Monday, July 27, 2008

USAID Suspends Iraqi Program Following Audit

Taking a rare course of action, USAID “has suspended a $644 million Iraq jobs program after two outside reviews raised concerns about misspending, including an inspector general’s audit that found evidence of phantom jobs and money siphoned to insurgents”. The Community Stabilization Program is an employment project implemented by Virginia based International Relief and Development that was intended to stem the rise of insurgents. A series of audits found that millions of dollars worth of funds were siphoned off through overbilling, phantom workers, and other forms of fraud. The audits found that the irregularities largely benefitted “insurgents, as well as to corrupt community leaders and (program) representatives”. Following the reports, USAID suspended payments on July 4th as it continues to investigate fraud that may reach tens of millions of dollars.

IRS Releases Education Materials on Governance

The IRS has released a number of training materials on governance matters that should be of interest to charities.  They are intended to serve as a resource for nonprofits interested in implementing good governance practices and fulfilling their legal obligations. The release of the education materials comes on the heels of IRS efforts to promote good-governance by charities.

FBI: Charities used to launder money

The Asbury Park Press reports on charges of money laundering and bribery involving religious leaders and public officials in New York and New Jersey:

“Court papers indicate that five rabbis and several other men were laundering money for an FBI cooperating witness who told them he needed to hide profits of his counterfeit handbag company, which produced knock-off versions of Prada, Gucci and Canali bags, which the witness said were sold for hundreds of dollars.”

According to investigators, the charities received money and sent it to Israel, at which point it was made available at “cash houses” in Brooklyn.  The rabbis reportedly took a ten percent cut in the funds laundered.

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