oversight

Central America: Assistance to Children Affected by the Nicaraguan Civil Strife

Published by the Government Accountability Office on 1990-10-25.

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

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National Security and
International Affairs Division

B-240256

October 25,199O

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 Peace Corps 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
House of Representatives

The Honorable George W. Crockett, Jr.
Chairman, Subcommittee on Western
  Hemisphere Affairs
Committee on Foreign Affairs
House of Representatives

The funds authorized in Public Law 100-276 (April 1988) to support peace and democracy in
Central America included $17.7 million to aid children affected by the Nicaraguan civil
strife. This report discusses the Agency for International Development’s administration and
expenditure of these funds. It is one of a series of reports prepared in response to a provision
in Public Law 100-276, calling upon GAO to audit the management of foreign assistance
provided to Central America. The prior reports dealt with humanitarian assistance to the
Nicaraguan Resistance and activities of the Verification Commission.

We are sending copies of this report to other interested congressional committees; the
Administrator, Agency for International Development; the Secretary of State; and the Direc-
tor, Office of Management and Budget. Copies will be made available to others on request.

The report was prepared under the direction of Joseph E. Kelley, Director, Security and
International Relations Issues, who may be reached on (202) 275-4128 if you or your staff
have any questions. Other major contributors are listed in appendix II.




Frank C. Conahan
Assistant Comptroller General
Executive Summary

                                                                                                                   t
                   m
                       On April 1, 1988, Public Law 100276 authorized the provision of $47.9                       1
FlEpOse
                       million to support peace and democracy in Central America. The Con-
                       gress stipulated that $17.7 million of these funds would be provided for                    3
                       medical care and other types of relief to children that were victims of                     i
                       the Nicaraguan strife.

                       Under the Iaw, GAO was required to independently review the adminis-
                       tration and expenditure of these funds. Specifically, GAO determined if
                       the Agency for International Development (AID) and participating orga-
                       nizations provided authorized types of assistance and established ade-
                       quate controls to administer and monitor the procurement and delivery
                       of goods and services provided under the Children’s Survival Assistance
                       Program.


                       In April 1988, AID established the Task Force on Humanitarian Assis-
Background             tance in Washington, D.C., with field offices in Honduras and Costa Rica,
                       to administer the Children’s Survival Assistance Program and other
                       Public Law 100-276 assistance efforts. The task force established guide-
                       lines for identifying eligible persons, and AID granted funds to 10 private
                       voluntary organizations and 1 international relief organization to deliver
                       assistance in Costa Rica, Honduras, and Nicaragua. However, limited
                       assistance was provided in Nicaragua because the Nicaraguan govern-
                       ment banned this program in October 1988.

                       Although the law authorized funds to remain available until expended,
                       AID  officials believed that most of the children’s needs specified by the
                       law had been met by the end of 1989 and directed most participating
                       organizations to cease expending funds by March 31,199O. As of June
                       15, 1990, AID had obligated about $10.3 million, and of this amount, AID'S
                       grantees had expended about $9.7 million. In December 1989, the Con-
                       gress authorized a follow-on program, under Public Law 101-215, to pro-
                       vide medical care and other relief to adults as well as children that were
                       victims of civil strife in any Central American country. The legislation
                       authorized AID to use any unobligated funds from the children’s program
                       for this program.


                            complied with Public Law loo-276 requirements in administering the
Results in Brief       AID
                       children’s program by selecting appropriate organizations, adhering to
                       funding restrictions, and ensuring that the assistance provided was
                       authorized. The selected organizations generally provided assistance to
                       eligible beneficiaries and established adequate controls to administer


                       Page   2                   GAO/NSIAD91-26   Assistance   to Central   American   Children
                         Executive   Snmmary




                         and monitor the procurement and delivery of goods and services. How-
                         ever, three organizations had provided medical care to some ineligible
                         persons. As a result, AID and the organizations tightened their controls.
                         Further, one organization lacked adequate documentation for certain
                         expenses, another had an inadequate financial management system, and
                         another procured excess quantities of a medication used to treat life-
                         threatening cases of allergies and severe asthma.

                         In addition, four organizations encountered problems in implementing
                         their projects due to delays in obtaining AID’S approvals and the transfer
                         of activities from Nicaragua. In another case, a factory constructed to
                         produce items for braces and artificial limbs was not fully productive
                         until the latter stages of the program.



GAO’s Analysis

Implementation of        In accordance with the law, AID provided funds to nonpolitical private
                         voluntary and international relief organizations, funded authorized
Children’s Survival      types of activities, and reserved half of the program’s funds to support
Assistance Program       activities inside Nicaragua. The 11 organizations participating in the
                         children’s program generally provided authorized types of assistance to
                         the target population.

                         Two organizations-the      World Rehabilitation Fund and the Pan Amer-
                         ican Development Foundation-had        provided medical care to 167 per-
                         sons in Honduras that AID officials believed were ineligible for
                         assistance. As a result, AID tightened its control by changing the eligi-
                         bility requirements. In addition, health facilities in Costa Rica had inap-
                         propriately distributed medicines to 4,785 adults, but the responsible
                         organization, Catholic Relief Services, took effective action to discon-
                         tinue this practice in February 1989.


Internal Controls Over   The task force required participating organizations to adhere to
Funds                    accounting and procurement standards. Task force officials and auditors
                         from several private accounting firms reviewed various aspects of the
                         program. The organizations had generally established systems to ade-
                         quately track expenditures, ensure reasonable prices for items procured,
                         and screen potential beneficiaries. However, the American Red Cross
                         lacked documentation for some expenses, and the World Rehabilitation


                         Page 3                      GAO/‘NSLIDSI-26   histance   to Central   American   Chilclren
                             Executive   Spmmuy




                             Fund did not maintain an adequate financial system. As a result, the
                             Fund exceeded its authorized expenditure limit by about $139,000.

                             Neither Catholic Relief Services nor its procurement contractor had ade-
                             quately analyzed medical needs before procuring medicines and sup-
                             plies. As a result, they procured excess quantities of a particular
                             medication and had to destroy 48,000 vials of expired medicine valued
                             at $12,960.


Problems in Implementi   w   Some organizations experienced problems inimplementing their
                             projects. CARE (Cooperative for American Relief Everywhere) and Pro-
the Program                  ject HOPE could not meet certain goaIs because of delays in obtaining
                              AID’S approval for their activities Because they had to relocate from
                             Nicaragua, Catholic Relief Services had an excess supply of certain
                             medicines and supplies, and the Pan American Development Foundation
                             had problems finding a suitable project site in Honduras.

                             In addition, a prosthetics factory constructed by the World Rehabilita-
                             tion Fund did not produce many items for eligible beneficiaries until late
                             in the program because Fund officials had not coordinated production
                             and testing and because of problems in installing equipment.


                             GAO   makes no recommendations in this report.
Reccxnmendations

                             In their oral comments on a draft of this report, AID officials generally
Agency Cornrnents            agreed with GAO'S findings and conclusions. Their comments have been
                             incorporated in the report where appropriate.




                             Page 4                      GAO/NSlAD91-28 Assidance to Central American   Children
Page 6   GAO/NSIAD91-25   Aeelstice   tn Cm&al   American   chilh
Executive Sununary                                                                                                  2

Chapter 1                                                                                                           8
Introduction            Program Implementation
                        Activities and Expenditures
                                                                                                                9
                                                                                                               10
                        Objectives, Scope, and Methodology                                                     12

Chapter 2                                                                                                      14
Implementation Issues   Delays in Obtaining Project Approvals
                        Difficulties Encountered Due to Transfer From Nicaragua
                                                                                                               14
                                                                                                               15
and Problems            Limited Use of Prosthetics Factory                                                     16

Chapter 3                                                                                                      18
Compliance With         Compliance With Legislative Requirements
                        CSAP Organizations Provided Assistance to the Target
                                                                                                               18
                                                                                                               18
Requirements and           Population
Establishment of        CSAP Organizations Established Controls                                                21
ControIs
Appendixes              Appendix I: Activities of Organizations Participating in                               26
                            the Children’s Survival Assistance Program
                        Appendix II: Major Contributors to This Report                                         31

Tables                  Table 1,l: CSAP Organizations                                                           9
                        Table 1.2: CSAP ObIigations and Expenditures                                           12
                        Table 3.1: C-SAPBeneficiaries                                                          20




                        Page   0                   GAO/NSUU191-26   Asalstance   to Central   American   Childrem
Abbreviations

AID        Agency for International Development
CARE       Cooperative for American Relief Everywhere
CRS        Catholic Relief Services
           Children’s Survival Assistance Program
GAO        General Accounting Office


Page 7                     GAO/NSIAD91-26   A&stance   ta Central   American   CThiMren
Intioduction


               On July 17, 1979, after nearly 2 years of civil strife, a coalition led by
               members of the Sandinista National Liberation Front party overthrew
               the existing government in Nicaragua. As the party consolidated its
               power, dissatisfaction with its rule prompted some Nicaraguans to join
               an armed opposition force referred to as the Nicaraguan Resistance. The
               ensuing conflict between the Resistance and the Sandinista government
               extended over a S-year period and resulted in injuries and the involun-
               tary migration of Nicaraguan and Honduran civilians. It also resulted in
               a deterioration in health care in Nicaragua and an influx of refugees into
               Costa Rica and Honduras.

               Public Law 100-276, effective April 1, 1988, provided $47.9 million to
               the Agency for International  Development (AID) to support peace and
               democracy in Central America. This amount included $17.7 million for
               humanitarian assistance to the Resistance, $17.7 million to aid children
               that were victims of the Nicaraguan civil strife, $10 million for activities
               of a Verification Commission, and $2.5 million for administrative
               expenses. These funds were transferred to AID from unobligated fiscal
               year 1986 Department of Defense appropriations.

               Since the law was enacted, we have issued reports in June 1989 and
               February 1990 on our reviews of expenditures under Public Law 100-
               276 for humanitarian assistance and the Verification Commission.*

               This report concerns the $17.7 million provided to assist children that
               were physically injured, orphaned, or displaced by the Nicaraguan civil
               strife, including services such as prosthetic and rehabilitation care,
               medicines, and immunizations. Funds were to remain available for this
               program, referred to as the Children’s Survival Assistance Program
               (CSAP),until expended. Further, AID was initially required to reserve at
               least half of the funding for activities in Nicaragua. In December 1989,
               the Congress enacted Public Law 101-215, which authorized a follow-on
               program to include victims of civil strife, including adults, in any Cen-
               tral American country. The law also authorized AID to use unobligated
               CSAP funds for this program.




               ‘Central America: Humanitarian Assistance to the Nicaraguan Democratic Resistance (GAO/
               NsIAD-89-152,    &me 1,1989) and Ch~traI America: Activities of the Verification Chuni&on    (GAO/
               NSIAD90-65, Feb. 23, 1990).



               Page 8                              GAO/NSIABSl-28      hsi~tance   to Central   Anxxican   Children
                                    chapter        1
                                    LnhldUCtlOll




                                -                                                                                                                    j
                                    PI-IApril 1988, AID established the Task Force on Humanitarian Assis-                                            )
Program                             tance in Central America to implement the CSAP and to provide other                                              I
Implementation                      assistance authorized in Public Law 100-276. The task force headquar-                                            1
                                    ters staff in Washington, D.C., administered the CSAP with some assis-
                                    tance from field personnel in Honduras and Costa Rica.
                                                                                                                                                     !
                                    In early April 1988, AID solicited proposals from 24 private voluntary                                           I
                                    and international relief organizations, and by mid-May 1988, it had                                              j
                                    selected and signed grant agreements with nine private voluntary orga-                                           P
                                    nizations to provide assistance in Honduras, Costa Rica, and Nicaragua.                                          )
                                    By June 1988, using the criteria in Public Law 100-276, AID had devel-
                                    oped guidelines that specifically defined who would be eligible for assis-
                                    tance. (As discussed in ch. 3, AID modified these guidelines in May and
                                    June 1989.) In September 1988 and March 1989, AID signed grant agree-
                                    ments with a 10th private voluntary organization and a United Nations
                                    international relief organization.

                                    Table 1.1 identifies the organizations selected to provide assistance in
                                    each country.

Table 1.1: CSAP Organizations
                                    Country                         Organization
                                    Nicaragua                       Adventist Development and Relief Agency
                                                                    Catholic Relief Services
                                                                    International Medical Corps
                                                                    National Association of the Partners of the Americas
                                                                    Pan Amencan Development Foundation                        -
                                                                    Project HOPE
                                                                    Save the Children
                                                                    World Rehabilitation Fund
                                    Honduras                        American Red Cross
                                                                    Fan American Development Foundation
                                                                    Proiect HOPE
                                                                    United Nations High Commissioner for Refugees
                                                                    %ld Rehabil!tatlon Fund
                                    Costa Rica                      CAREa
                                                                    Catholic Relief Services
                                    aCooperative       for American Relief Everywhere.


                                    Although AID had planned to provide most CSAPassistance in Nicaragua,
                                    one organization-International  Medical Corps-was unable to obtain
                                    Nicaraguan government approval for its project, and in October 1988,                                         I



                                    Page 9                                      GAO/NSlAD-9126   Assistance   tn Central   American   Children
                 c3mpter 1
                 IlltXOdWtiOLl




                 the Nicaraguan government prohibited all CSAPactivities. As a result,
                 AID had to make significant adjustments to the program. AID instructed
                 the seven organizations that planned to operate in Nicaragua to cease                       E
                 operations and gave them the option of transferring their projects to
                 Honduras or Costa Rica. Three organizations-Pan       American DeveIop-
                 ment Foundation, Project HOPE, and World Rehabilitation Fund-trans-
                 ferred activities to Honduras; one-Catholic Relief Services (CRS)-
                 transferred its activities to Costa Rica; and three-Adventist   Develop-
                 ment and Relief Agency, National Association of the Partners of the
                 Americas, and Save the Chiidren-ended       their CSAJJinvolvement.

                 At the time of the ban, four organizations-Adventist     Development and
                 Relief Agency, CRS,National Association of the Partners of the Amer-
                 icas, and Pan American Development Foundation-had          purchased and
                 shipped items, such as vehicles, medicines, and office and medical equip-
                 ment, to their project sites. With AID’S approval, these organizations
                 either used these items for CSAPactivities in Honduras or Costa Rica or
                 other tipfunded activities or donated items to private voluntary or
                 international relief organizations working in Nicaragua, Honduras, or
                 Costa Rica. Chapter 2 and appendix I provide additional information on
                 the transfers.


                 According to available statistics, CSAP organizations provided assistance
Activities and   to about 240,000 persons in Nicaragua, Honduras, and Costa Rica from
Expenditures     May 1988 to April 1990. Due to the Nicaraguan government’s ban on
                 CSAPactivities, only two organizations were able to provide assistance in
                 Nicaragua. Before October 1988, the National Association of the Part-
                 ners of the Americas had delivered medical supplies and milk powder to
                 private clinics and orphanages, and Save the Children had shipped
                 clothing to a private orphanage and prepared plans for the orphanage’s
                 repair. Thus, most of the assistance was provided in Honduras and
                 Costa Rica and involved the following:

                 medicines, medical equipment, and supplies;
                 surgical and other clinical services;
                 rehabilitation services and braces and artificial limbs;                                        e
                 supplementary food rations and crop production supplies;
                 clothing, shoes, and personal hygiene and household items;
                 training in child health and nutrition issues;
                 improvement of health, water, and sanitation facilities;
                 emergency shelter; and
                 vehicles and motorcycles for health technicians.


                 Page 10                    GAO/NSL4U91-26   Assistance   to Central   American   Children
Chapter         1
IlltmdllCti0n




(See app. I for details on the assistance each CSAPorganization
provided.)

AID officials believed that the Congress intended the w to be an emer-
gency short-term assistance program. However, as AID officials began
implementing the program, they realized that the number of persons
suffering from traumatic injuries was smaller than expected. Thus, they
permitted certain organizations to provide long-term primary health
care and training activities.

By April 1990, all organizations had completed their activities+ Before
this, MD required the organizations to submit proposals for the disposi-
tion of nonexpendable property, such as vehicles and computers,
acquired during the program. In accordance with its property disposi-
tion regulations, MD authorized the donation of these items to Ministries
of Health or private voluntary or international relief organizations in
Honduras, Nicaragua, and Costa Rica or the use of the items to support
other Amfunded projects.

As of June 15, 1990, AID had obligated about $10.3 million of the $17.7
million authorized for CSAPactivities, and CSAPorganizations had
expended about $9.7 million for activities conducted from May I988 to
April 1990. (See table 1.2 for a breakdown of total CSAPobligations and
expenditures.) Although the legislation provided that funds were to
remain available until expended, AID officials believed that the highest
priority needs of the target population had been met by December 3 1,
1989, and directed most organizations to cease expending funds by
March 31, 1990.2




‘In June 1989, AID instructed all but two GAP organizations to cease delivery of services on
December 31,1989. The Pan American Development Foundation and the World Rehabilitation Fund
were allowed to deliver services until April 1990 because they were scheduled to receive funds under
the follow*n  program.




Page 11                              GAO/NSIAD91-26      Assistance   to Central   American   Children
                                                                                                                                                                  I
                                                  chapter       1
                                                                                                                                                                  1
                                                  lntmduction
                                                                                                                                                                  I




Table 1.2: CSAP Obligations    and Expenditures       (As of June 15, 1990)
                                                                                                                                                                  I
                                                                                                           Expenditure
                                                                      Obligation      Honduras        Costa Rica      Nicaragua                           Total   i
Organization
Advents1 Development and Reltef Agency                                 $1.360.000        $42,053        $390,608        $927,333                   $1,359,994
                                                                                                                                                                      I
American Red Cross                                                        440,ocQ        429,342                   l                          .       429,342
CARE                                                                    1.165,000               .        1.028,86             735.000               1,063,867         /
                                                                                                                                                                      I
CRS                                                                     1,2cJo,ooo              I        1.162.02             537,975               1,200,000
International Medical Corps                                                 19,310              .                .             19,310                   t9,310        1
                                                                                                .                                                                     1
National Assoclatton of the Partners of the Americas                      618,ooo                                  l
                                                                                                                              607,013                 607,013
                                                                                                                                                                      f
Pan American Development Foundation                                     1,850.000      1,353,276                   .          362,570               1,?15,946         I
Project HOPE                                                            1,ooo,ooo        763,205                   l
                                                                                                                                    9,795             773,000         I
Save the Children                                                          4B,DoO               .                  .           47,938                   47,938
United NatIons High Commissioner for Refugees                             554355         554,355                   .                 .                 554,355
World Rehabllitatlon Fund                                               2,066,cKl      1,919,0&l                   .                1,470           1,920,534
Total                                                                $10,320,665     $5,061,295       $2,581,500         $2,048,404                $9,691,199
Amount unobligated                                                      7,379,335
Total available                                                      $17,700.000


                                                  In February 1990, AID reprogrammed all unobligated CSAP funds-about
                                                  $7.4 million-for   the follow-on program. According to an AID official,
                                                  AID will also reprogram any obligated funds that have not been
                                                  expended after all expenditures are accounted for.


                                                  Our objectives were to determine if AID and participating organizations
Objectives, Scope,and                             provided authorized types of assistance under the CSAPand established
Methodology                                       adequate controls to administer and monitor the procurement and
                                                  delivery of goods and services in accordance with Public Law 100-276.

                                                  We met with officials from the AID Task Force and the Department of
                                                  State in Washington, D.C., and the AID missions and U.S. embassies in
                                                  Tegucigalpa, Honduras, and San Jose, Costa Rica. At these locations, we
                                                  reviewed records and observed the delivery of goods and services. We
                                                  did not observe the delivery of the goods that were distributed inside
                                                  Nicaragua. We also interviewed U.S. representatives from the partici-
                                                  pating organizations.

                                                  To determine if the assistance provided was authorized, we reviewed
                                                  eligibility guidelines and procedures and project records concerning the
                                                  monitoring and delivery of goods and services. We also visited several




                                                  Page 12                            GAO/NStADSl-26     A&stance       to Central           American   Children
CSAPproject sites to observe treatment procedures and deliveries of sup-
plies and services.

To determine if controls were adequate, we reviewed procedures for
purchasing and delivering goods and services and conducted spot checks
                                                                                          j
of the financial and procurement records of the private voluntary orga-
nizations with CSAP projects in Honduras and Costa Rica. We also                          I
reviewed reports of firms hired to audit CSAPorganizations and moni-
tored the distribution and uses of funds, commodities, and supplies as
well as the provision of medical and rehabilitation services.

We conducted the review between April 1988 and June 1990 in accor-
dance with generally accepted government auditing standards. We did
not obtain written agency comments on this report.. However, we did
obtain oral comments from AID officials on a draft of this report. They
generally agreed with our findings and conclusions and suggested some
minor modifications, which we have incorporated in the report where
appropriate.




Page 13                   GAO/NSIAD91-26   Assistance   to Centrd   American   Children
Implementation Issuesand Problems


                      CSAPorganizations provided assistance as planned; however, five
                      encountered problems in implementing their activities. CARE and Project
                      HOPE encountered difficulties in obtaining project approval, and as a
                      result, project implementation was delayed. Also, due to the transfer of
                      activities from Nicaragua, CR.S had to donate or exchange medicines that
                      were inappropriate for use in Costa Rica, and the Pan American Devel-
                      opment Foundation had problems finding a new work site in Honduras.
                      Finally, the World Rehabilitation Fund made a large investment in a
                      production facility that was not fully productive until the latter stages
                      of the project.


                      Project HOPE and CARE submitted proposals for projects in Honduras in
Delays in Obtaining   September 1988, but AID and the two organizations did not agree on spe-
Project Approvals     cific project activities until several months later. Although AID approved
                      the proposals in early November 1988, several days later, it withdrew
                      approval because officials from AID'S mission in Honduras believed that
                      the two organizations had overstated the number of displaced persons
                      and Nicaraguans living in Honduras and that the projects would conflict
                      with AID'S health programs, The mission recommended that the task
                      force obtain better information on the number of people that qualified
                      for CsAp assistance.

                      AID hired a consultant in November 1988 to obtain additional informa-
                      tion and make recommendations on CSAP activities. The study, completed
                      in December 1988, recommended that only one of the organizations
                      receive funding. CARE later withdrew its proposal for Honduras, and
                      Project HOPE resubmitted its proposal and obtained AID'S approval in
                      March 1989. However, AID did not approve Project HOPE’s implementa-
                      tion plan until late July 1989 because, according to AID and Project
                      HOPE officials, it took time to reach an agreement on eligibility and
                      reporting requirements. Project HOPE officials said that the delayed
                      approval prevented it from making a pIanned second procurement and
                      delivery of medicines and medical supplies.

                      CARE  also experienced delays in implementing its project in Costa Rica.
                      CARE officials negotiated with AID mission officials in Costa Rica and the
                      task force between October 1988 and February 1989 on the assistance to
                      be provided and the eligibility requirements. In February 1989, AID
                      approved CARE'S proposal; however, CARE could not implement its project
                      until AID modified its eligibility criteria to satisfy Costa Rican Ministry
                      of Health requirements* In May 1989, AID issued the modified criteria
                      and requested that CARE obtain information on the Ministry of Health’s


                      Page 14                     GAO/NSIAD91-26   AmLetance   M Central   American   Children
                           Chapter 2
                           Implementation   Issues md Problems




                           financial investment in clinics expected to receive assistance. CARE sub-
                           mitted this information to AID in July 1989 and began providing assis-
                           tance in August 1989. According to AID and CARE officials, the project
                           approval process took longer than expected primarily because complex
                           eligibility issues had to be resolved.

                           According to CARE officials, the lengthy approval process left only 5
                           months to implement project activities in Costa Rica and contributed to
                           the inability of some Costa Rican private voluntary organization
                           grantees to provide as much assistance as pIanned. For example, Clinica
                           Biblica, a clinic in San Jose, signed a $30,000 contract to provide special-
                           ized medical services but was able to treat only 20 patients at a cost of
                           about $5,600.


                           As discussed in chapter 1, in October 1988, the Nicaraguan government
Difficulties               prohibited CSAP activities, and organizations selected to operate in Nica-
Encountered Due to         ragua transferred or cancelled planned projects. In particular, two orga-
Transfer From              nizations--cm and the Pan American Development Foundation-
                           experienced problems in implementing their programs after transferring
Nicaragua                  from Nicaragua.
                                                                                                                            1


Catholic Relief Services   At the time of the ban, CRShad purchased three vehicles, medicines, and
                            medical supplies and had hired most of its in-country staff. Some items,
                           including two vehicles and a container of medicines, had already arrived
                            in Nicaragua. In November 1988, AID authorized CRS to transfer its pro-
                           ject to Costa Rica. Subsequently, CRS shipped the vehicles and other
                           items from Nicaragua and began providing CSAP medicines and medical
                           supplies to Costa Rican Ministry of Health clinics in January 1989.

                           According to CRSofficials, except for certain medicines (malaria, tuber-
                           culosis, antiparasite, and aspirin) and sutures, most of the medicines
                           and supplies purchased for Nicaragua were suitable for the project in
                           Costa Rica. Malaria and tuberculosis are more prevalent in Nicaragua
                           than in Costa Rica, and two of the antiparasite medications had been
                           replaced by less toxic medicines. Aspirin was generally not used for chil-
                           dren in Costa Rica because it had been linked to a childhood liver dis-
                           ease. Further, the Ministry of Health would not authorize most of the
                           CsApclinics to use sutures.

                           According to a CRSofficial, after transferring the project, only 2 months
                           remained to use one of the malaria medicines before it expired in July


                           Page 16                           GAO/NSW91-26   Assistance   to   Central American   Children
                         chapter   2
                         Implementation    hues    and Problems




                         1989. To minimize waste, the Costa Rican government used most of it to
                         rid bodies of water of malaria-carrying mosquitos. CRSalso exchanged a
                         quantity of another malaria medicine, valued at about $60,000, with its
                         procurement contractor, for other more appropriate medicines, Further,
                         Ministry clinics distributed the less toxic of the two antiparasite
                         medicines to children and provided the other medicine to older teenagers
                         and adults. AID authorized CRS to donate excess aspirin and other items,
                         including sutures, to the Ministry.’


Pan American             By October 1988, the Foundation had purchased over $283,000 of med-
                         ical equipment, hospital supplies, and generators for use in Nicaragua;
Development Foundation   had shipped two vehicles and office equipment; had initiated searches
                         for potential patients; and had hired in-country staff. In October 1988,
                         AID gave the Foundation the option of transferring  its project to Hon-
                         duras or Costa Rica. By January 1989, the Foundation had received
                         AID’s preliminary approval to assist a Honduran Ministry of Health hos-
                         pital in Tegucigalpa; however, hospital labor union representatives
                         objected because they feared that the hospital would use CSAP funds to
                         treat Nicaraguan Resistance members. The Foundation was not able to
                         find another site until March 1989.


                         The World Rehabilitation Fund spent about $178,000 to build a factory
limited Use of           in Honduras for manufacturing components used to assemble braces and
Prosthetics Factory      artificial limbs. By funding the factory, AID officials hoped to provide a
                         more affordable Central American source for the devices and to offer
                         replacement and repair services to IZSAPbeneficiaries after the program
                         ended.2 The Fund planned to reduce the number of imported items used
                         by its laboratory in Honduras to construct devices. The laboratory, also
                         funded with CSAP monies, began operating in October 1988.

                         In October 1988, AID authorized the Fund to proceed in constructing the
                         factory, and in January 1989, the Fund began to implement its plan. By


                         ‘AID officials agreed that the Ministry could provide the aspirin to persons that did not qualify for
                         SAP assistance because large amounts would expire if the supply was restricted. CR.5 officials
                         believed that sutures also would have to be distributed outside the GAP target population if they
                         were to lx u5ed before becoming non-sterile.

                         ‘To support this objective, AID authorized the Fund, in ,%ptember 1989, Costudy if the factory and
                         other rehabilitation services should continue operating after the BAP ended <and how they could
                         become financially self-sufficient. The study, completed in December 1989, concluded that the factory
                         and services should continue, but that external financial support was needed for at least another
                         yCtJ-.




                         Page 16                               GAO/NSL4lMl-26       Assistance   to Central   American   Children
chapter2
Implementation   Iscmes and Problems




June 1989, the factory was sufficiently complete to begin limited pro-
duction of unsophisticated items such as wooden ankle blocks and
leather straps. However, complete testing of more complex items, such
as suction valves and knee units, did not begin until mid-November
1989. Consequently, these items were not available to CSAP beneficiaries
until late November 1989. The project ended on April 30, 1990, and as of
that date, about 100 CSAPbeneficiaries had received devices with
factory-produced items.

Fund officials stated that the factory’s late start was partly caused by
delays in the purchase, shipment, and installation of the production
equipment. The Fund and a contractor hired in January 1989 took sev-
eral weeks to determine the types of equipment and supplies to order. In
March 1989, the Fund began purchasing equipment and supplies but
was unable to install all equipment until late November 1989 because
vendors could not deliver some equipment promptly, certain materials
were not readily available in Honduras, and it took time to ship items to
Honduras and clear them through customs. Further, once in Honduras,
certain equipment could not be operated immediately because of missing
or broken parts.

The Fund had not coordinated activities of the factory with the labora-
tory, which was responsible for some of the testing of the items and
using the items to construct devices. As a result, the laboratory had not
tested or used most of the factory-produced parts. According to a Fund
official, the factory and the laboratory did not coordinate activities
because they were controlled by different managers until mid-November
1989 when the Fund named one person to manage both facilities.

AID did not closely monitor the factory’s progress. AID officials acknowl-
edged that the factory made a limited contribution to the CSAP and that
they did not ask the Fund to provide any schedules or production goals
for the factory.

The Fund’s CSAP project ended in April 1990. AID, however, granted
$2,180,000 in additional funds, authorized under Public Law 101-215, to
provide prosthetics devices to eligible persons under the follow-on pro-
gram. According to AID and Fund officials, this money should ensure
that the factory will remain operational, and its output will benefit chil-
dren that the Congress sought to assist when it authorized the CSP.




Page 17                                GAO/NSIAD-91-26   Assistance   to Central   American   Children
Chapter 3

ComplianceWith Requirementsitnd
Establishment of Controls

                         AID and CSM organizations generally complied with legislative and other
                         requirements and established adequate controls to administer procure-
                         ment and distribution of goods and services. CSAPorganizations provided
                         assistance to the target population; however, about 5,000 ineligible per-
                         sons received CSAPbenefits. In addition, the American Red Cross lacked
                         adequate documentation for some authorized expenses, and the World
                         Rehabilitation Fund had an inadequate financial management system.
                         Furthermore, CRS did not adequately analyze medical needs before pro-
                         curing medicines, and as a result, it had to destroy excess quantities
                         valued at about $13,000.


                         Public Law 100-276 specified that AID would provide funds for certain
Compliance With          types of assistance, such as prosthetics and rehabilitation, and that
Legislative              assistance must be provided through nonpolitical private voluntary and
Requirements             international relief organizations. Further, AID was required to reserve
                         at least half of the SAP funding, or $8.85 million, for activities in Nica-
                         ragua. However, the law stipulated that none of this assistance could be
                         provided to or through the Nicaraguan government.

                         AID  complied with these requirements by selecting appropriate types of
                         organizations, funding authorized assistance, and reserving $9.4 million
                         for use in Nicaragua. We did not review activities in Nicaragua; how-
                         ever, officials from the two organizations that operated in Nicaragua
                         told us that their organizations provided assistance through private
                         clinics and orphanages, not to or through the Nicaraguan government.


                         According to Public Law 100276, only those children affected by the
CSAPOrganizations        Nicaraguan civil strife were eligible for C&P assistance, and priority was
Provided Assistance to   to be given to the children with the greatest needs. By June 1988, AID
the Target Population    had established preliminary guidelines that defined eligibility more spe-
                         cifically than the law did. To be eligible, children were to be 17 years of
                         age or younger or 17 or younger at the time of iqjury. The Nicaraguan
                         conflict was determined to have started in 1979. Children with the
                         greatest needs were those with traumatic, conflict-related injuries such
                         as wounds resulting from bullets or mines or bums suffered in
                         explosions.’



                         ‘During the course of the CSAP, AID discovered that there were few traumatic injury cases and thus
                         permitted CSAP organizations to alsn provide nonemergency, primary health care services.




                         Page 18                              GAO/NSLW-91-26     AssMance    to CentraI   American   Children
                          chapter 3
                          Complhnce With I&?quhmenta        and
                          IQttablMment of Chntrol~3




CSAP Organizations        Using AID’S guidance, results of health surveys, and host government
                           statistics, CSAPorganizations selected sites for project activities in areas
Selected Sites            judged to be most heavily populated by the target population. In early
                           1989, CARE and Project HOPE officials reported that it would be difficult
                           to adhere strictly to the eligibility criteria+ These organizations planned
                          to provide assistance through Costa Rican and Honduran Ministry of
                           Health facilities; however, Ministry policy required facilities to deliver
                           health care in a nondiscriminatory manner. Thus, AID could not demand
                          that the facilities use CSAPcommodities only for children affected by the
                           strife.

                          AID officials stated that using the existing health infrastructure in Hon-
                          duras and Costa Rica was the only means for AID to comply with the
                          statutory requirement to provide CSAPassistance. They also noted that it
                          was not politically feasible or cost-effective for AID to build a separate
                          network of clinics to provide treatment to a select population consisting
                          largely of Nicaraguans. Thus, they concluded that, in order to satisfy
                          Public Law loo-276 requirements, it was necessary to permit partici-
                          pating organizations to provide assistance at facilities that served a
                          larger population than the target population.

                          In May 1989, AID authorized CARE and Project HOPE to provide assis-
                          tance through Ministry facilities under certain conditions. Specifically,
                          AID stipulated that CSAPorganizations should work, to the extent pos-
                          sible, through Ministry facilities in areas in which eligible beneficiaries
                          made up about 20 percent of the population. Otherwise, they had to
                          prove that Ministry funding at a particular facility equaled or exceeded
                          the value of csAP-funded donations2 CARE and Project HOPE provided
                          such evidence.


Some Ineligible Persons   According to available statistics, CSAFJ organizations provided about
Received Assistance       241,000 individuals with direct benefits such as commodities, training,
                          or services and indirect benefits such as improvements to local sanita-
                          tion, water, or health facilities. Table 3.1 provides a breakdown of the
                          number of persons treated by each CSAPorganization.



                          %RS also provided assistance, includii      supplying medicines initially purchased for use in Nica-
                          ragua, through Ministry of Health facilities in Costa Rica However, there were not enough Costa
                          Rican health facilities to absorb the medicines in areas where eligible beneficiaries were about 20
                          percent or more of the population. Thus, AID required CR.5 to apply the 20-percent criterion only to
                          facilities that were added after the new guidelines were issued in May 1989.



                                                                                                                                     I
                          Page 19                                 GAO/h’SIAD-91-26   Assistance   to Central   American   Children   i
                                mpter     3
                                Chmplhnce With Requirements    md
                                Establidunent of Ckmhde




Table 3.1: CSAP Beneficiaries
                                Organization                                                                                Number
                                American Red Cross                                                                           42,ooo
                                CARE                                                                                         35,562
                                Catholic Relief Services                                                                      51,436
                                National Association of the Partners of the Americas                                         46,604
                                Pan American OeveloDment Foundation                                                              615
                                Project HOPE                                                                                  50,272
                                Save the Children                                                                                 80
                                Unlted Nations High Commlssioner for Refugees                                                 13,500
                                World Rehabilitation Fund     -                                                                  885
                                Total                                                                                       240.954


                                We found that 4,952, or 2 percent, of the 240,954 beneficiaries did not
                                meet AID’Seligibility requirements, Those ineligible included 167 Hon-
                                duran children who received specialized medical and rehabilitation ser-
                                vices from the Pan American Development Foundation and the World
                                Rehabilitation Fund in Honduras and 4,875 adults who received CSAP-
                                funded medicines from Ministry of Health facilities in Costa Rica.

                                Foundation and Fund officials said that they believed the law and AID’S
                                preliminary guidance allowed them to treat any Honduran child that
                                lived in an area where health care services had deteriorated as a result
                                of the conflict. They believed that the Nicaraguan strife had caused a
                                deterioration in the quality and availability of health care services and
                                that the Honduran government might suspend their CSAPprojects or turn
                                down future non-       work if large numbers of Hondurans were
                                excluded from csu assistance.

                                AID  officials stated that they believed Public Law loo-276 required AID
                                to limit assistance as much as possible to children whose health
                                problems were directly linked to the Nicaraguan conflict, particularly
                                those who had suffered traumatic injuries such as wounds from bullets
                                or mines. Therefore, allowing the Foundation and the Fund to treat non-
                                Nicaraguan children whose medical needs were the result of inadequate
                                health care would turn the CSAP into a general health care program and
                                thus contradict legislative intent. Further, it would be difficult for AID to
                                determine if the level of health care had deteriorated in a certain area.

                                Consequently, AID believed that the two organizations had interpreted
                                the law and preliminary criteria too Iiberally. In June 1989, AID issued
                                guidelines that stated that the Foundation and the Fund could provide



                                Page 20                             GAO/NSL4091-26     Assistance   to Central   American   Children
                            chapter     3
                            Compllrulce
                                      Witi -meno              and
                            FdaMinhment     of Control8




                                                                                                                                          Y
                            assistance only to those non-Nicaraguan children injured, orphaned,
                            abandoned, displaced, or unable to obtain health care services for rea-
                            sons directly related to the strife. Foundation and Fund officials noted
                            that, to comply, they had to reject greater numbers of Hondurans for
                            treatment, including those that would previously have been treated.

                            CRSprovided medicines and medical supplies to Ministry clinics in Costa
                            Rica and required clinic officials to sign agreements stipulating that
                            these items would be used to treat children under 18. In February 1989,
                            CRSlearned that six clinics had distributed medicines and medical sup-
                            plies to 4,785 adults and requested Ministry officials to ensure that
                            clinics discontinued this practice. Subsequent monthly reports indicated
                            that the six clinics had stopped treating adults with (%&funded items.
                            The CRS official who administered the project believed that the care had
                            been improperly provided because clinic personnel misunderstood the
                            restrictions governing CSAP donations.


                            AID required participating organizations to maintain adequate financial
CSAP Organizations          management and procurement systems and to monitor the distribution
Establbhed Controls         of goods and services to ensure that assistance was being provided to
                            eligible beneficiaries. AID also recommended that the organizations
                            working in Honduras and Costa Rica arrange for a concurrent audit.
                            CSAP organizations generally complied with these requirements; how-
                            ever, the American Red Cross and the World Rehabilitation Fund had
                            some problems.


Organizations Established   The CSAFJ  organizations in Honduras and Costa Rica established systems
Systems                     that included procedures for tracking expenditures, obtaining price quo-
                            tations for each procurement, screening beneficiaries, and monitoring
                            deliveries.3 In addition, officials from AID and CUP organizations and
                            auditors from several private accounting firms reviewed expenditures,
                            conducted field visits, and inspected deliveries of goods and services.

                            Several organizations operating in Honduras and Costa Rica took mea-
                            sures to ensure that goods were provided to eligible beneficiaries. The
                            American Red Cross conducted surveys to determine the specific needs
                            and number of children that qualified for CSAP assistance and required
                            beneficiaries to sign receipts for BAP items. Price Waterhouse auditors

                            %Ve did not review the fmancial, procurement,     and distribution   systems established   for C&W
                            projects in Nicaragua




                            Page   21                               GAO,/NSIADSl-26       Assistance   to Central   American   Children
                    cllupter 3
                    Compliance With Requirements   and
                    Eatabliahment of Controls




                    observed several distributions and concluded that the Red Cross was
                    distributing goods to eligible beneficiaries. CKS,CARE, and Project HOPE
                    coordinated their activities with Ministry officials to ensure that assis-
                    tance was provided to facilities serving the greatest number of eligible
                    beneficiaries and required Ministry officials to maintain inventory and
                    patient statistics.

                    The Foundation, the Fund, and CARE also screened patients through
                    interviews to determine if they met AID’S eligibility requirements. In
                    addition, the Foundation and the Fund hired auditors to review
                    screening practices, and the auditors attested to their general adequacy.


Concurrent Audits   Although CSAPorganizations generally maintained adequate financial
Revealed Some       management, procurement, and distribution systems, the American Red
                    Cross and the Fund had some problems. In April 1990, Price Waterhouse
Weaknesses          reported that the American Red Cross either lacked or had received
                    insufficiently detailed documentation for $16,046 paid to the Honduran
                    Red Cross and the League of the Red Cross. An American Red Cross
                    official acknowledged that the expenditures had not been properly doc-
                    umented but stated that the expenditures had been verbally approved
                    by American Red Cross officials and were made for legitimate project
                    activities.

                    In its February 1990 report covering activities from May 1988 through
                    June 1989, Price Waterhouse reported that the Fund’s office in Hon-
                    duras had not maintained accurate and properly classified accounting
                    and payroll records, had not reconciled bank accounts, and had not
                    adhered to its budget. According to Price Waterhouse and Fund officials,
                    the lack of a qualified accountant was a major cause of these financial
                    deficiencies. Price Waterhouse also reported that the Fund had pur-
                    chased goods without analyzing costs as required and had not estab-
                    lished adequate procedures to inventory and distribute medical supplies
                    and equipment.

                    As a result of the inadequate accounting system and failure to adhere to
                    a monthly budget, the Fund exceeded expenditure limits established by
                    AID. By June 1989, the Fund’s expenditures exceeded the authorized
                    amount of $1.15 million by about $139,000. AID officials stated they
                    were not aware of the overexpenditure until August 1989 when they
                    received a report from the Fund. According to Fund headquarters offi-
                    cials, they did not immediately report the overexpenditure to AID



                    Page 22                          GAO/NSLAD91-26   Assistance   to CentTal American   Chiidren
                        chapter 3
                        Complbnce        With Requkwnta           and
                        Establlshrnent     of Chntrole




                        because they were not aware of it until after they had received expendi-
                        ture reports from the Honduras office for May and June 1989.

                        To compensate for the overexpenditure, the Fund reduced expenditures
                        and did not bill AID for overhead expenses from April to November 1989.
                        The Fund later hired a qualified accountant, and in June 1989, the Hon-
                        duras office improved its accounting system by beginning to classify
                        accounting and payroll records properly, reconciling bank accounts, and
                        adhering to a monthly budget. In October 1989, we reviewed the Fund’s
                        financial records and found no significant problems. The Fund also
                        began adhering to procurement procedures, inventoried its holdings, and
                        established inventory and distribution procedures. In its June 1990
                        report, Price Waterhouse reported that the Fund had improved its finan-
                        cial management system and procurement practices and had established
                        an adequate inventory management system.                                                                            ,



Procurement of Excess   In February 1990, CRSdestroyed 48,000 vials of epinephrine, valued at
Medicine                $12,960, because its shelf-life had expired. The medicine was excess
                        because neither CKSnor its procurement contractor had adequately ana-
                        lyzed specific needs of the c%n target population for epinephrine, a
                        medication used to treat life-threatening cases of allergies and severe
                        asthma, or other types of medicines and supplies.

                        In June 1988, cas contracted with the Catholic Medical Mission Board4 to
                        manage procurement for its project in Nicaragua. The Board began pro-
                        curing items in June 1988, and by September 1988, it had expended
                        about $1 million for medicines and other items. In January 1989, CRS
                        moved its project from Nicaragua to Costa Rica and began providing
                        these medicines and other items to local clinics.

                        CRSprovided two lists of recommended medicines and relied on the
                        Board to use these lists and other available data to determine appro-
                        priate quantities and types. However, Board officials ordered medicines
                        based on, for example, the numbers of patients treated at selected
                        clinics, not on the frequency of specific illnesses. According to the med-
                        ical adviser for the project, the Board procured a quantity of epineph-
                        rine that was sufficient to supply all of Central America for a year.



                        4The Board is a nonprofit        organization    with extensive cxpericncc   in supplying   medicines to church
                        clinics in Nicaragua.




                        Page 23                                         GAO/NSIAD-91-26     Assistance   to Central   American   Children
chapter 3
Camphutce With Requimmenta   and
EMabliehment of Controls




If an analysis had been performed, it is likely that a smaller quantity of
epinephrine would have been ordered because the medicine is used only
in emergency situations. The lack of such an analysis’also increased the
possibility that other medicines were purchased in excess; however, the
purchase of epinephrine was the only clearly documented case. CRS offi-
cials acknowledged that too much epinephrine was purchased. They
stated that AID’S description of the CSAFas an emergency program con-
tributed to their decision to order medicines before the medical needs of
Nicaraguan children could be carefully analyzed.
                                                                                                ,
With AID’S permission, CRS tried to redistribute the excess epinephrine
before destroying any quantities. It donated a portion to the Costa Rican
Ministry of Health for national distribution to nonGAP assisted regional
hospitals and an additional quantity to Peru for use by the charitable
organization Caritas. It also donated, at our suggestion, a small portion
to one of the Costa Rican private voluntary organizations participating
in CARE’S CSAP project. However, its efforts to donate the remaining epi-
nephrine to other organizations in Central America were unsuccessful,




Page 24                        GAO/NSIAD91-26   Assistance   to Central   American   Children
Page 26   GAO/NSIAD-91-26   Assistance   to Central   American   Children
Ppe

i;Lties   of OrganizationsParticipating in the
Children’s Survivd AssistanceProgram

Adventist            untary organization, signed an agreement with AID to provide medical
Development and      care, clothing, food, and urgent medical care and rehabilitation referrals
Relief Agency        for children in 20 rural Nicaraguan communities. By October 1988,
                     when the Nicaraguan government prohibited CSAPactivities, the Agency
                     had purchased all of the project’s vehicles, office equipment and sup-
                     plies, clothing, some spare parts, and 182 metric tons of rice. The
                     majority of these items were en route to Nicaragua. The Agency donated
                     the items to other CSAPprojects in Honduras and Costa Rica and to its
                     projects in Haiti, Honduras, Peru, and Bolivia and gave the rice to the
                     United Nations High Commissioner for Refugees program in Costa Rica.
                     It spent all of the funds AID provided-about    $1.4 million-during  1988
                     and 1989 on its CSAP project, including the items donated with AID'S
                     approval to other projects.


                         provided the American Red Cross with $440,000 to implement a IXAP
American Red Cross   AID
                     project to provide assistance to children living in the southern area and
                     the eastern Atlantic coast area of Honduras. The American Red Cross
                     used its C&W funds to purchase and deliver, with the assistance of the
                     Honduran Red Cross, medical supplies and equipment, nutritional sup-
                     plementation and Personal care, and hygiene articles to these children.
                     During this project, it also distributed commodities donated by Red
                     Cross chapters from other countries and the United States. According to
                     the American Red Cross, it provided assistance to over 42,000 children.
                     As of June 15,1990, the American Red Cross had expended about
                     $430,000 for activities conducted from May 1988 to November 1989.


                            a U.S.-based private voluntary organization, received about $1.2
CARE                 CARE,
                     million in CSAP funds from AID to (1) estabhsh an information coordina-
                     tion unit to disseminate information to all CWPorganizations; (2) assess
                     war-related needs of children in Nicaragua, Honduras, and Costa Rica;
                     and (3) conduct activities in Costa Rica. From May to December 1989,
                     CARE provided materials and training to the Costa Rican Ministry of
                     Health and grants to Costa Rican private voluntary organizations
                     working with the CSAPtarget population. CARE also provided supplemen-
                     tary food rations to eligible beneficiaries living in five refugee camps
                     and near selected rural Ministry health posts.

                     CARE  provided items, including 4 mobiIe health units, 30 motorcycles,
                     medical equipment, and medicines, to Ministry of Health facilities
                     serving areas populated by significant numbers of Nicaraguans. CARE


                     Page26                     GAO/NSIADSl-ZBAssistancetorRnh-alAmericanChil~n
                         also supported eight projects operated by local Costa Rican private vol-
                         untary organizations that provided specialized medical care, preventive
                         health and dental care, supplementary feeding, and shoes to refugee
                         children and other eligible persons. According to CARE officials, 36,000
                         beneficiaries were served by its project from August through December
                         1989. As of June 15, 1990, CARE had expended about $1.06 million.


                         CRS,a U.S.-based private voluntary organization, planned to expend
Catholic Relief          about $3 million to provide medicines, medical equipment, and supplies
Services                 to clinics throughout Nicaragua. It had hired local staff, acquired office
                         equipment, and purchased medicines, medical supplies, and two vehicles
                         before the Nicaraguan government banned CSAPactivities. Accordingly,
                         it transferred its project to Costa Rica, and AID reduced the grant
                         amount to $1.2 million. CRS spent about $38,000 on CXAPactivities in Nic-
                         aragua, mainly for personnel, storage, and shipping costs.

                         Most of the items procured for Nicaragua were used in the Costa Rican
                         project. During this project, CRSdelivered medicines, medical equipment,
                         and supplies to Ministry of Health facilities and refugee camps located
                         in areas thought to be most heavily populated by Nicaraguans.
                         According to CRSofficials, the Costa Rican Ministry agreed that the CSAP
                         medicines and medical supplies would be used only for children that
                         were 17 or younger. These officials said that there were 51,436 benefi-
                         ciaries of its Costa Rican w project from January to December 1989.
                         As of June 15,1990, cm had expended the entire $1.2 million of CSAP
                         funds.


                         The International Medical Corps, a U.S.-based private voluntary organi-
International Medical    zation, planned to upgrade a private Nicaraguan medical facility for use
Corps                    as a pediatric surgical center and to work with another w organiza-
                         tion to recruit medical specialists, identify patients, and deliver medical
                         care. However, the Nicaraguan government never granted approval for
                         these activities. In planning the project, it spent about $19,000 for per-
                         sonnel and travel costs incurred during 1988.


                         The National Association of the Partners of the Americas, a U+S.-based
National Association     private voluntary organization, planned to equip various Nicaraguan
of the Partners of the   clinics and orphanages with food, medicines, and medical equipment and
Americas                 supplies. Before the Nicaraguan government banned the CSAP,the Asso-
                         ciation sent 11 shipments of commodities purchased with CSAPfunds to


                         Page 27                     GAO/NSIAD-91-26   Assistance   to Central   American   Children
               Appendix I
               Actlvkies   of Orgadzation~     Pucleipating  in
               the Children’8 Survhd      A~letance     Pmgmm




               Nicaragua and used CSAPfunds to pay for the transport of one container
               of items donated by the Ecumenical Refugee Council of Wisconsin.
               According to Association officials, the donated items (medicines, med-
               ical equipment and supplies, toys, and clothes) were distributed to eight
               private orphanages in the cities of Managua, Limon, and Esteli and
               reached about 3,200 children. The Association also distributed milk
               powder to about 46,600 children through its network of private clinics
               in Nicaragua. The Association spent $607,013 of the $618,000 it
               received from AIUD.


               AID granted about $1.9 million to the Pan American Development Foun-
Pan American   dation, a U.S.-based private voluntary organization. The Foundation ini-
Development    tially planned to equip a private medical facility in Nicaragua with
Foundation     resources needed to conduct surgery on children with traumatic injuries.
               However, the Nicaraguan government’s ban on CSAPactivities prevented
               the Foundation from providing any assistance in Nicaragua. Accord-
               ingly, the Foundation transferred its project to Honduras.

               The Foundation spent about $363,000 for its planned project in Nica-
               ragua, mainly for personnel costs and the purchase of medical and office
               equipment and supplies. The majority of the items purchased were used
               in Honduras; the remainder, valued at about $65,000, are stored in a
               Miami, Florida, warehouse because they were not needed in Honduras.
               According to a Foundation official, the items will be used for a project in
               Nicaragua included in the follow-on program to the CSAP.

               In Honduras, the Foundation provided surgical services for CSAFbenefi-
               ciaries at an Adventist hospital located near Tegucigalpa, Honduras, by
               using referrals and its own detection teams to locate eligible benefi-
               ciaries that appeared to need the type of services offered at this hos-
               pital. It arranged and paid for the transportation of potential patients
               and their companions to the hospital where their patients were tested to
               determine if they needed and could withstand the rigors of surgery.
               Honduran surgeons, contracted by the Foundation, performed the
               needed orthopedic and plastic surgeries. As of June 15, 1990, the Foun-
               dation had expended about $1.4 million for activities in Honduras from
               March 1989 to April 1990 and had accepted 615 patients for treatment.
               The Foundation expended a total of about $1.7 million for activities in
               Nicaragua and Honduras.




               Page 28                               GAO/NSIADSl-26   Assistance   to Central   American   Children
                      Project HOPE, a U.S.-based private voluntary organization, received a
Project HOPE          grant of about $1 million and conducted CSAP activities in Honduras con-
                      sisting of (1) financing repairs to nine Honduran Ministry of Health
                      facilities; (2) donating medicines, medical supplies, and equipment to 18
                      Ministry facilities; and (3) supporting health education and training for
                      Ministry personnel. According to Project HOPE officials, it provided
                      benefits to about 50,000 beneficiaries. As of June 15, 1990, $763,000
                      had been spent for activities conducted in Honduras from April 1989 to
                      March 1990.

                      Project HOPE also planned to establish health centers to dispense pri-
                      mary health care services in four zones in Nicaragua and to supply
                      medicines and supplies to other private voluntary organizations working
                      with other private clinics in the zones. However, the Nicaraguan govem-
                      ment never responded to Project HOPE’s requests to establish a C&W
                      project. Project HOPE spent about $9,800 on CSAPactivities for Nica-
                      ragua, mainly for initial travel and personnel costs. Total expenditures
                      for Honduras and Nicaragua were about $773,000.


                      Save the Children, a U.S.-based private voluntary organization, had to
Save the Children     curtail its planned activities, which were to assist orphans and displaced
                      children in the Esteli and Leon regions of Nicaragua, due to the Nicara-
                      guan government’s ban. It spent about $48,000 for project activities,
                      mainly for personnel and travel costs; however, $1,500 was expended to
                      ship clothing to 80 children at a private orphanage and to prepare reno-
                      vation plans for the orphanage.


                      AID granted $554,355 to the United Nations High Commissioner for Refu-
United Nations High   gees, an international relief organization, to provide assistance to Nica-
Commissioner for      raguan children living in refugee camps in Honduras. This organization
Refugees              expended these funds for agricultural implements to grow vegetables,
                      supplementary food rations, medicines, basic household goods, personal
                      hygiene items, fumigation services, and improved sanitation and water
                      facilities.

                      In addition, the organization financed the transfer of a flooded refugee
                      camp to a new site on higher ground. According to organization officials,
                      13,500 beneficiaries received CSAPassistance through activities con-
                      ducted from January 1989 to December 1989.                                                   /




                      Page 29                    GAO/NSL4D-91-26   Assistance   ta Central   American   Children
                       Appendix I
                       kthidea      of Organhdo~     Partidpatlng   in
                       the Chilhn’rr    5kuvival Amistmce     Plvgmm




                       AID granted about $2.1 million to the World Rehabilitation Fund, a U.S.-
World Rehabilitation   based private voluntary organization specializing in rehabilitation ser-
Fund                   vices. The Fund established a center in Tegucigalpa, Honduras, to pro-
                       vide comprehensive rehabilitation services and prosthetic and orthotic
                       devices. The center included a factory that manufactured and tested
                       items used to construct the devices and a mobile laboratory and work-
                       shop that provided services to beneficiaries in locations outside of Tegu-
                       cigalpa. The FImd provided CSAPassistance from May 1988 through
                       April 30, 1990, and expended about $1.9 million. Fund officials stated
                       that 885 patients had been admitted into its rehabilitation program.

                       The Fund planned to conduct activities, including establishing a pros-
                       thetics laboratory, in Nicaragua, and it sent a representative to Kica-
                       ragua in July 1988 to establish contacts with groups that could refer
                       children for rehabilitation services. However, the plans never material-
                       ized because of the Nicaraguan government’s ban on CUP activities.
                       Thus, only $1,470 was expended in Nicaragua, which was in connection
                       with the July 1988 trip.




                       Page   30                             GAO/NSIAlMl-26   hdstance   Ix Central   American   Children
Appendix II

Major Contributors to This Report


                   -
                        Stewart L, Tomlinson, Assistant Director
National Security and   Sharon L. Pickup, Evaluator-in-Charge                                                    r

International Affairs   David G. Jones, Evaluator
                        Patrick A. Dickriede, Evaluator
Division, Washington,
DC.




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