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Money destined for Cuba democracy programs has been frozen following charges of massive fraud.
Posted on Tue, Jul. 22, 2008
BY FRANCES ROBLES

Congress has put the U.S. Agency for International Development’s $45 million Cuba program’s 2008 funding on hold, following a series of troubling audits and cases of massive fraud, The Miami Herald has learned.

In a quest to get the funding hold lifted, U.S. AID on Friday ordered a bottoms-up review of all its Cuba democracy programs and suspended a Miami anti-Castro exile group that spent at least $11,000 of federal grant money on personal items.

Rep. Howard Berman, D-Calif., ordered a hold on the U.S. AID Cuba program funding last month, in part in response to a $500,000 embezzlement at the Center for a Free Cuba in Washington disclosed earlier this year, federal officials said.

In a memo sent Friday to various members of Congress, Stephen Driesler, AID’s deputy assistant administrator for legislative and public affairs, said the agency recently implemented stricter financial reviews. That new review turned up irregularities at the Grupo de Apoyo a la Democracia (Group in Support of Democracy), a Miami group criticized in the past for using federal funds to send Nintendo games to Cuba.

The executive director of Grupo de Apoyo admitted that an employee used the organization’s credit card for thousands of dollars in personal items and then billed them to the grant aimed at bringing democracy to Cuba, Driesler’s memo said.

The group’s funding has been suspended pending further review, and the money has been reimbursed, Driesler said. In a telephone interview, he declined to say what items were purchased.

” U.S. AID has decided to conduct an immediate review of all the grants to determine where financial vulnerabilities exist and how best to address these vulnerabilities to strengthen the program for future success,” his memo said. “All grants are currently undergoing review, and pending the outcome of these reviews, some grants will be partially suspended.”

Grupo de Apoyo Executive Director Frank Hernández Trujillo did not return several messages seeking comment.

The announcement that U.S. AID would conduct a thorough review of its controversial $45 million program is considered a significant development that illustrates increased congressional oversight over the program.

A report by the Cuban-American National Foundation released in May showed that less than 17 percent of $65 million in federal Cuba aid funds spent during the past 10 years went to ”direct, on-island assistance.” The bulk of the money, the report said, went to academic studies and expenses of exile organizations, mostly in Miami and Washington.

The report echoed findings by The Miami Herald in 2006 and a congressional Government Accountability Office audit that found lax oversight of the programs and came as the Bush administration prepares to dole out a record $45.7 million in Cuba democracy grants.

IMPORTANT SHIFT

In an important shift, the Bush administration this year ordered a major change in the grants, favoring international advocacy groups over Miami exile organizations.

”Yes, we were worried,” Driesler said in an interview. “When we have problems with two institutions within six months out of 11 active grantees, you say, `We hope this is not a pattern, but we better pause and check and make sure.’

“We are focusing on procurements, validating that purchases being billed are being delivered, that the purchase price on the invoice is accurate and that the purchase was legitimate for a government program.”

Frank Calzon, executive director of the Center for a Free Cuba, stressed that the $500,000 fraud at his organization was not discovered by a federal audit but by Calzon himself. He said Berman, who heads the House Foreign Affairs Committee, pushed for the audits because he is against President Bush’s Cuba policy.

POLITICS CHARGED

”I think any additional oversight is fine; I don’t have any problem with that,” Calzon said. “I would say that it is simply motivated by politics. If Mr. Berman were in agreement with the president’s Cuba policy, he would not be on this fishing expedition.”

Berman’s office did not return a call seeking comment.

Critics say AID’s move did not go far enough.

”Those of us who have been following this issue are alarmed about the program,” said Sarah Stephens, whose organization, Democracy in the Americas, lobbies for a change in Cuba policy.

“We are pleased that Congress has started asking questions and, given what we have learned about possible corruption and waste, we believe Congress needs to stop this funding and continue asking the hard questions.”