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Eurasia to start doling out grants in region after two-year suspension

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Dec. 20, 2001, 7 p.m. | Ukraine — by Peter Byrne
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The Eurasia Foundation is again open for business following after an embezzlement scandal rocked foundation in 1999.

The largest U.S.-funded non-governmental organization in the CIS could be doling out money again in Kyiv more than 15 months after grants were discontinued following the financial scandal. Officials in Washington, D.C., are expected to sign off on another installment of the foundation’s federal endowment this month.

Richard Shepard, Eurasia’s regional director in Kyiv, said the five-year grant would allow his office to resume full activity, which was suspended in the fall of 1999 after Eurasia’s principal benefactor, the U.S. Agency for International Development, launched an investigation into financial improprieties.

In its October 2001 report to the U.S. Congress, USAID’s Inspector General said investigators found that the regional grants manager and several Ukrainian employees had embezzled government funds. The report did not include the names of those suspected of wrongdoing.

According to the report, “the wide-ranging scheme employed various illegal tactics to defraud U.S. taxpayers, including the alteration of wire transfer records to divert funds, submission and approval of false grant proposals and requests for approval of payments on expired grants.”

According to the report, $375,888 was embezzled.

The Eurasia Foundation was established in 1993 to deliver technical and financial assistance to grassroots organizations pushing for democratic change in the former Soviet Union.

It began with a $75 million grant from USAID. Since then, the foundation has issued more than 5,000 grants totaling more than $104 million to recipients throughout the CIS. By 1999, up to a third of the grants were administered from Eurasia’s Kyiv office, which promoted the development of a market economy and civil society in Ukraine, Belarus and Moldova.

Nicholas Deychakiwsky, who directed Eurasia’s Kyiv office between 1995 and 1999, told the Post on Dec. 18 that he had not been in touch with Eurasia since leaving Kyiv in the summer of 1999. He said he left the agency for personal reasons.

“I’d rather not comment on the affair,” Deychakiwsky said.

Deychakiwsky is now a program officer for the Prague-based Charles Stewart Mott Foundation, which aims to strengthen non-governmental organizations throughout Central Europe, Eastern Europe and Russia.

Since 1996, the Mott Foundation has sent more than $1 million to Eurasia earmarked for projects in Ukraine. Most of the money has been spent on NGO resource centers in Kyiv, Donetsk, Odessa, Kirovohrad, Lviv and Chernivtsi.

Officials at both the Eurasia Foundation and USAID declined to explain why the investigation into the Kyiv office has proceeded so slowly.

In April, USAID’s Inspector General reported on preliminary audits of Eurasia’s headquarters and of four field offices, but did not mention an audit or investigation into the Ukraine office. It said only that audits had found no evidence of fraud at Eurasia regional offices in Moscow, Vladivostok, Tbilisi and Almaty.

The 96-page report also failed to mention that Eurasia has a large regional office in Kyiv, which administers close to one-third of all Eurasia Foundation grants.

Eurasia President Charles Williams Maynes told the Post on Dec. 17 that he could not comment on the status of 11 employees dismissed as a result of the investigation.

“This matter is currently in the Ukrainian court system and we are not at liberty to comment further,” Maynes said.

The public relations office of the Kyiv-based USAID mission also declined to respond to numerous requests for comment.

Despite a rash of troubles, Eurasia’s Western NIS Regional Office has continued to operate since 1999, disbursing $2.8 million in loans to 49 small businesses in partnership with VABank and providing logistical and administrative support to the Economic Education and Research Consortium at Kyiv-Mohyla Academy.

Shepard said Eurasia could resume grant-making activities only after USAID approved a fresh five-year core grant.

“That could happen, today, tomorrow or sometime in the middle of January,” Shepard said. He estimated that the Kyiv office’s grant budget would exceed $6 million annually.

Shepard said grants would be awarded to indigenous nonprofit organizations that deal with media development, public policy and private enterprise development.
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