick or injured Resistancemembers and their families stayed at a
                                          recuperation center near San Jose and received treatment at two local
                                          hospitals and an outpatient clinic. Several local physicians also treated
                                          patients staying at the center. AID also provided food, clothing, and
                                          medicines for recuperating patients. According to AID'S records, about
                     ‘(                   700 persons transited the center during the secondphase.

                                          Page 27                                      GAO/NSJAD9OQ2 Central America
                    chapter 4
                    AID’8 OperatIona in Cwt.41Rica

                    The recuperation center was designedto accommodatea maximum of
                    200 patients. However, between January and March 1989, the number
                    staying at the center increased from 113 to 234. As of August 1989, the
                    number had decreasedto 131.

Tr lining           AIDprovided training to Resistancemembers and their families through
                    its contract with Creative AssociatesInternational, Inc., and its grant to
                    the Nicaraguan Association for Human Rights. Beginning in March 1989,
                    Creative Associatesprovided training in health and sanitation practices
                    at the recuperation center. As of April 30,1989, the contractor had
                    trained 86 persons.The Association began conducting human rights
                    training in October 1988 and had trained about 460 Resistancemembers
                    as of April 30,1989.

                    administer the assistanceprogram, including monitoring cash payments,
    $I Monitoring   overseeingpurchases of food and supplies, and reviewing contractor
                    and grantee activities and expenditures. In addition, AID relied on Price
                    Waterhouseauditors to audit program operations. Their activities
                    included verifying reasonablenessof prices and expenditures and
                    observing family assistancepayments. We found no evidence that AID
                    had provided any unauthorized assistance.However, Price Waterhouse
                    auditors found that an intermediary responsible for collecting family
                    assistancepayment funds for Resistancemembers in Nicaragua improp-
                    erly paid out about $60,000.
                    AID’S procedures required Resistancememberswho were unable to col-
                    lect their payment in person to designate an intermediary. Each interme-
                    diary signed a receipt and acceptedresponsibility for delivering the
                    funds to the recipient. In May 1989, Price Waterhouseauditors reported
                    that one intermediary received $68,700 in payments from April 1988
                    through March 1989. Of this amount, the intermediary disbursed $8,250
                    to designated recipients, transferred a total of $55,260 in periodic pay-
                    ments to four Resistancecommanderswho were not the designated
                    recipients, and loaned $6,200 to a local businessman.

                    The auditors were unable to determine whether the funds eventually
                    reached the intended beneficiaries becauseno documentation or other
                    evidence existed. One Resistancecommander stated that he used

                    Page 28                                      GAO/NSIAD9082   Central America

              chapter 4
              AxD’a OperatiolM in CmNa Rica

              $20,000 to purchase watches, radios, food, and other items for benefi-
              ciaries inside Nicaragua but that he had no records to document the pur-
              chaseor transfer to the beneficiaries, The businessmanstated that he
              owns a firm that buys and sells helicopter spare parts and that he used
              the loan to purchase spare parts. The AID official in Costa Rica stated
              that the businessmanrepaid the loan to the intermediary in August
              1989 and that the intermediary reported that the funds were given to
              other intermediaries to take to the intended recipients.
              As a result of these findings, AID'S Office of the Regional Inspector Gen-
              eral recommendedthat AID discontinue the practice of using
              intermediaries. AID did not believe the recommendation was feasible
              becausethe majority of payments were being made through
              intermediaries. Further, AID believed that the security risk of requiring
              all recipients to be present in Costa Rica to receive payments was too
              high. Thus, AID elected to continue using intermediaries but adopted
              stricter guidelines that included limiting the number of beneficiaries
              that could be represented by each intermediary to three.

&inclusions   AIDadopted adequate procedures to administer the assistanceprogram
              and provided only authorized items and services,As a result of Price
              Waterhouse audit findings, AID adopted new guidelines for transferring
              family assistancepayments to intermediaries.


              Page 29                                       GAO/NSLAD9082   Central   America

Appendix I

 C@nmentsFrom the Agency for
 I#ernational Development

          lementing those in the
            text appears at the
                                                     UNlTLD   l T*TCI  INTLRNATIONAL      DCVCLOCMLNT      COOPERATION          A~QcNCV
                                                                AQCNCY     FOR INTERNATIONAL            DEVELOPMENT
                                                                                  WASNINOTON. D C 7.012,

                                   Mr. Frank C. Conahan                                                                           DEC- I I!389
                                   Assistant     Comptroller       General
                                   U. S. General Accounting                 Office      (GAO)
                                   National    SeCUrity     & InternatiOnal               Affairs          Division
                                   Washington,        D.C.  20548
                                   REF:     Conahan to Edelman letter                   dated     October       23,      1989

                                   Dear Mr. Conahan:
See                                Following  are the TFHA comments on the GAO Phase II                                    Report         on the
                                   TFHA Program, (GAO code 463775).
Now                                In the footnote     at the bottom of page 26, we would suggest changing
                                   the last sentence to read as follows.        “For subsequent phases, AID
                                   and Dooley/Intermed      decided that it would be in the best interest   of
                                   the activity    to have the International   Medical Corps take over the
                                   task of project     implementation”.
See pip. 27-28.                    Chapter 4 of the Report is entitled,          “AID’s Operations   in Costa
                                   Rica”.      In three places on page 36, and one place in the first
                                   paragraph      of page 37, there are false or at least quite misleading
                                   statements.       Those statements    would indicate    that TFHA runs a
                                   Cash-For-Food      program in Costa Rica.      That is not true.     The only
                                   Cash-For-Food      delivered  to the Southern Front comes from another
                                   country,     as the Government     of Costa Rica does not allow
                                   implementation       of that  program within     its territory.   Therefore,
                                   TFHA requests      that you [revise your report accordingly].
                                   On page 36, delete  the last                  word on line         3, and the first                four    words
                                   on line 4 of the text,
                                   In the budget at the bottom of page 36, delete                                 the second          item    under
                                   Cash Payments, “Cash-For-Food     $30,000”.
                                   Delete    the last         full   sentence        at the     bottom       of page 36.
                                   Delete    the last         sentence      in the first         partial        paragraph         on page 37.
                                   On behalf of the Task Force, I would like to take                                  this opportunity
                                   to express our appreciation       for the excellent    job                         which the GAO
                                   auditors    have done to contribute     to the successful                            implementation             Of
                                   this difficult    program.

                                                                                       6i-i-N-b.r”l    -
                                                                                       Robert B. Me’ghan
                                                                                       Acting Direc f- or
                                                                                       Task Force for Humanitarian

                                            Page30                                                                GAO/NSLAD-9082CentralAmerica
              Appendix I
              Commenta From the Agency for
              International Development

              The following is GAO’S comment on the letter dated December1, 1989,
              from the Agency for International Development.

GAO Comment   tions in the text of our report where appropriate.

              Page 21                                       GAO/NSIAD-90-62 Central America

                  Ir   ,

    ._   -I