'Slush fund'? USAID under fire for paying Afghan, other governments to pass laws

A shadow is cast on boxes of relief items from U.S. Agency for International Development (USAID). (Reuters)

WASHINGTON – A U.S. agency whose mission is to foster democracy by providing financial aid to foreign governments is under fire for what some lawmakers charge is blatant political bribery to get foreign officials to pass policies favored by the Obama administration.

The payment programs, administered by the United States Agency for International Development (USAID), are described as "incentive" funds. The U.S. government offers multimillion-dollar payments to foreign governments -- including in Afghanistan, as well as North Africa and elsewhere -- in exchange for approving policies that are a priority in Washington, but not necessarily in those countries.

The money effectively greases the palms of foreign government officials, but watchdogs and lawmakers are questioning how that money is being spent.

"It sounds like a bonus, it sounds like a slush fund, it sounds like a lot of very negative things," Rep. Jason Chaffetz, R-Utah, said during a recent House hearing on Capitol Hill.

Last year, the U.S. government gave $15 million to Afghanistan in exchange for its parliament passing a law on violence against women. The United States Agency for International Development has defended that payment, arguing before a House Oversight subcommittee that the vital law would have been "unpalatable" for Afghanistan without the monetary incentive.

But that was just a chunk of a larger, two-year $175 million "incentive fund" through USAID to nudge Afghanistan toward "progress" on human rights, budget and election reforms. Another $15 million was given last month for budget changes.

The programs are run through USAID, a federal agency established in 1961 by President John F. Kennedy that manages how much money is given to other countries to advance the political and economic interests of the United States. So far, the U.S. has committed $100 billion to reconstructing war-torn Afghanistan, with a good chunk of the cash coming from USAID. The money has funded hospitals, power plants and other initiatives.

In recent years, though, the agency has come under criticism for the way it divvies up that money and the programs it chooses to fund, including for its "incentive" payments.

The money is supposed to go toward initiatives involving election laws, human rights, public and commercial finance, state budgets and economic development.

USAID defends its methods and policies and tells FoxNews.com there has been “dramatic development progress.” Among the successes, the agency says, are “a 20-year increase in life expectancy and getting 8 million Afghan boys and girls enrolled in school up from 900,000 boys a decade ago.”

“The purpose of the incentive fund for Afghanistan is to leverage the Afghan government to make reforms that will help sustain the dramatic development gains from the past decade,” Kathleen Campbell, deputy assistant to the administrator in the Office of Afghanistan and Pakistan Affairs, said. “This will contribute to their long-term stability and U.S. national security.”

But Chaffetz, the chairman of the Subcommittee on National Security, criticized Donald Sampler, assistant to the administrator of the Office of Afghanistan and Pakistan Affairs for USAID, during a heated hearing in Washington earlier this month over the way the money is spent. He claimed the funds essentially were used to pay off politicians.

“That is the very essence of corruption, and we’re funding that?” Chaffetz said.

Sampler said he didn’t agree with terms like “slush fund” to describe the millions of dollars in payments the U.S. was sending Afghanistan to get policies and programs passed.

One problem for the programs is widespread corruption in the countries where the funds are spent.

John Sopko, the special inspector general for Afghanistan reconstruction, says that “persistent corruption, wasteful spending and increased violence” have prevented top U.S. generals from visiting sites where the programs are reportedly in place. Sopko's comments referred to reconstruction projects, including those financed from the incentive funds.

Sopko, who has been blunt in the past about America’s approach to aiding Afghanistan, says the strategy of delivering direct assistance and tying it to votes is “the biggest gamble with taxpayer money that USAID has ever made.”

Aid from America and other Western countries pays for most of the Afghan government’s expenses. In recent years, the Obama administration has pushed to route the funds directly to the Afghan government versus programs managed by U.S. officials. The move was made to build up a better and more credible Afghan government, but multiple audits revealed corruption, chaos and a deep lack of transparency.

In March 2013, SIGAR asked USAID as well as the departments of State and Defense to provide SIGAR with information on what each considered to be the 10 most and 10 least successful of its projects and programs for the reconstruction of Afghanistan, supplemented with explanations of selection and evaluation criteria for the choices.

“Unfortunately, while each agency provided anecdotes of what it deemed successful programs and cited general improvements within Afghanistan related to health, education, and other important areas, none could show how any of its programs had directly contributed to these positive outcomes,” Sopko said.

Sopko acknowledges that even if the agency applies more pressure on the Afghan government to clean up its act, misuse and abuse would likely continue.

Rep. John Tierney, D-Mass., also criticized USAID's handling of projects on a wider scale. He blamed the agency for delays in delivering assessment documents and chided USAID for implementing only 24 of 337 recommendations from inspectors general on ways to make programs more efficient. He also said USAID hid details from Congress, often redacting much of the material lawmakers asked to see.

USAID has strongly denied hiding material and says it has worked with Congress.

Elsewhere, more than $30 million in incentive funds were used in the Republic of Congo. The money went to curb violence against women -- the paid incentive programs provided social services to more than 9,000 survivors and trained more than 4,000 service providers.

In 2013, the Obama administration requested $580 million for the Middle East and North Africa Incentive Fund, which was described as “a macro-level tool that will allow us to more nimbly support the transitions that are taking root” in the region.

The money would have also gone to Libya, where there is currently no USAID mission. The aid would be used to support local justice and security reform, elections, civil society, small and medium enterprises and women’s empowerment.

Congress said no.