America Recovery Reinvestment Act, NOT SO Much

When one visits the government website www.recovery.gov, these description reads that the board is a non-partisan, non-political agency and then in bold letter in a heading it also reads ‘The Recovery Accountability and Transparency Board’.

Additionally the site mission statement reads: “To promote accountability by coordinating and conducting oversight of Recovery funds to prevent fraud, waste, and abuse and to foster transparency on Recovery spending by providing the public with accurate, user-friendly information.”

Sheesh note the one particular case below and then ask yourself if there is a violation.

From Watchdog.org:

Company that got millions from U.S. taxpayers now profits Chinese owners

The good news is electric car battery maker A123 Systems is finally on track to turn a profit.

The bad news is taxpayers don’t figure to see any of the $133 million the federal government spent and the estimated $141 million in tax credits and subsidies secured from Michigan to help the company take off in 2009, only to see A123 Systems crash, declare bankruptcy in 2012 and then get purchased by a privately held Chinese conglomerate.

“In the case of A123, they created some jobs and a year or two later those jobs were gone, so taxpayers weren’t getting that money back,” said Jarret Skorup, a policy analyst at Michigan’s Mackinac Center, a free-market think tank .

Earlier this month, CEO Jason Forcier announced that A123 Systems’ parent company, the China-based Wanxiang Group, will spend $200 million to double the capacity of three lithium-ion battery plants, including two in suburban Detroit.

Forcier told Crain’s Detroit Business that A123 Systems is expected to generate $300 million in revenue this year and plans to double that amount by 2018. The company, Forcier said, will turn a profit for the first time in its history in 2015.

“The strength of A123 has never been greater and we are honored to be expanding our existing customer relationships and establishing new ones at the same time,” Forcier said in a company news release.

It would mark a dramatic turnaround for the company that was on the verge of collapse when Wanxiang bought it a little more than two years ago at a stripped-down price of $256.6 million. 

But finding out if taxpayers will ever see any of their money back is another matter.

Watchdog.org sent an email and left two voicemail messages with A123 Systems, asking whether any refunds are coming or if — under the terms of the bankruptcy — Wanxiang is under no financial obligation to do so.

The one-sentence response from Paulette Spagnuolo, A123’s marketing and communications manager: “A123 continues to meet and exceed all of the terms of the state and federal grants including all job creation, repayment and investment requirements.”

Spagnuolo did not respond to inquiries asking her to elaborate.

Skorup says the money is gone for good.

“There are a lot of local and state rebates and they are largely upfront costs, so yes, taxpayers are sunk on those,” Skorup told Watchdog.org in a telephone interview. “They’re not going to be getting money back from them … Michigan doesn’t require (A123 Systems) to pay them back anyway.”

How much money?

On the federal level, A123 Systems was originally slated to receive $249 million in grants from the U.S. Department of Energy in 2009 to build production facilities in the towns of Romulus and Livonia, Michigan — just $7.6 million less than Wanxiang eventually bought the entire company for four years later.

But A123 Systems ran into trouble early on. After some of its batteries were involved in a recall for the company’s biggest customer, the electric car company Fisker Automotive, the company’s federal grant was cut off after A123 received $133 million. 

Figuring out how much Michigan passed out has been more difficult.

The Detroit Free Press and the Mackinac Center have been rebuffed in attempts to see how much of an investment the state made in A123 Systems because the Michigan Economic Development Corporation will not disclose specifics.

Skorup estimates Michigan approved A123 Systems for $100 million in a tax credit program and another $41 million in subsidies.

“How much they actually cashed in those we don’t know,” Skorup said. “We’ve tried to find out, but the state won’t give it to us … they say it’s a private contract.”

The federal money was part of the stimulus package and a green-tech initiative the Obama administration touted would spur economic success.

A123 Systems was one of a number of Michigan battery companies that received a surge of tax credits from the state in 2009, but the incentives did not spur the jobs and dollars that were promised.

Detroit Free Press estimated $861 million in Obama administration grants were awarded in the fledgling Michigan battery industry and another $543 million in state tax credits were awarded during the administration of then-Gov. Jennifer Granholm, a Democrat.

Most of the Michigan business tax credit program was eliminated by current Gov. Rick Snyder, a Republican. However, companies that had already secured the tax incentives were allowed to keep them.

“The general lesson for policy makers is that they make very poor venture capitalists because they’re not spending their own money,” said Skorup. “They’re spending other people’s money and those politicians weren’t putting their own stock portfolios into A123 Systems. They were putting taxpayer money into them.

“And the lesson for taxpayers should be, when politicians are making these claims about job projections they should be extremely skeptical. In Michigan, almost none of those — we’ve done multiple studies, other news organizations have done multiple studies — reach the actual projections that they promise.”

“Just because the jobs haven’t happened ‘yet,’ it doesn’t mean that cracking the code to vehicle batteries was the wrong strategy,” Granholm told the Free Press in March 2014.

President Obama appeared by remote broadcast for the grand opening of the A123 Systems Livonia plant in the fall of 2010, an event hosted by Granholm.

“Thanks to the Recovery Act, you guys are the first American factory to start high-volume production of advanced vehicle batteries,” Obama said at the time.

Skorup told Watchdog.org  the video of the event was taken down by the Michigan Economic Development Corporation, but the Mackinac Center, a sharp critic of the battery plan from the start, retained a copy of it:

 

What has Stopped Detention and Deportation

Barack Obama has selectively issued waivers on countless laws, one with real consequences is deportations. Then in August of 2013, the federal court, noted the 9th circuit ruled in a case Rodrigues v. Robbins that long-term detention without due process required immediate bond hearings. As a result, detention and deportations laws and procedures have been turned upside down.

Enforcement? What Enforcement?

by Mark Krikorian
Three recent items highlight the continuing collapse of interior immigration enforcement under Obama.
The first is information pried out of DHS by Senators Grassley and Sessions: One hundred twenty-one convicted criminals who faced deportation orders between 2010 and 2014 were never removed from the country and now face murder charges, according to Immigration and Customs Enforcement (ICE). Just to be clear, these were convicted criminals, in ICE custody, who had been ordered deported but were instead released back into U.S. communities, and then went on to murder Americans. Most were released simply because the administration didn’t want to detain them. Only for two dozen does the administration have any excuse at all, saying that they had to be released because their home countries wouldn’t take them back. And even that’s no excuse, for two reasons: the Supreme Court decision Obama’s people point to (Zadvydas v. Davis) limiting open-ended detention beyond six months of any criminal aliens whose countries won’t take them back has significant wiggle room in it – wiggle room the administration refuses, in this one and only instance, to take advantage of.
And second, the law requires the State Department to impose visa sanctions on countries that won’t take their own citizens back, a requirement Secretaries Clinton and Kerry have simply ignored. Some of the blood of these 121 murdered Americans (whose names we don’t know, presumably because ICE is protecting their murders’ privacy rights) is on the hands of this administration, which chose to release the convicted criminal aliens back into the United States rather than keep them in detention.
If that’s not depressing enough, Maria Sachetti at the Boston Globe has done yeoman’s work in uncovering hundreds of immigrant sex criminals whom ICE let go because of the same Supreme Court ruling – without even making sure they were registered with local authorities as sex offenders. Here’s what happened in several instances after their release by ICE: Immigration officials tried to deport Luis-Leyva Vargas, 47, to Cuba after he served three years in a Florida prison for unlawful sex with a teen. In 2008, officials released him. Two years later, he kidnapped an 18-year-old in Rockingham County, Va., at knifepoint and raped her. Now he is serving a 55-year prison sentence. Felix Rodriguez, a 67-year-old sex offender convicted of raping children as young as 4 in the 1990s, was freed in 2009, also because Cuba would not take him back. Months later, he fatally shot his girlfriend in Kansas City. He pleaded guilty and is serving 10 years in a Missouri prison. Andrew Rui Stanley, convicted in 2000 of multiple counts of sodomizing a child when Stanley was 14, was released in 2009 after Brazil failed to provide a passport needed to send him home. For the next two years, he viciously abused three children in St. Louis and now, at age 31, will be in prison for the rest of his life. None of these sickening crimes should have been allowed to occur. An administration that took public safety seriously would find ways to detain criminals until they could be deported, and apply whatever pressure was needed to get their native countries to comply. But this is not that administration. And finally, on a less grisly note, my colleague Jessica Vaughan has uncovered data showing a collapse in worksite enforcement.
In effect, as the Washington Times headline put it, “Obama gives free pass to businesses that hire illegals.” From 2013 to 2015, the number of ICE audits of employer records (to check the work eligibility of employees) dropped 86 percent; arrests of crooked employers dropped 73 percent; and fines collected dropped 51 percent. It seems that once it became clear that Sen. Rubio’s amnesty/immigration-surge bill was not going to reach his desk, Obama called a halt to the (limited) show of worksite enforcement he had ordered up to persuade skeptical Republican House members that he could be trusted to enforce the provisions of Rubio’s amnesty/immigration-surge bill. The fact that he cut back so drastically on enforcement when it was no longer politically useful is proof that such skepticism was warranted.
And finally, as evidence of this administration’s true priorities, USCIS is broadcasting “DACA Renewal Tips” out of a concern that some recipients of Obama’s lawless version of the DREAM Act amnesty may not renew their two-year work permits (presumably to avoid paying the fee, since they that there won’t be any enforcement consequences from reverting to illegal status).

Jeh Johnson Fighting Deposition

In Tampa back in 2012, there was a scandal brewing that led to an FBI investigation, some compromising emails, generals and some women. In the end, James Clapper called General Petraeus and told him to resign. But the story does not end there.

Another lawsuit is in the pipeline.

Feds fight Jeh Johnson testimony in Petraeus-related lawsuit

From Politico:

The Justice Department is fighting an effort to force Homeland Security Secretary Jeh Johnson to give a deposition in a privacy invasion lawsuit a Florida woman has filed over the federal government’s handling of the investigation into former CIA Director David Petraeus.

Lawyers for Jill Kelley subpoenaed Johnson to testify about his knowledge of a complex inquiry that unfolded after Kelley complained to the FBI in 2012 that someone was sending derogatory statements and threats about her to various of her associates, including Marine Gen. John Allen and Petraeus, and seemed aware of private details about their schedules.

The probe revealed an extramarital relationship between Petraeus and his biographer, Paula Broadwell. That discovery led to Petraeus’s resignation shortly after the 2012 elections. However, in a lawsuit filed in 2013 Kelley alleged that the FBI and the Defense Department leaked personal information about her to the media, including suggestions that she had a sexual relationship with Allen. Kelley has adamantly denied any impropriety.

Johnson was the Defense Department’s general counsel at the time and played a key role in managing the agency’s response. But in a court filing Thursday evening (posted here), government lawyers argue that as a busy cabinet member Johnson should simply be required to answer written questions in the lawsuit and not be subjected to the videotaped depositions most witnesses face.

“Presently, as the head of the Department of Homeland Security, the third largest cabinet-level agency, Secretary Johnson oversees more than 240,000 federal employees. He holds ultimate responsibility for DHS’s mission, which includes preventing terrorism and enhancing national security; managing the borders of the United States; administering immigration laws; securing cyberspace; and ensuring disaster resilience,” the Justice Department argues. “Owing to these responsibilities and the incredible demands they impose on the Secretary’s time and resources, defendants informed plaintiffs that they object to Secretary Johnson’s deposition absent a clear and convincing showing that he possesses unique, non-privileged, relevant information that cannot be obtained through other means.”

The court filing also reveals that lawyers for Kelley have already obtained records of at least one journalist’s communications with Johnson about the Petraeus investigation. In an email sent to U.S. District Court Judge Amy Berman Jackson and attached to the filing, Kelley lawyer Alan Raul said he wants to question Johnson about a Kelley-related email Daily Beast reporter Dan Klaidman sent to Johnson on his personal gmail account in November 2012.

Raul also wants to ask about “Mr. Johnson’s responses and/or prior communications to or from Mr. Klaidman, who addressed him as ‘Jeh’ and to whom it appears he subsequently granted an ‘exclusive’ story about his nomination as DHS Secretary.”

Klaidman—now an editor at Yahoo News—declined to comment.

Kelley’s lawyers also want to question Johnson about the identity of anonymous sources described as “senior defense officials” or “senior military officials” who discussed the investigation with journalists at around the same time. Raul pointed to articles from the Associated Press, USA Today and Washington Post as ones of particular focus. Kelley’s team is also asking for information on Johnson’s contact with Tampa Tribune reporter Howard Altman and for information on who at the Department of Defense may have spoken with one or more reporters for ABC News about Kelley.

It’s possible the journalists themselves could face demands to testify in the case, but that does not appear to have happened yet.

The Justice Department filing does disclose that the government has agreed to make three former senior officials available for depositions in the suit: former Defense Secretary Leon Panetta for a two-hour session, Panetta’s former chief of staff Jeremy Bash for a four-hour session and former Defense Department public affairs chief George Little for a seven-hour session.

Kelley’s lawyers face an uphill battle in trying to force a sitting Cabinet member like Johnson into a deposition. Last year, another federal judge in Washington ordered Agriculture Secretary Tom Vilsack to appear at a deposition in lawsuit brought by fired Ag Department employee Shirley Sherrod, but an appeals court issued an unusual order blocking the deposition.

The government also has one more argument in the current dispute: Johnson is a lawyer, so at least some of his actions on the Petraeus/Kelley matter may have been covered by attorney-client privilege or protection for attorney “work product.”

Johnson was originally subpoenaed to appear for his deposition on Friday, but the session has been postponed until Jackson rules on the dispute.

In April, Petraeus pleaded guilty to a change of mishandling classified information by sharing classified briefing books with Broadwell and maintaining classified information at his home after he was required to turn it in. He was sentenced to two years probation and a $100,000 fine.

The FBI also investigated Broadwell in connection with the episode. No charges have been filed. The status of that inquiry is unclear.

 

State Dept. Breaking Laws for the Sake of Iran

At least on 2 tracks the State Department is breaking the law when it comes to Iran.

Sanctions

The State Department (State) is three years late in slapping certain sanctions on Iran, prompting new allegations that the Barack Obama administration is deliberately skirting US law in its quest for a nuclear deal.

Under the Iran, North Korea and Syria Nonproliferation Act (INKSNA), State is supposed to inform Congress every six months of attempts to help the three countries obtain weapons of mass destruction and certain missile technology. The law requires the agency to sanction violators or justify its decision not to.

But the department has fallen way behind in recent years, according to a government watchdog report obtained by Al-Monitor. Delays have kept on getting longer, with Congress receiving an update on violations committed in 2011 only in December 2014.

“Our analysis demonstrates that State is falling further and further behind in providing the reports and is now juggling a backlog of draft reports at different stages of that process,” the US Government Accountability Office (GAO) report concludes. “The imposition of sanctions no sooner than 3 or more years after the transfer occurred may diminish the credibility of the threatened sanction.”

The State Department acknowledges the delays but faults a complex web of agency reviews to make sure allegations of violations are substantiated. Republicans, however, are jumping on the report as further evidence of the Obama administration bending over backwards to placate Tehran.

“How many overtures of good will are we sending to these guys? How many times do we have to bend over to look like we’re good people?” Rep. Ileana Ros-Lehtinen, R-Fla., told Al-Monitor ahead of her Middle East subcommittee’s hearing on the issue the afternoon of June 17. “It’s unbelievable. Iran keeps demanding more of us, and we keep on giving them more kind signals.”

The GAO report is but the latest example of questionable sanctions enforcement that has raised congressional ire in recent months.

Earlier this year, according to Israel, the United States allowed Iran to purchase used airplanes for an airline that the United States has blacklisted for its ties to Hezbollah and the Iranian National Guard. More details here from al Monitor.


Human Rights Report

Via Free Beacon: Sen. Ted Cruz, R-Texas, is seeking to fine the State Department for illegally withholding the release of a key report on Iranian human rights abuses that was supposed to be released earlier this year, but was withheld, according to sources, in order to appease Iran as negotiations over its nuclear program approach a June 30 deadline.

The Obama administration was legally obligated to release a full report outlining the state of Iranian human rights by Feb. 25 but has so far declined to do so.

Cruz and other senators petitioned the State Department in May to comply with federal law compelling the report’s public release.

“That report was due by law on February 25,” Cruz told the Washington Free Beacon in an interview. “The Obama State Department simply ignored the law. They refused to produce the report. Months have gone by and they continue to refuse to produce the report.”

Angered by this delay, Cruz is gearing up to file legislation this week that would fine the State Department 5 percent of its budget for every 30 days it postpones releasing the report, according to a copy of the bill viewed by the Free Beacon.

“It is a penalty for willfully violating federal law,” Cruz explained. “This is also a policy decision that is profoundly counterproductive.”

“This simply puts a financial bite into the obligation because the Obama administration has demonstrated a willingness over and over again to violate federal law,” Cruz added.

Iran has long been a leading violator of human rights, carrying out hundreds of state-sanctioned executions and abusing the human rights of its citizens. Iran also continues to imprison several American citizens who human rights advocates report are being abused.

Cruz said the report is likely being delayed in order to avoid upsetting the Iranians and potentially harming ongoing nuclear discussion.

“It appears that both President Obama and Secretary of State Kerry are trying to sweep under the rug Iran’s horrific human rights record because, presumably, acknowledging that fact would be inconvenient” for the ongoing diplomacy with Iran, Cruz said.

The policy, he added, appears to be “surrender everything to the Iranian mullahs in a hope they will accede to a [nuclear deal that only accelerates their acquiring nuclear weapons.”

The lawmaker and current presidential candidate went on to accuse the administration of ignoring Iranian human rights abuses.

“This administration has consistently refused to address the human rights violations” committed by Iran, including the imprisonment of Americans such as Saeed Abedini and Washington Post reporter Jason Rezaian, Cruz said.

“The Obama administration seems more focused on swilling Chardonnay with Iranian despots then on securing the release of American citizens wrongly imprisoned,” he said.

In a June 9 letter to Cruz, the State Department claimed the report’s release had been delayed due to Kerry’s intense travel schedule and need to present the report in person.

“The secretary’s participation in the report rollout, even if it must be delayed by his travel, elevates the report,” the State Department said, according to a copy of the letter. “The secretary has needed to travel abroad for extended periods, often on short notice, during the past three months to address a variety of pressing foreign policy concerns.”

“We intend to release the report as soon as possible and will keep you informed,” the letter states.

Cruz criticized the State Department’s response.

“It has been 115 days since the expiration of the statutory deadline” to release the report, he said. “Secretary Kerry has not been on the road continuously for 115 days.”

Kerry, though recently injured and still recovering, phoned in via video link to the State Department’s daily briefing on Tuesday. He did not use to the opportunity to present the Iran report, sources pointed out.

A State Department official would not comment on record about when the report would finally be released.

 

Fleecing of America in Afghanistan Schools

Probes started into potential U.S. spending on “ghost schools” in Afghanistan

Officials in Washington and Kabul are examining whether U.S. funds were spent for schooling in Afghanistan that never occurred

By: The Center for Public Integrity

Nils Kauffman, who served as an education officer for the U.S. Agency for International Development in Afghanistan, said he noticed irregularities at a vocational training institute the agency was funding during his visits to its campus in downtown Kabul in 2012 and 2013. He recalls being surprised not to see any students in the institute’s laboratories, where volt meters and scientific equipment remained in their original packaging.

Though Kauffman spied students elsewhere, he said he could never get a reliable account of how many were actually enrolled at the school. He also could not verify that the institute had addressed what a 2011 external audit called a host of “deviations” from sound practices, including a lack of accounting software, a cash-based payment system, and $118,000 in spending by the school over a five month period on weapons, international travel, and salary supplements.

Kauffman didn’t have the authority to demand a new, broader audit of the institute, but he reported his concerns to his superiors at USAID. They never acted, he said, and he recalls an official in the agency’s Office of Afghanistan-Pakistan Affairs expressing worry that canceling the institute’s funding would create what the official called “bad press.”

“Every time something came up, they jumped to keep this guy [the institute’s leader] happy, despite the problems, despite the lack of financial transparency,” said Kauffman, who is now a private development consultant based in the San Francisco Bay Area. In fact, USAID continued giving the institute funds, totaling at least $12.3 million through last Sunday, according to USAID spokesman Sam Ostrander.

Kauffman’s experience is only a small part of the controversy suddenly surrounding the long-running U.S. effort to promote the education and training of the largely illiterate population in Afghanistan. More than three-quarters of a billion dollars in U.S. funds have been used to finance the effort, and USAID has repeatedly depicted it as one of its signal accomplishments there.

Last month, Afghanistan’s newly-appointed education minister raised questions about the veracity of that claim when he told his country’s parliament that some aid funds had flowed to so-called “ghost schools, which are only on paper,” according to several Afghan media accounts of the May 27 session. The minister, Assadullah Hanif Balkhi, said that officials in the previous government — in power from 2004 to 2014 — lied about the number of schools to obtain more foreign funds.

“It is a fact that there are no schools in some parts of the country, but all the expenses — including teachers’ salaries — are being paid, and now we will bring reforms to this waste,” Balkhi told the parliament, according to Tolonews, a publisher and broadcaster based in Kabul.

Asked to provide more detail, a spokesman for the ministry, Kabir Haqmal, later told NBC News — the Center for Public Integrity’s publication partner for this article — that the matter is still under investigation. In some cases, he said, schools may have been closed due to fighting while “permanent absentees” were kept on the books for years, following a requirement of Afghan law.

“There could be schools that do not exist, but we [are] assessing all our records and so far have not found any such instances,” Haqmal said. “That does not mean there are no ghost schools, but we just do not have that information yet. We are taking this very seriously and will share our finding with public very soon.”

The new minister’s claims have provoked the top federal auditor for U.S. reconstruction efforts in Afghanistan, John F. Sopko, to express concern that “U.S. and other donors may have paid for schools that students do not attend and for the salaries of teachers who do not teach.”

In a June 11 letter to acting USAID administrator Alfonso E. Lenhardt, released by Sopko on June 18, Sopko said the allegations about “ghost schools, ghost students, and ghost teachers call for immediate attention,” and asked the agency to explain within two weeks what it is doing to investigate the reliability of its data and the potential misuse of its funds.

Accurate data, Sopko said, “is essential for gauging progress in USAID’s education programs and for making future funding decisions.”

USAID spokesman Ostrander, in an emailed response to questions, said the agency will provide a detailed reply to Sopko by the June 30 deadline. According to a written statement Ostrander provided to the Center for Public Integrity from Larry Sampler, assistant to the USAID administrator for Afghanistan and Pakistan, the agency has already asked the Afghan Education Ministry for more information. USAID currently has a full-time employee assigned to help the ministry improve the reliability of its data, according to Sampler’s statement.

Like all the agency’s projects in Afghanistan, “USAID-implemented education projects adhere to the Agency’s strict practices for monitoring their performance and success,” Sampler wrote.

USAID has repeatedly boasted about its role in raising enrollment rates in Afghanistan, citing Afghanistan Education Ministry data. More than eight million Afghan students were enrolled in 2013, compared to just 900,000 in 2002, according to data that Sopko cited in his most recent quarterly report. He said USAID had acknowledged these figures could not be independently verified, however.

At the Afghanistan Technical Vocational Institute, where Kauffman said he observed irregularities, 4,529 students have so far graduated “with the support of USAID and other sponsors,” Ostrander said. But the institute’s founder and director, Sardar Roshan, reached by cell phone in Kabul, told the Center for Public Integrity that the total number was “close to 7,000.” Ostrander told the Center for Public Integrity he could not explain the discrepancy.

Roshan’s tight connections to Washington

Roshan served as Afghanistan’s ambassador to Pakistan from 1992 to 1994, as the country’s minister of education from 1990 to 1992, and as a “rebel commander” liaising between “anticommunist forces and the U.S. government” in the National Islamic Front of Afghanistan during the 1980’s, according to his Linkedin profile.

Roshan denies that the institute has ever misreported its student population, saying the “ghost schools” are in rural provinces, but that his institute in downtown Kabul “could not fake students even if we wanted to.” He says he is highly proud of the institute. “When I’m in the international airport, when I walk into a bank in Kabul, when I look at the provincial governments, I see my graduates in every corner,” he said.

Rajiv Shah, the administrator of USAID from 2010 until February, singled the vocational institute out for special praise in a July 2013 speech at the U.S. Institute of Peace in Washington. “Today, we have more than 8 million children in schools with over 30 percent of who are girls. These investments have resulted in over 30,000 young women finishing secondary school and more than 40,000 young women seeking to earn university degrees today,” Shah said. “I’ve had the chance to meet some of these young women on visits to places like the Afghan Vocational Training Institute, watching them come in from around the country to develop marketable skills so they can triple or quadruple their earning potential upon graduation.”

But Kauffman, the former USAID education officer, was not alone in in voicing concerns about the institute’s achievements. In early 2012 – more than a year before Shah’s speech — USAID’s inspector general had reported there was “little evidence” that the agency’s support of the school, known as the Afghanistan Technical Vocational Institute, had strengthened its “overall technical capacity” or empowered Afghan youth. It said the project that included the institute “lacked clearly defined goals, objectives, and priorities.”

The institute began receiving USAID funds in 2007, according to Roshan and Ostrander. The funds were initially for scholarships, and were paid under USAID’s Afghanistan capacity-building program, Roshan said. But the financing was switched to the agency’s education department in 2010, under a subcontract with Education Development Center, Inc., a Massachusetts-based non-profit organization. Students were supposed to be trained in business management, construction, horticulture, information and communication technology, and automotive repair, according to the USAID webpage about the institute.

After the 2011 audit by accounting firm Grant Thornton’s Afghanistan office, USAID staff twice came to inspect the institute. But Kauffman said the institute obstructed efforts by USAID teams to dig deeper into its records, a claim supported by a copy he provided of USAID’s internal report about its site visits in July and August 2011.

The report states that the inspectors were “unable to meet all technical staff, check the systems, or gather sample documentation,” partly because the staff “were instructed by their headquarters not to disclose any documents” to them. It complained that Roshan and his ex-finance officer only met with them for 50 minutes, and said that as a result they were unable to learn whether the Institute had addressed key concerns the audit raised, including many involving its handling and disbursement of donor funds.

One person was, inappropriately, still responsible for handling petty cash, writing checks, and entering financial data into the computer, the report said.  And the “most important gap” identified by the auditors — the fact that the institute paid its employees’ salaries in cash rather than traceable bank transfers — was still a problem, the inspectors wrote. Multiple reports by Sopko have described this as a frequent practice in Afghanistan.

Roshan denied making any attempt to obstruct the inspection. He told the Center for Public Integrity that many of these problems were resolved by the institute directly after the audit appeared, though he acknowledged that the institute had continued to use a cash-based payment system until 2013. Ostrander similarly said the institute had made progress since undergoing a separate assessment of its business model.

Roshan sent the Center for Public Integrity a lengthy rebuttal to the Grant Thornton audit, accompanied by documents including templates for payment vouchers, time sheets, a 19-page accounting manual, and its personnel policy. He defended the spending on weapons, saying the institute needed shotguns for the protection of its staff and students. The international travel was for his own visits to the U.S., he said. And the salary supplements were “necessary,” he said, to keep American teachers at the institute.

“I admit shortfalls in the finance/procurement systems,” Roshan told the Center for Public Integrity in an emailed statement, but some were “nothing but symptoms of failure of the counterpart/donor to deliver technical and financial assistance” in a timely and consistent manner.

Roshan said further that the issues raised in the audit stemmed from friction between Education Development Center, Inc. and USAID. Indeed, the agency’s 2012 inspector general report said the two entities had disagreed about “key elements of the design” of the larger educational project that Washington was financing, and said that this had hampered progress. “We were just caught in the tug of war,” Roshan said.

Alison Cohen, a spokeswoman for Education Development Center, Inc., said in an emailed statement that her firm “did as it was required,” and USAID found no mismanagement of its funds “on the part of EDC.” She said the firm is “fully committed to achieving the highest level of compliance” with its contracts, a quality recognized by “dozens of federal agencies, state and local governments, and private organizations” that have given it funds.

Finding various ways to keep the funds flowing

A few months after the USAID site visits, the agency stopped funding the institute through Education Development Center and found what Kauffman described as an alternative path: It modified one of its ongoing funding agreements with the United Nations Human Settlements Programme (UN Habitat) to add continuing technical and financial support for the institute.

But UN Habitat leaders raised their own concerns about the institute’s accounting and spending practices, informing USAID staff at an April 2012 meeting that Roshan’s salary and benefits package was $17,600 per month, according to a memo five months later from the director of USAID’s Office of Social Sector Development, Carol Horning, to the agency’s Afghanistan mission director. Annual per capita gross national income in Afghanistan was $1,940 that year, according to World Bank data.

Roshan denied he was paid $17,600 but declined to say what his salary was at the time. He said he had salaries that “were not on an Afghanistan scale” because he was an American citizen, and lived in Maryland for periods during the early 2010s. “I singlehandedly created the institute from scratch,” he said. “I was compensated less than half of what I should have received.” Roshan stepped down as the CEO this year, according to both Roshan and Ostrander, but Roshan said he remains the president until its board selects a new one.

The UN Habitat funding method worked for most of 2012, but on November 19, 2012, as it was drawing to a close, Roshan wrote directly to Shah, suggesting that “urgent funding be continued through an appropriate USAID mechanism for a period of time to avoid an abrupt closure” of the institute, according to an email that Roshan provided the Center for Public Integrity.

Shah responded less than four hours later, according to a second email that Roshan provided the Center for Public Integrity, thanking Roshan for his note and sending a copy to USAID’s assistant administrator for Afghanistan and Pakistan “so we could explore this issue and get back to you.” McKenzie Stough, a spokesperson at Georgetown University, where Shah is now a distinguished fellow at the School of Foreign Service, said that she had conveyed a request for comment to Shah’s personal assistant, but no response was forthcoming.

Eleven days after Roshan’s email exchange with Shah, Afghanistan’s then-education minister Farooq Wardak signed a letter to U.S. Ambassador James B. Cunningham — identical in wording to the email that Roshan had sent Shah.

USAID’s Afghanistan mission director at the time, Ken Yamashita, met with Roshan on December 10, 2012, and proposed that USAID continue supporting the institute but disburse the funds as a part of an overall USAID financial support to the Education Ministry, according to an email from USAID official Kerry Pelzman to several colleagues, which was obtained by the Center for Public Integrity. Yamashita, who is now a regional director at the Peace Corps, told the Center for Public Integrity by email that he did not dispute this account.

Twelve days later, Yamashita met with Wardak to seal the deal, according to a December 29, 2012, letter from him to Wardak. In it, Yamashita thanked him for his “receptivity to inclusion of support for ATVI as part of USAID’s on-budget support to the Ministry of Education,” and promised to let Cunningham know that Wardak’s November letter had “borne fruit.” Cunningham, who is now a senior fellow at the Atlantic Council, did not respond to phoned and emailed requests for comment.

Yamashita’s optimism was premature. Funding for the institute did not end up going through the Education Ministry, according to Kauffman, who said he heard the USAID finance department had objected to providing such general support. But in June 2013, USAID began providing another million dollars in direct funding for the institute, good for the next two years, according to the statement it posted on the Web. That funding expired on June 14, 2015.

Ostrander said the direct grant would not be renewed, but said USAID expects to start funding the institute again soon, this time through The Asia Foundation. The funding is meant to improve administrative functions and — subject to compliance with what Ostrander described as “certain requirements and standards” — cover its operating expenses. Ostrander said he could not immediately tell the Center for Public Integrity how much funding would be transmitted to the institute under the new agreement.

Roshan said however that he expects The Asia Foundation funding to net his institute $300,000 over the next six months. Two spokeswomen for The Asia Foundation did not reply to phoned and emailed requests for comment.

There’s “no way” the institute could continue to exist without international support, Kauffman said.