USAID programs hit by fraud, corruption and bid-rigging allegations

The shadow of a Philippine Army personnel is cast on boxes of relief items from U.S. Agency for International Development (USAID) for the victims of super typhoon Haiyan, at Villamor Air Base in Manila November 13, 2013. (Reuters)

WASHINGTON – USAID, the government agency in charge of distributing tax dollars to foreign aid projects, once again is being hit with allegations and audits exposing how fraud and corruption are undermining its programs.

Though the government says it's taking "steps" to address the problems, the multiple reports reflect a decades-long problem with how USAID money is administered and, critics say, how little has been done to fix it.

"There's a cult around foreign aid and those who question it," Judicial Watch President Tom Fitton told FoxNews.com.

One new investigation shows millions are being stolen and sold on the black market from money meant for malaria drugs in Africa.

The malaria initiative was set up to help fight the disease but has been hijacked by organized networks in the region that steal large amounts of the drug and resell it on the street.

The U.S. spent $2.5 billion between 2006 and 2012 on the President’s Malaria Initiative – a program created by George W. Bush in 2005 and led by the U.S. Agency for International Development, or USAID.

Of the drugs sent, more than 20 percent were diverted each year, with a street value of $60 million, according to a recent Wall Street Journal investigation.

The allegations in Africa come on the heels of widespread concern about how $1.1 billion in Haiti earthquake recovery aid has been spent in the three years since the disaster hit, as well as aid funding in Afghanistan.

On Thursday, USAID chief Rajiv Shah acknowledged during a speech at the Brookings Institution that the government agency has to do "a more focused job of delivering" on its agenda.

Shah outlined the agency's new three-part plan to help extreme poverty in the world. He said USAID would focus on more public-private partnerships and country programs and demand mutual levels of accountability between other countries and the U.S. He also said the challenges his organization is "grappling" with include understanding "how to fight corruption in fragile environments -- even as you want to make rapid gains in health and welfare."

Despite the problems tracking its aid, USAID has been credited with helping many nations, including transitioning Eastern and Central Europe to market-based economies by pushing reform to the legal systems in 15 countries. USAID has also mobilized $2.3 billion in private financing for more than 100,000 entrepreneurs around the world over the past decade through its Development Credit Authority.

Several calls and emails made by FoxNews.com to USAID for comment were not returned.

Fitton’s organization has documented multiple allegations of money marked for foreign aid being funneled, mismanaged and used in unintended ways.

“Foreign aid is notoriously corrupt,” Fitton said. “The surprise is that anyone is surprised by this anymore. Twenty percent of aid is lost. If this happened in the private sector, (the program) would have been shut down.”

In September, the Office of the Special Inspector General for Afghanistan Reconstruction charged that millions of U.S. dollars were being wasted on public health programs that were at risk “of waste, fraud and abuse.”

The report also said that the U.S.-funded effort to build a 100-bed civilian hospital in the eastern part of Afghanistan was two years behind schedule and that there had been significant issues with contractors overcharging the government.

Most of the criticism centered on a $236 million USAID program that was created to provide basic services including immunizations, hospital equipment and the salaries of 13 Afghan officials

“Despite financial management deficiencies at the Afghan Ministry of Public Health, the U.S. Agency for International Development continues to provide millions of U.S. taxpayer dollars in direct assistance with little assurance that the MoPH is using funds as intended,” according to the report.

The conservative Heritage Foundation also claimed that patterns of abuse abroad demonstrate the USAID model of aid has repeatedly failed to deliver sustained economic growth and development.

“Traditional development assistance does not work, at least not if the goal is to foster sustainable development in poor countries,” Heritage researcher James Roberts wrote in a 2011 paper.

According to a June 2013 federal audit by U.S. Government Accountability Office, half of the $1.14 billion that the U.S. government allocated to help Haiti rebuild ended up being wasted on a failed port and power plant venture heavily promoted by former President Bill Clinton and the State Department.

There have also been a series of problems with U.S. cash going to Cuban aid and allegations of widespread bid-rigging for projects in Iraq.

A 2006 GAO audit found that nearly all of the $74 million USAID spent to promote democracy in Cuba had been distributed without any competitive bidding or oversight that ultimately led to massive amounts of fraud and waste.

According to the report, a Miami-based group used taxpayer dollars to buy “a gas chainsaw, computer gaming equipment and software (including Nintendo Game Boys and Sony PlayStations), a mountain bike, leather coat, cashmere sweaters, crab meat and Godiva chocolates.”

At the time, the director of the grant recipient, Accion Democratica Cubana, told the Miami Herald that all of the items were sent to Cuba. However, GAO author David Gootnick concluded in his report that the lack of documentation made it impossible to verify.

Two years before the Cuba call-out, USAID had also been scolded for how it picked contractors in charge of rebuilding Iraq. USAID’s own inspector general reprimanded the organization for “the significant appearance of conflict of interest issues” in awarding a $240 million contract to BearingPoint Inc.

FoxNews.com tried reaching BearingPoint Inc. at their offices in McClean, Va. The line had been disconnected.

For Fitton, the problems are not something he sees being resolved any time soon.

“If this were Apple computer, it would be shut down but it’s not,” he said. “Billions have been lost and more will be.”