~1;~1111;11’) I’t’to ,. ~E&J-TRAL A.MERICA Humanitarian Assistance to the Nicaraguan Democratic Resistance ..-- .-. ..--. - -.-.- -.--... --.-- --..._..--l _-..-^.__ ---.- .__-. .--.. ..-.___^ (;/I( 1 --NSl-ili:!to Ci% - - -- United States General Accounting Office A0 Washington, D.C. 20648 National Security and International Affairs Division B-226832 January 23,199O The Honorable Patrick J. Leahy Chairman, Subcommittee on Foreign Operations 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 t, P ecutive Summq The Congresshas been concernedthat assistanceprovided to the Nica- P+pose 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 Y ‘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 , I , 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 intermediaries. 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. --I 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 trained. 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. 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. Y Page 4 GAO/NSIAD-9082 Central America \- - c 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 Rt A( 01 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 27 28 Costa Rica Conclusions 29 Appendix Appendix I: CommentsFrom the Agency for International 30 Development Tsibles Table 2.1: AID’s Obligations for Humanitarian Assistance 14 Provided Under Public Law loo-463 (As of July 31, 1989) Table 2.2: AID Obligations for Transportation (As of April 14 30,1989) Table 3.1. Training Provided to ResistanceMembers(As 22 of April 30,1989) Page 0 GAO/NSIAD90-62 Central America I Contenta Table 4.1: AID’s Obligations for Costa Rica (As of July 31, 27 1989) Figure 3.1: ResistanceMembersAttending Computer 23 Training Figure 3.2: ResistanceMembersAttending Human Rights 24 Training Figure 3.3: Air Cargo Handlers Preparing for an AirDrop 26 Figure 3,4: ResistanceMembers Loading an AID 26 Contractor’s Helicopter Abbreviations Y AID Agency for International Development DOD Department of Defense GAO General Accounting Office Page 7 GAO/NSIAD8O-62 Cmtral America I’itroduction 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 Introduction I 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 expenditures. 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 Introduction 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 payments. 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 lntraduction 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. Y Page 11 GAO/NSIAD4O82 Central America r ~~-F I 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 operations. 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 abuses. 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. Y *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 camps. 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 I , 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 Y 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 1 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. Y 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 AIDcOmplbdWithLe#lativeEequlrementn 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. Y 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 Resistancecamps. 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 personnel. 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 that . 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 Rica. 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. Y ‘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 - t 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. Y %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 182 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 1 ,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 t 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 Resistancecamps. 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 I -Cpnclusion 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. Y Page 26 GAO/NSLAD-9082 Central America I * I 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 $60,000. As a result, AID implemented new guidelines for transferring funds to intermediaries. In May 1988, AID established an office at the AID Mission in San Jose, Eleblents of Costa Rica, and assignedone staff person to administer the assistance As$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. i 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 Y evidence existed. One Resistancecommander stated that he used Page 28 GAO/NSIAD9082 Central America l ‘, 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. Y 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. Sincerely, 6i-i-N-b.r”l - Robert B. Me’ghan Acting Direc f- or Task Force for Humanitarian Assistance 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 c Ir , d ._ -I -7
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)