Fraud Charges Prove Costly to International Development Agency

December 8, 2010; Source: Washington Post | The Academy for Educational Development (AED), a Washington, D.C.-based nonprofit that receives federal funds to run programs that support health, education, and social and economic development in some 150 countries, is about to learn a costly lesson for not keeping its financial house in order. Earlier this week, the U.S. Agency for International Development (USAID) said it would stop doing business with AED because of initial findings from an investigation that show “evidence of serious corporate misconduct, mismanagement, and a lack of internal controls.”

The inspector general’s examination also raised “serious concerns of corporate integrity.” The Washington Post reports that AID has contracts from USAID totaling about $640 million. They include $109 million in contracts for work in Afghanistan, where AED oversees USAID’s higher education program.

This week’s suspension restricts AED from bidding on or receiving any more government contracts.

Investigations into the 49-year-old AED have been underway since 2009, focusing on two development and education programs in Afghanistan and Pakistan. A five-year, $150 million AED program to provide disaster relief, infrastructure development, education and agricultural services in Pakistan was recently ended after an inspector general’s investigation found evidence of fraud. Since then, AED has returned $92,000. The agency also says it is “cooperating with the [inspector general’s] investigation and is committed to working with USAID on their overall and specific concerns.”—Bruce Trachtenberg