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Longtime USAID contractor embroiled in scandal fires top managers, others

International Relief and Development Inc., once one of the largest nonprofit contractors working for the U.S. Agency for International Development, has dismissed its board of directors and laid off 21 employees in an effort to stabilize the struggling organization, senior managers said Friday.

The managers are trying to lift a Jan. 26 suspension issued by USAID, preventing the nonprofit group from receiving federal work. The agency reported that it had found evidence of “serious misconduct” at IRD, including allegations of unchecked spending and mismanagement in humanitarian and stabilization programs, many of them in Iraq and Afghanistan.

Since 2007, IRD has received nearly $2.4 billion to administer USAID-funded programs.

Nonprofit contractor sent government $1.1 million bill for parties and retreats

The largest nonprofit contractor working for the U.S. Agency for International Development during the height of the wars in Iraq and Afghanistan billed the government $1.1 million for staff parties and pricey retreats — three of them held at one of the poshest destinations on the East Coast, Nemacolin Woodlands Resort in Pennsylvania.

Attendance was compulsory, and more than 100 IRD employees went to two of the mountain retreats. Among the perks they received at Nemacolin: private rooms; open bars; gala dinner parties; free iPods at one retreat, Nikon Coolpix cameras at another; skeet-shooting outings at the resort’s Field Club; extreme-driving classes at its Jeep Off-Road Driving Academy; and complimentary $50 gift certificates to spend on clothing, jewelry, massages — whatever the employees wanted.

“It was scandalous,” said Andrea Clarke, IRD’s former media and communications officer, who attended the 2008 retreat. “I remember thinking, ‘We’re dealing with issues where people are actually dying overseas, and here we were at this five-star resort and we are living it up.’ There were alarm bells going off every day. It was no way to run a nonprofit.”

In January, USAID suspended IRD from receiving any more federal work, citing other spending that involved “serious misconduct.”

The couple who presided over IRD — Arthur B. Keys, an ordained minister, and his wife, Jasna Basaric-Keys — retired from the nonprofit last summer. Attorneys for the couple have denied any wrongdoing, saying, “Dr. Keys made sure that things were charged correctly.” A new chief executive, Roger Ervin, took over at IRD in December and has forced seven of the nonprofit group’s longtime officers to resign and removed its board members. The nonprofit’s annual revenue from USAID has plummeted from $587 million in 2010 to $78 million last year.

IRD was one of the biggest beneficiaries of U.S.-financed projects in Iraq and Afghanistan designed to rebuild the countries and quell insurgencies after the U.S. invasions. Of the more than $2.4 billion IRD has collected from USAID since 2007, 82 percent went toward projects in the battle zones. “It was heartbreaking,” said one former IRD employee who attended the Nemacolin conference and spoke on the condition of anonymity because of the ongoing investigations. “We had all of these people working on programs in Third World countries, and then there were all of these people trying to get as much money as they could out of the programs.”

For departing USAID administrator, Afghanistan is rarely mentioned

Despite $100 billion and counting in reconstruction funding from the United States since 2001, Afghanistan has rarely rated a mention by Shah, particularly during his last year. With USAID’s Afghanistan projects fraught with graft, questionable spending and corruption by Afghan contractors and some major U.S. partners, the agency has struggled to prove its programs’ success and justify continued U.S. government spending in the war-riven nation. During his five years at USAID, he has made three visits to the region, according to the official agency website.

For years, John Sopko, the top U.S. government official tasked with oversight of spending in Afghanistan, and his staff at the Congress-appointed office of the Special Inspector General for Afghanistan Reconstruction (SIGAR) have attempted to verify USAID’s spending on development programs in that country. He says he has been routinely frustrated by the agency’s inability to specify initiatives that have worked.

“I said, ‘Can you point to any program? Is it better to put money into building schools, or was it better to hire teachers, or was it better to train?’” he says. “The American taxpayer deserves an answer. Congress deserves an answer.”

Last year SIGAR concluded that the success of USAID’s spending on women-related projects in Afghanistan could not be evaluated because the agency was unable to identify which portions of programs specifically related to women.