One of USAID’s largest grantees in the region – the Eurasia Foundation – reopened its Kyiv office Sept. 20 after a month-long shutdown following allegations of financial improprieties.
A source familiar with USAID (United States Agency for International Development) operations in Ukraine, Moldova and Belarus told the Post that employees of the Kyiv Eurasia Foundation office were under U.S. federal investigation for possible fraud. Other sources in the region, including both current and former Eurasia employees, confirmed that Eurasia is the target of an ongoing investigation by USAID’s Office of the Inspector General.
USAID and Eurasia Foundation officials in both Kyiv and Washington refused to confirm or deny that an investigation was ongoing.
The specific nature of the charges against Eurasia and the names involved remain unclear. But past scandals involving U.S. government funds in the Newly Independent States of the former Soviet Union have usually involved the careless handling of U.S. taxpayer dollars by management at those grantee organizations – often by acceptance of bribes or kickbacks from organizations to which they funnel grant money.
It was unclear whether the investigation into Eurasia had anything to do with the Aug. 23 closure of Eurasia’s Kyiv office. But the secrecy with which that closure was carried out fueled suspicion that the two events were linked.
Local media failed to pick up on the closure completely, and even some Eurasia grantees reported that they were not informed. The Post learned of the closure only in early September, when tipped off by a source working for one of those grantees.
The source provided the Post with the following notice, written by the recently appointed director of the Eurasia Foundation’s Kyiv office, Marie Stok, on Aug. 19, and disseminated to select grantees in Belarus, Moldova, and Ukraine.
‘The Eurasia Foundation will be closed until Sept. 20 in connection with technical reorganization of the office … to prepare the computer network for the beginning of fiscal year 2000.’
‘Current grants are under review and all grant payments have been suspended,’ Stok’s notice continued. ‘Most of the foundation’s computer equipment, including the [grants] database will not function during the closure.’
One local grantee, speaking on the halted because of suspected improprieties, none of which have been proven yet.
Eurasia’s explanation for the closure did not gibe completely with that of USAID. In response to a Post question, USAID’s Kyiv office gave the following explanation:
‘The Eurasia Foundation (Kyiv Branch Office) closed its operations temporarily to address internal management issues, as well as a number of recent audit findings. USAID and others were advised in advance of the closure. Questions related to Eurasia’s internal management operations and decisions should be referred directly to them.’
The explanations stopped there, despite the Post’s repeated attempts – over a three-week period – to get a clearer response from State Department higher-ups in Washington and the local offices of both USAID and Eurasia.
Eurasia’s high-powered Washington-based president, Charles William Maynes, has not responded to written questions in twenty days.
According to Stok, who returned from consultations in the United States in late August, Maynes instructed her and local foundation representatives not to comment on current foundation activities, or on the real reasons for its temporary closure.
‘I have given them orders to say nothing,’ confirmed Maynes when contacted by phone. He declined further comment.
The Kyiv office is now telling its grantees that the foundation is open for business, although management has extended some program managers’ ‘vacations’ until Oct. 10.
Asked whether computer repairs are proceeding apace, one employee responded, ‘The repairs are ongoing.’
In another development, Nick Deychakiwsky, who served as the director of the Kyiv office of the Foundation from 1995 until early this summer, left Kyiv for unspecified reasons.
Employees at the Eurasia Foundation’s Kyiv office told the Post that Deychakiwsky was slated to become the director of the newly established Polish-American-Ukrainian Cooperation Initiative (PAUCI), which USAID will underwrite to the tune of $10 million a year.
Meanwhile, Deychakiwsky’s deputy, Natalie Yasko, has left Kyiv and gone to work for PAUCI.
The Post found no evidence that Deychakiwsky’s departure had anything to do with the investigation in Washington, or that he was one of the employees under investigation.
The Kyiv office of the Eurasia Foundation accounts for a substantial percentage of the 3,000 grants awarded by Eurasia in former Soviet Union since the foundation began making grants in 1993.
The foundation declined to provide concrete figures to the Post. But a Nov. 22, 1998, report in the newspaper Ukrainian Weekly quoted Deychakiwsky as saying that the Kyiv office of the foundation processed 683 grants worth $18 million between 1995 and 1998.
In 1998, the Kyiv office spent about $5 million to support over 200 grant applicants, 41 in Belarus, 21 in Moldova, and 172 in Ukraine.
Projects supporting the development of electronic communication, non-governmental organizations, and rule of law received top priority.
It is no secret that USAID’s Office of the Inspector General (OIG) is aware that USAID subcontractors may be soliciting kickbacks from some of the organizations they have been charged to support.
In the agency’s semi-annual report to Congress last fall, agents mentioned Ukraine, reporting that, ‘…the intake procedures utilized by the grantee organizations [USAID subcontractors] to review and evaluate proposals from local NGOs were weak and highly susceptible to abuse.’
A number of privately run USAID-funded foundations were hatched following the collapse of the USSR. Most were run by former government officials with close ties to the foreign-policy establishment, which undertook to support the process of economic and political reform in twelve New Independent States of the former Soviet Union.
In 1992, President Bush endorsed and Congress approved USAID Project 0010, which provided for the incorporation of a ‘privately managed U.S. taxpayer funded non-profit grant-making foundation’ designed to deliver technical and financial assistance to grass roots organizations pushing democratic change. Project 0010 was the Eurasia Foundation.
Bush hand-picked the foundation’s first board, which included beltway insider and Clinton confidant Vernon Jordan, as well as the founder of Stanford University’s International Policy Division, Dr. William Bader, presently the Associate Director of the U.S. Information Agency.
Stewardship over foundation’s operations has always been entrusted to former or furloughed Foreign Service officers who play at politics better than they speak Russian.
They include former Ambassador to Moscow, Thomas Pickering, who presently serves as the U.S. Undersecretary of State and the current president, Maynes, a former State Department official, U.S. Congressman and Foreign Policy magazine editor.
Fueling this summer’s scandal has been both USAID’s and Eurasia’s continued inability to openly address and revise strategies for rending effective assistance to Belarusian individuals, many of whom became eligible for Eurasia grants only after dictatorship was consolidated in 1996.
In an article appearing in the Post on March 11, Belarusian civic leaders explained how USAID and its subcontractors, specifically the Eurasia Foundation and Counterpart, were unwittingly sponsoring dictatorship as well as endangering the liberties of those whom they were trying to assist.
According to them, Belarusian President Alexander Lukashenko was pocketing the difference between official and market rates of currency exchange on grants provided by those organizations via wire transfers to Belarusian banks. Currently, the official bank exchange rate is 290:1, as opposed to the street rate of 530:1.
Asked to comment on the closure of Eurasia’s office from Minsk, one Belarusian grantee sighed and said, ‘Write that the Eurasia Foundation awards in Belarus have turned us all into potential criminals.’
