USAID OIG is sharing our recent Management Advisory concerning an ongoing lack of information and insight into the U.S. African Development Foundation's (USADF) operations and management of funds. If USADF does not respond to our information requests, we cannot complete our mandatory assessments and other planned oversight, including the verification of USADF’s physical assets and over $9 million in accounts overseas. The lack of timely information from USADF obstructs our oversight and exposes taxpayer dollars and sensitive U.S. government information to significant and ongoing risks.

In fiscal year 2024, USAID awarded about $36 million for multi-purpose cash assistance (MPCA) activities in West Bank and Gaza. Although providing cash can be flexible and more cost effective than providing in-kind commodities, it is also susceptible to fraud and diversion. Our recent audit found that USAID did not develop a fraud risk assessment or fraud risk profile for its humanitarian response in West Bank and Gaza. Without these, USAID was unable to demonstrate how it identified or addressed key risks to MPCA, such as cash liquidity challenges, vendor fees, price gouging, and diversion to unauthorized recipients and terrorist groups. This is especially critical in Gaza—a high-risk area for diversion and misuse of U.S. foreign assistance. Addressing this weakness presents an opportunity for policymakers to proactively design and implement targeted controls and safeguard critical resources in the future to reach those in need.

USAID’s partner vetting was intended to help the Agency manage tradeoffs associated with delivering lifesaving aid in a timely manner, while providing assurance that such aid did not support entities associated with terrorism. However, our recent audit highlights notable exemptions to the Agency's vetting policy in the West Bank and Gaza. For example, UN staff were not subject to vetting. This increases the risk that U.S. funds or assistance may be diverted to entities associated with designated terrorist groups. We suggest that the administration consider reviewing exemptions to partner vetting policies and enhancing procedures and other internal controls for vetting partners that receive humanitarian assistance in West Bank and Gaza. USAID OIG’s dedicated staff, posted across the world, remain firmly committed to preventing the diversion of taxpayer-funded aid by terrorists, and identifying associated risks.

A USAID OIG investigation found evidence that a USAID-funded aid organization in Yemen was forced to hand over approximately $122,000 in equipment to Ansar Allah (a.k.a. the Houthis), a designated Foreign Terrorist Organization, after its award was terminated.

USAID OIG, with its active and ongoing cases, continues to be at the forefront of investigating allegations of diversion of taxpayer-funded aid by terrorist organizations. The American people deserve utmost transparency in ensuring that well-intended assistance is not impeded, interfered with, or diverted by terrorists.