Foreign Assistance: Inadequate Accountability for U.S. Donations to the
World Food Program (Chapter Report, 01/28/94, GAO/NSIAD-94-29).
Intended as emergency food relief for countries such as Ethiopia,
Pakistan, and Afghanistan, thousands of tons of U.S. commodities donated
to the World Food Program of the United Nations have been lost, stolen,
or mishandled due to lax accountability and internal controls. The
program is exempt from accountability requirements that the Agency for
International Development (AID) places on other program sponsors, and
AID did not follow its own regulations governing its relationship with
the program. GAO also notes that the United States does not always
respond quickly to the World Food Program's emergency food requests.
During fiscal year 1992, U.S. donations generally arrived nearly 8
months after being requested. The slow response occurred because AID
does not routinely treat World Food Program emergency requests as
emergencies and because the Agriculture Department uses the same
procurement and shipping procedures for emergency and nonemergency
orders. Despite the slow U.S. response, emergency victims have not
suffered because the program is able to substitute food stocks from
other sources until U.S. donations arrive.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-94-29
TITLE: Foreign Assistance: Inadequate Accountability for U.S.
Donations to the World Food Program
DATE: 01/28/94
SUBJECT: Accountability
Accounting procedures
Internal controls
International food programs
Foreign aid programs
Program management
Food relief programs
Gifts or gratuities
International relations
Developing countries
IDENTIFIER: USDA Section 416(b) Program
Somalia
Yugoslavia
Africa
Liberia
Ethiopia
Afghanistan
Pakistan
Persian Gulf
UN World Food Program
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Cover
================================================================ COVER
Report to the Chairman, Legislation and National Security
Subcommittee, Committee on Government Operations, House of
Representatives
January 1994
FOREIGN ASSISTANCE - INADEQUATE
ACCOUNTABILITY FOR U.S. DONATIONS
TO THE WORLD FOOD PROGRAM
GAO/NSIAD-94-29
Donations to the World Food Program
Abbreviations
=============================================================== ABBREV
AID - Agency for International Development
FFP - Office of Food for Peace
GAO - U.S. General Accounting Office
UNHCR - United Nations High Commissioner for Refugees
USDA - U.S. Department of Agriculture
WFP - World Food Program
Letter
=============================================================== LETTER
B-254791
January 28, 1994
The Honorable John Conyers, Jr.
Chairman, Legislation and National
Security Subcommittee,
Committee on Government Operations
House of Representatives
Dear Mr. Chairman:
As requested, we reviewed the Agency for International Development's
management of U.S. food donations to the World Food Program and the
United States' responsiveness to emergency food requests. We make
recommendations in the report that are intended to improve this
management and accelerate the U.S. response to emergencies.
We plan no further distribution of this report until 30 days from the
date of this letter unless you publicly announce the report's
contents earlier. At that time, we will send copies to the
Administrator of the Agency for International Development and the
Secretaries of the Departments of State and Agriculture; the
Director, Office of Management and Budget; the Executive Director of
the World Food Program; and other interested parties. Copies will
also be made available to others on request.
Please contact me at (202) 512-4128 if you or your staff have any
questions concerning this report. Other major contributors are
listed in appendix V.
Sincerely yours,
Harold J. Johnson
Director, International
Affairs Issues
EXECUTIVE SUMMARY
============================================================ Chapter 0
PURPOSE
---------------------------------------------------------- Chapter 0:1
The Agency for International Development (AID) is charged by title II
of Public Law 480 with managing emergency and nonemergency U.S. food
donations. In the past 3 years, AID has increasingly relied on the
World Food Program (WFP)--a U.N. agency--to manage these donations.
During fiscal year 1992, the U.S. government contributed about $372
million to WFP programs, $228 million of which AID provided in title
II funds and commodities.
Concerned about reports of mismanagement and slow response to
disasters, the Chairman of the House Committee on Government
Operations asked GAO to review the management of food donations to
WFP. GAO's objectives were to determine whether (1) AID's procedures
for ensuring that accountability was maintained over U.S. donations
to WFP were adequate and (2) the United States was responsive to WFP
emergency food requests. In its review of AID's accountability
procedures, GAO focused on five WFP projects involving U.S.
donations--three protracted refugee operations and two development
projects.
BACKGROUND
---------------------------------------------------------- Chapter 0:2
The United States is one of the world's largest donors of food for
humanitarian purposes. Title II of Public Law 480 authorizes the
United States to donate food to nongovernmental organizations,
foreign governments, and multilateral institutions such as WFP for
emergency and nonemergency uses overseas. AID has primary oversight
responsibility for these food grants, and the Departments of State
and Agriculture play ancillary roles. State is primarily responsible
for setting broad U.S. policy with U.N. agencies, but AID is the
lead agency for U.S. interaction with WFP. The Agriculture
Department (USDA) procures title II commodities for AID and also
provides additional commodities directly to WFP through its section
416(b) program. As the lead agency, AID is responsible for working
through the WFP governing board to ensure proper accountability for
U.S. contributions.
Established in 1961, WFP is supported by voluntary contributions from
donor countries. During 1992, it supplied $1.7 billion of food for
more than 258 development projects in 90 countries and for 60 percent
of all international emergency food relief. This included emergency
operations in Somalia, the former Yugoslavia, and southern Africa.
WFP estimates that its food projects fed over 42 million people in
1992.
Because WFP lacks the resources to carry out large-scale projects, it
negotiates implementation agreements with host governments and
nongovernmental organizations. Once projects have begun, WFP is
responsible for monitoring them to ensure they are carried out in
accordance with the agreements. WFP periodically reports to the
United States and other donors on how their contributions were used.
RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3
Thousands of tons of U.S. commodities donated to WFP have been lost,
stolen, or mishandled. Inadequate accountability over the donations
by WFP, and AID's inattention to WFP's accountability and internal
control problems, invited these losses to occur and has made
detection difficult. WFP is exempt from the title II accountability
requirements AID placed on other program sponsors, and AID did not
follow its own regulations governing its relationship with WFP.
Prolonged mismanagement of WFP projects and massive losses of U.S.
donations went unchecked because AID relied on ineffective WFP
accountability procedures and did not monitor the donations'
distribution or uses. AID did not detect WFP's procedural weaknesses
and commodity losses, in part, because it was unfamiliar with WFP's
monitoring practices and because WFP reports to donors were
incomplete and inaccurate.
The United States does not always respond quickly to WFP emergency
food requests. During fiscal year 1992, U.S. donations generally
arrived almost 8 months after WFP's emergency request. The slow U.S.
response occurred because AID does not routinely treat WFP emergency
requests as emergencies and because USDA uses the same procurement
and shipping procedures for emergency and nonemergency orders.
Despite the slow U.S. response, emergency victims have not suffered
because WFP is able to substitute food stocks from other sources
until U.S. donations arrive.
PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4
POOR ACCOUNTABILITY FOR U.S.
DONATIONS
-------------------------------------------------------- Chapter 0:4.1
AID has a fiduciary responsibility to protect U.S. government funds;
however, it provided virtually no oversight of commodities furnished
to WFP. WFP is exempt from AID's accountability requirements that
are imposed on foreign governments and nongovernmental organizations
because WFP is a U.N. agency. However, AID provided little
oversight of WFP's accountability processes through U.S. membership
on the governing board because AID officials said they believed WFP
was a well-managed organization. GAO found, however, that AID
officials were not familiar with (1) WFP's accountability procedures,
(2) problems with WFP projects, (3) actual loss rates of U.S.
donations, or (4) the WFP external auditor's findings regarding
accountability problems.
AID has not followed its own guidance on its relationship with WFP.
AID requires its missions to periodically assess the management of
each WFP project involving U.S. donations so the United States can
recommend any needed project improvements. However, in four of the
five projects GAO reviewed, AID missions did not assess WFP and host
government project management capabilities. As a result, U.S.
officials were not in a position to recommend improvements to
safeguard U.S. donations or identify and stop commodity
mismanagement during program implementation.
WFP delegated the responsibility to manage commodity donations to
recipient host governments and nongovernmental organizations without
imposing adequate accountability requirements on them. In addition,
GAO found that WFP's project monitoring practices were often
unreliable. As a result, WFP's accountability over donations varied
significantly from project to project, and WFP cannot assure AID that
U.S. commodities are properly managed and accounted for.
Of the five WFP projects GAO reviewed, two were generally well
managed and sustained low rates of food losses. In India, WFP relied
on the government's accountability system. In the Liberia project,
WFP relied on the Red Cross's accountability system. In both
projects, GAO found that WFP's partners had systems in place to (1)
safeguard donations, (2) provide effective monitoring, (3) ensure
minimal losses, and (4) produce accurate loss reports. The Liberia
project's ability to safeguard U.S. donations was especially notable
given the civil strife in the region.
However, WFP projects in Ethiopia, Afghanistan, and Pakistan suffered
sustained and significant food losses. In Ethiopia, WFP provided
food for up to 400,000 people who were not eligible for WFP
commodities, in part, because WFP relied on information from the
United Nations High Commissioner for Refugees (UNHCR) who had
responsibility for estimating refugee numbers. In one large camp
alone, UNHCR officials estimated that 40 percent of WFP's food for
250,000 refugees was stolen. For the Afghan refugee operation in
Pakistan, WFP provided food to over 270,000 fraudulently registered
people from 1987 to 1992. This amounted to 194,400 metric tons of
wheat, valued at $25.3 million, and 9,720 metric tons of edible oil,
valued at $9.7 million. During this period, the United States
provided 40 percent of all wheat contributions and most of the oil.
In the Pakistan food-for-work project, WFP allocated 985,000 workdays
of food between 1988 and 1990; 710,000 workdays of food, totaling
2,200 metric tons, was stolen or misappropriated. Although WFP
notified the government of Pakistan about the losses, the government
disagreed and never compensated WFP for the lost food.
AID relied on incomplete and inaccurate WFP reports for information
on the handling of U.S. donations. WFP does not report
project-specific losses to donors. Although WFP collects this
information, GAO found that the data were not always reliable. For
example, WFP did not use loss reports from Ethiopia because the
reports were considered grossly inaccurate. In the Afghan refugee
program, the local WFP office failed to report (1) potential losses
of up to 900 metric tons due to government skimming; (2) thousands of
tons in losses from fraudulent distribution, although fraudulent
distribution is considered theft; and (3) additional losses reported
by its monitors. Furthermore, WFP's management assessments were not
effective at identifying or correcting commodity mismanagement.
These and other GAO findings on specific WFP projects are described
in appendix I.
WFP audit reports have repeatedly cited the need to improve WFP
accountability, monitoring, and reporting procedures. However, WFP
has not fully implemented many of its auditors' recommendations.
Furthermore, WFP does not provide its internal audit reports to
donors. As a result, donors cannot make fully informed decisions
about program improvements needed to protect their donations.
The WFP Executive Director has acknowledged these problems and has
begun to take corrective action. She cited the lack of adequate
donor contributions toward WFP operating expenses as a key impediment
to improving accountability.
AID RESPONDS SLOWLY TO
EMERGENCY FOOD REQUESTS
-------------------------------------------------------- Chapter 0:4.2
AID does not have a system to expedite the approval of emergency food
requests. Emergency food requests must be approved before the food
can be purchased, and in fiscal year 1992, AID took nearly 3 months
on average to approve requests from WFP and submit them to USDA for
procurement of commodities. Although AID has quickly approved some
donations, a timely response depends mostly on U.S. interest in the
emergency situation and the initiative of the responsible AID
officer.
Purchasing and shipping emergency donations, a USDA responsibility,
took another 5 months on average. USDA officials said it would be
difficult to provide processed commodities more quickly than this.
Although USDA can save about 1 month by following expedited
procedures, AID did not request expedited procedures for any of the
emergency commodity orders that GAO reviewed. Despite the slow U.S.
response, WFP officials stated that emergency victims did not suffer
because WFP was able to substitute food stocks from other sources
until U.S. emergency donations arrived.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5
In chapters 2 and 3, GAO makes recommendations to the Administrator
of AID that are intended to improve accountability over U.S.
donations to WFP and accelerate the U.S. response to WFP emergency
food requests.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6
In its comments (reprinted in app. II), AID did not disagree with
GAO's specific findings or recommendations for improved
accountability for U.S. donations; however, AID contended that (1)
since the United States relies on the management, audit, and
procurement policies and procedures of international organizations
when making contributions to them, AID is not responsible for
ensuring that U.S. contributions are properly managed and not
wasted; (2) management problems at WFP and losses of commodities were
not as severe as GAO portrayed them; and (3) even if some losses did
occur, GAO did not sufficiently appreciate the management challenge
WFP confronted in difficult and sometimes hostile operating
environments.
GAO acknowledges that the United States, by agreement, relies on
international organizations to appropriately use and safeguard U.S.
contributions. However, this does not relieve U.S. government
agencies such as AID from their fundamental responsibility to protect
U.S. government funds or other assets. In the case of WFP, AID
could have done this by (1) ensuring that WFP had the capacity and
systems to properly manage and safeguard U.S. donations before
donations were made, which it did not do, or (2) finding other means
to provide the assistance, such as through private voluntary
organizations.
GAO did not overstate the severity of WFP's management problems or
the losses that occurred. In commenting on this report, WFP
acknowledged that it had not dealt with many of the management,
administrative, and accountability issues as effectively as it could
have. GAO appreciates the difficult challenge WFP continues to face
in meeting emergency and development needs, and WFP's comments on
this point (reprinted in
app. III) describe in some detail actions WFP has recently taken or
plans to take to address the matters discussed in this report.
USDA stated in its comments (reprinted in app. IV) that it will work
with AID and the WFP governing body to strengthen WFP's internal
controls.
INTRODUCTION
============================================================ Chapter 1
The United States has been one of the largest donors to the World
Food Program (WFP)--a U.N. agency--and, in fiscal year 1992,
provided it about $372 million for food, transportation, and
operating expenses largely through funds from title II of Public Law
480. Because of its lead role in managing the title II program, the
Agency for International Development (AID) has the primary oversight
responsibility for contributions to WFP; the Departments of State and
Agriculture also have important roles.
U.S. CONTRIBUTIONS TO WFP
---------------------------------------------------------- Chapter 1:1
AID's authority to donate food to WFP operations is derived from
title II of the Agricultural Trade Development and Assistance Act of
1954, as amended, commonly known as Public Law 480. Title II
authorizes AID to donate agricultural commodities to meet
international emergency relief requirements and carry out
nonemergency feeding programs overseas. By law, about 75 percent of
title II commodities are dedicated to nonemergency use, although the
requirement may be waived to meet emergency needs. Title II
commodities are distributed through nongovernmental organizations,
international organizations like WFP, and foreign governments.
During fiscal year 1992, AID provided commodities and transportation
services valued at $228.2 million to WFP. This represents about 29
percent of the $788.7 million AID provided to all title II sponsors
during that year.
According to AID officials, AID contributes a significant portion of
the title II budget to WFP for several reasons. WFP's status as a
U.N. agency allows it to operate in areas that might be hostile to
U.S.-affiliated agencies. As a neutral agent, WFP has been able to
mediate between warring factions and establish safe passage corridors
to facilitate food aid deliveries. WFP also has the capacity to
obtain, store, transport, and distribute large quantities of food
throughout the developing countries. According to AID, because WFP
has large amounts of food positioned throughout the world, it can
respond quickly to emergencies.
Other U.S. agencies also contribute funding or commodities to WFP.
The most significant contributor other than AID has been the
Department of Agriculture (USDA), which provides surplus commodities
under section 416(b) of the Agricultural Act of 1949, as amended.\1
Total U.S. contributions to WFP by AID, USDA, and the State
Department in fiscal years 1990, 1991, and 1992 are shown in table
1.1.
Table 1.1
Contributions by U.S. Agencies to WFP in
Fiscal Years 1990-92
(Dollars in millions)
U.S. agency 1990 1991 1992
------------------------------ -------- -------- --------
AID/title II
Development/protracted $143.6 $120.2 $173.8
refugee programs
Emergency operations 22.1 151.6 54.4
AID/Office of Foreign 1.7 2.1 8.2
Disaster Assistance
USDA/section 416(b) 12.7 34.0 110.0
State/International 1.0 1.0 2.0
Organization Affairs
State/Refugee Programs 0.0 3.5 23.6
============================================================
Total $181.1 $312.4 $372.0
------------------------------------------------------------
Sources: AID, USDA, and State Department.
The United States has been one of WFP's largest donors. According to
WFP data, the United States committed over $1 billion to WFP during
calendar years 1991 and 1992.\2 The next two largest donors during
that period were the Commission of the European Communities, at $593
million, and Canada, at $276 million. Of the total 2-year U.S.
commitment to WFP, $223 million was for development programs; $340
million for refugee operations; and $439 million for emergency
operations.
--------------------
\1 Section 416(b) authorizes donations of commodities owned by USDA's
Commodity Credit Corporation to foreign food aid programs, provided
that the needs of domestic food aid programs have been met first.
Program sponsors may be nongovernmental organizations, international
organizations, or foreign governments.
\2 WFP's data for U.S. contributions do not match the U.S. data in
table 1.1 because of the difference in U.S. and WFP reporting
periods (fiscal years versus calendar years) and accounting systems.
U.S. MANAGEMENT OF TITLE II
DONATIONS TO WFP
---------------------------------------------------------- Chapter 1:2
Amendments to Public Law 480 in 1990 placed direct responsibility for
implementing the title II program with AID. Within AID, the Bureau
for Food and Humanitarian Assistance's Office of Food for Peace (FFP)
is responsible for programming title II resources and ensuring that
accountability is maintained for U.S. donations to WFP. As the lead
agency, AID represents the United States on WFP's governing board
(the Committee on Food Aid Policies and Programs) and works through
the governing board to ensure program accountability. It also
evaluates and approves proposed WFP projects, develops the title II
pledge to WFP programs, and responds to emergency appeals.
AID heads the U.S. delegation to WFP's governing board, but the
delegation also includes officials from USDA and the State
Department. As part of the Committee, the delegation is responsible
for approving WFP project proposals and general policy actions. AID
and USDA representatives to the Committee's Subcommittee on Projects
evaluate and comment on each project presented by WFP. AID also has
a liaison located in Rome who represents U.S. food aid interests to
WFP staff and representatives of other member nations, evaluates and
develops policies to improve the effectiveness of WFP, and
coordinates the exchange of information concerning U.S.
contributions to WFP.
FFP is responsible for formulating the title II pledge to WFP and
recommending approval of any title II contributions to WFP made
outside of the pledge, such as for emergency operations. AID's
pledge to WFP is directed toward development projects and refugee
programs. For calendar years 1993 and 1994, AID pledged a total of
$350 million for commodities and transportation costs, allowing WFP
to allocate the funds between development and refugee programs. In
the past, AID specified certain amounts for each program type.
AID's Bureau for Food and Humanitarian Assistance prepares guidance
and regulations for AID missions overseas to use in planning and
implementing food aid programs. As the center of title II
operations, FFP monitors the overall title II budget and adjusts
funds among programs and sponsors as needs and priorities change.
FFP also initiates commodity procurement by coordinating with USDA,
which makes Public Law 480 purchases, and monitors shipments as they
move toward their destinations. Through occasional field visits and
reports from AID missions, FFP monitors the food situation and AID's
ongoing food programs in various countries.
In response to emergencies, FFP works with other AID offices, the
State Department, USDA, and other agencies to coordinate U.S.
assistance. Unlike U.S. donations to WFP development and refugee
projects, which are authorized by the U.S. pledge to WFP for
shipping upon WFP request, each WFP emergency request is reviewed and
approved individually by AID. AID enters into a formal agreement
with WFP concerning the types and quantities of emergency foods to be
contributed and orders the approved commodities from USDA.
In addition to AID, the State Department and USDA also have important
interests in WFP.
The State Department's Bureau of Refugee Programs coordinates with
WFP because WFP is the predominant source of food for refugees.
The Bureau provides a portion of the commodity transportation
costs for WFP refugee projects.
The State Department's Bureau of International Organization Affairs
shapes U.S. policy on WFP governance issues and longer term
structural concerns of the U.N. system. The Bureau has been
the only U.S. source of general operating funds for WFP.
USDA's Agricultural Stabilization and Conservation Service
identifies commodities available for title II donations and
arranges for procurement, processing, and transportation to U.S.
ports for shipment.
USDA's Foreign Agricultural Service manages food aid provided to
WFP through its section 416(b) program.
THE WORLD FOOD PROGRAM
---------------------------------------------------------- Chapter 1:3
WFP was established in 1961 as a 3-year experiment by parallel
resolutions of the U.N. General Assembly and the Food and
Agriculture Organization Conference, and WFP continues to report to
both organizations. Since its inception, WFP has provided food for
use in approved development projects and, in recent years, has
assumed increasing responsibility for support and management of
humanitarian emergency feeding activities. WFP spent about $1.7
billion on development and emergency projects in 1992, with an
estimated 15 million people benefiting from 258 development projects
and an estimated 27 million people benefiting from emergency
operations. WFP handled 60 percent of all international relief food
in 1992. The organization employs about 3,700 staff, including
full-time and part-time project personnel and consultants, of which
less than 500 are located at WFP's Headquarters in Rome, Italy; the
remaining personnel are located in field offices in 85 countries.
WFP's emergency relief activities have increased dramatically in the
past several years. Its commitments to relief activities were nearly
50 percent higher in 1992 than in 1991. By 1993, WFP's relief
activities accounted for 60 percent of WFP's total resources. In
recent years, WFP has provided food to major emergencies in Somalia,
Liberia, the former Yugoslavia, the Persian Gulf, and southern
Africa. To respond quickly to emergencies, WFP often borrows food
stocks from its hundreds of development programs or diverts its ships
bound for less time-critical projects.
Participation in WFP is open to U.N. member countries and to member
and associate member countries of the Food and Agriculture
Organization; however, because WFP obtains its resources through
voluntary contributions from governments and does not make
assessments, it has no formal membership. The WFP Secretariat,
headed by an Executive Director, is located in Rome, Italy, and is
responsible for program planning, operations, and evaluations.
During 1991, certain outstanding questions about reorganizing WFP to
(1) meet its growing agenda, (2) ensure accountability, and (3)
empower donor countries and developing countries to exercise full
oversight of WFP operations were resolved. What follows are some of
the most important changes:
WFP obtained working autonomy and legal status that enables it to
carry out its mission independently;
The Executive Director of WFP was granted authority to appoint all
but the two most senior subordinates, enter into contracts, and
certify WFP accounts, with sole responsibility in each of these
matters;
The Committee on Food Aid Policies and Programs was specifically
named the governing body of WFP; and
To permit wider representation of interested states, the Committee
on Food Aid Policies and Programs was enlarged from 30 to 42
members--27 to come from developing nations and 15 from
industrialized nations--with members partly named by the Food
and Agriculture Organization Council and partly by the Economic
and Social Council of the United Nations.
WFP has three types of projects--development projects, protracted
refugee operations, and emergency operations. These projects are
developed in conjunction with host countries. Development and
protracted refugee projects usually require approval by WFP's
governing board. WFP's Executive Director has the authority to
approve projects with food allocations up to $3 million. Development
projects are generally approved for 3 to 5 years, protracted refugee
operations are approved for 18-month periods, and emergency
operations are approved for 1 year or less. All three project types
are often extended for longer periods, and extensions generally
require approval from WFP's governing board. However, because of
their urgency, emergency operations costing over $3 million are
approved jointly by WFP's Executive Director and the Food and
Agricultural Organization's Director General instead of by the
governing board.
WFP's Executive Director is responsible for ensuring that projects to
be implemented are sound, carefully planned, and directed toward
valid objectives; ensuring the mobilization of the necessary
technical and administrative skills; and assessing the ability of
host countries to carry out the projects. The Executive Director is
also responsible for ensuring that food and services are supplied as
agreed to in the project agreements. The Executive Director is also
charged with correcting (in consultation with the host government)
any program inadequacies in project operations and may withdraw
assistance in the event that essential corrections are not made.
WFP is responsible for providing food and monitoring its use in
accordance with project agreements. WFP informs donors on how their
donations were used through periodic project assessments, biennial
reports by its external auditor, and annual reports covering
commodity losses. Host governments or nongovernmental organizations
are generally responsible for implementing projects and reporting to
WFP on the commodities' uses.
For protracted refugee feeding operations, WFP shares responsibility
with the U.N. High Commissioner for Refugees (UNHCR) and host
governments. UNHCR, in conjunction with the host government,
determines who is a refugee; the decision as to who among the
refugees requires food aid rests jointly with UNHCR, WFP, and the
host government. UNHCR, through its implementing partners,
distributes, monitors, and reports on food use to WFP.
WFP obtains food and funds for other expenses through voluntary
pledges by donor countries. Contributions are made in the form of
commodities, services (such as shipping and overland transport), and
cash for operating expenses. WFP's goal is to obtain at least
one-third of each country's contribution in cash and services;
however, the United States provides commodities and pays for ocean
transportation and some overland transportation. Pledging
conferences are convened at 2-year intervals, when pledges for the
following 2 years are made. Although donors may pledge to any of the
three project types, most donors pledge only to development and
protracted refugee projects, preferring to respond to WFP emergency
appeals on a case-by-case basis.
OBJECTIVES, SCOPE, AND
METHODOLOGY
---------------------------------------------------------- Chapter 1:4
We reviewed the management of title II commodities provided to WFP at
the request of the Chairman of the House Committee on Government
Operations. Our objectives were to review (1) how AID ensures that
accountability is maintained for U.S. donations to WFP and (2) U.S.
responsiveness to WFP emergency food requests.
We performed work at AID, the State Department, and USDA in
Washington, D.C.; USDA's Kansas City Commodity Office; and WFP
headquarters in Rome. We visited overseas locations for five WFP
projects, which we selected because they were among the largest
recipients of title II donations in fiscal year 1991 and represented
both development and protracted refugee operations.
The WFP projects we reviewed were
a protracted refugee operation in Ethiopia: food assistance for
Somali and Sudanese refugees and returnees from Somalia;
a protracted refugee operation in the Liberia region: food
assistance to Liberian and Sierra Leonean refugees and displaced
persons in Liberia, Cote d'Ivoire, Guinea, and Sierra Leone;
a development project in Pakistan: rural development works in the
Northwest Frontier Province;
a development project in India: supplementary nutrition for
preschool children, pregnant women, and nursing mothers; and
a protracted refugee operation in Pakistan: feeding of Afghan
refugees in Pakistan.
For the Liberia regional project, we performed work in the
neighboring countries of Cote d'Ivoire and Guinea because security
and administrative problems prohibited us from traveling in Liberia.
We selected Cote d'Ivoire because (1) WFP manages the country
operations there, (2) Cote d'Ivoire's port is the main entry point
for commodities for the entire regional project, and (3) a large
number of Liberian refugees are located there.
To evaluate the accountability systems used to control and account
for title II donations to WFP, we reviewed AID and WFP accountability
procedures in Washington, D.C., and WFP headquarters in Rome. We
studied AID's overall accountability requirements for title II
programs and AID requirements for the AID-WFP relationship and
interviewed AID officials in Washington, D.C. At overseas locations,
we interviewed officials from AID, WFP, UNHCR, the State Department,
local and U.S. nongovernmental organizations, and the national and
provincial host governments. We observed WFP operations and reviewed
program documents, WFP commodity reports, audit reports submitted by
host governments, and host government accounting documents. We also
met with the staff of WFP's external auditor (the Comptroller and
Auditor General of the United Kingdom) and with WFP's internal
auditor. We did not evaluate UNHCR's methodology for determining
refugee census information because it was outside the scope of this
review.
To determine the reliability of WFP accounting reports, we made
unannounced visits to WFP feeding operations, visited warehouses and
ports, and compared actual quantities of U.S. stocks with recorded
stock levels. We attempted to reconcile WFP reports with reports
provided to WFP by its field monitors. To determine the amount of
commodities distributed through fraudulent registration in Pakistan,
we multiplied the authorized individual commodity ration by the
number of registrations WFP and UNHCR officials believed to be
fraudulent.
We were unable to identify the full amount of losses of U.S.
commodities donated to WFP because (1) AID did not have individual
loss reports on U.S. donations and (2) WFP consolidates reported
losses from all of its projects into general loss reports, making it
impossible to identify U.S.-specific losses. However, we did
quantify some of the losses that occurred in the Pakistan and
Afghanistan projects, and these losses were substantial. Although we
were not able to quantify specific loss rates in Ethiopia because of
the poor quality of data available, our work identified large losses
that had been ongoing for years.
In conducting our work, we generally had access to WFP documents and
project files, and WFP headquarters and field staff generally
provided us with whatever information and assistance was requested.
However, WFP officials denied us access to the organization's
internal auditor reports because these reports were for the sole use
of the Office of the Executive Director and were not releasable to
donor governments or their agencies.
To determine how long U.S. agencies took to provide food in response
to WFP emergency requests, we reviewed all title II donations to WFP
emergency operations in fiscal year 1992. These included 11
separately approved donations to ten countries. We reviewed AID
documents to determine the length of AID's approval process. Two
emergency donations were not included in the calculation of average
approval times because, in one case, documentation of WFP's request
date was not available from FFP and, in the second case, WFP did not
request the donation. Data on procurement, loading, and discharge at
the foreign port of the emergency commodities were obtained from AID,
USDA, and WFP.
We did not evaluate the management of U.S. commodities donated to
WFP by USDA through section 416(b) of the Agricultural Act of 1949
for two reasons. First, section 416(b) contributions to WFP had been
insignificant in the past. Second, in July 1992, USDA officials told
us that section 416(b) stocks were low and would not be available for
WFP in 1993. In early 1993, USDA reversed its position and donated
large quantities of food to WFP, but we did not review WFP management
of USDA commodities because our audit work was substantially
completed by that time. However, WFP uses the same accountability
procedures for AID and USDA commodities. We conducted our review
between April 1992 and June 1993 in accordance with generally
accepted government auditing standards.
AID DID NOT ENSURE THAT ADEQUATE
ACCOUNTABILITY WAS MAINTAINED FOR
U.S. DONATIONS TO WFP
============================================================ Chapter 2
WFP is exempt from the title II accountability requirements that
govern AID's relationships with other program sponsors,\1 such as
host government and nongovernmental organizations,\2 but AID did not
follow its own regulations that govern its specific relationship with
WFP. AID relied on inadequate WFP accountability and monitoring
procedures to ensure proper management of U.S. donations. WFP's
generally deficient monitoring practices and incomplete and
inaccurate reports allowed massive losses to go unnoticed.
Distribution of commodities through WFP, particularly during
emergencies, often occurs in difficult or volatile circumstances.
These circumstances can make accounting for the distribution of food
stocks significantly more difficult. Moreover, the limited number of
WFP staff in-country requires that WFP place reliance on host
government authorities to protect, distribute, and account for the
deliveries of WFP food. Despite these difficult circumstances, we
believe that WFP must provide necessary resources to ensure donor
contributions are adequately protected and accounted for.
--------------------
\1 According to Government Auditing Standards, developed by the
Comptroller General of the United States, "accountability" is the
process used to ensure that government (1) funds are handled in
compliance with laws and regulations and (2) programs are achieving
their intended purposes economically and efficiently. Public
officials are responsible for establishing and maintaining an
effective internal control system to ensure that resources are
safeguarded; laws and regulations followed; and reliable data
obtained and disclosed.
\2 We recently examined AID's management of agricultural commodity
assistance to foreign countries provided through private voluntary
organizations, nongovernmental organizations, or directly to
recipient countries under titles II and III of Public Law 480. See
Food Aid: Management Improvements Are Needed to Achieve Program
Objectives (GAO/NSIAD-93-168, July 23, 1993).
WFP IS EXEMPT FROM TITLE II
REGULATIONS
---------------------------------------------------------- Chapter 2:1
AID regulation 11 is intended to safeguard title II commodities,
ensure proper accountability for their use, and provide AID the
necessary information to determine whether U.S. donations are being
used effectively. It requires all governments and nongovernmental
organizations accepting title II food to (1) provide adequate
storage, supervision, and internal controls to safeguard food; (2)
conduct independent audits and internal control reviews that meet
U.S. auditing standards or those approved by AID; (3) provide
detailed reports to AID on program management and the amount of
contributions lost to theft, waste, and abuse; and (4) provide for
oversight by AID's Inspector General.
WFP is exempt from AID's title II accountability requirements because
WFP is a U.N. agency. According to AID, the United States relies on
the management, audit, and procurement policies and procedures of an
international organization, such as WFP, when making contributions to
it, and the Congress has endorsed this policy. Furthermore, AID
officials stated that they believed that WFP had adequate management
and accountability procedures to properly safeguard U.S. donations.
Officials at AID, the State Department, and USDA said that once the
United States gives food to WFP, the commodities belong to WFP and
not to the United States. The officials noted that (1) the United
States exercises oversight over WFP operations through its membership
on WFP's governing board, and (2) they rely on and have confidence in
WFP's accountability structures and auditing capacities to ensure
proper commodity management.
We found, however, that none of the U.S. officials that we spoke
with at AID, USDA, and State were familiar with WFP's accountability
procedures or audit reports. These officials had participated on
WFP's governing board or approved proposed WFP projects and were
considered the most knowledgeable people in the U.S. government on
U.S.-WFP management issues. While the U.S. officials strongly
endorsed WFP and said they were not aware of any mismanagement, none
of these officials had assessed WFP's accountability procedures, knew
the loss rates for U.S. commodities, or were aware of the
accountability problems cited in WFP audit reports. We found that
even project officers, who oversee the daily management of title II
donations, were unaware of the effectiveness of WFP's accountability
procedures and related problems.
The AID Inspector General's position is that all organizations
receiving title II commodities, including foreign nongovernmental
organizations and provincial governments, should have the capacity to
properly account for the receipt and distribution of all commodities
provided by the U.S. government. The AID Inspector General views
title II assistance provided in foreign countries to be more
vulnerable to waste and abuse than resources provided through our
domestic assistance programs. Therefore, comprehensive audits of all
organizations, including host and provincial governments and foreign
nongovernmental organizations handling title II commodities, are
necessary to enhance accountability in vulnerable areas.
AID Inspector General officials informed us, however, that the same
accountability requirements that apply to host governments and
nongovernmental organizations through U.S. bilateral assistance
programs cannot always be applied to international organizations such
as WFP, which receive donations from many countries. Nonetheless,
this should not preclude the establishment of proper safeguards to
the receipt, control, and distribution of title II commodities. If
an organization is not capable of providing such safeguards,
including adequate audit coverage, the AID Inspector General's
position is that AID should look to other organizations to deliver
American commodities.
AID DOES NOT COMPLY WITH ITS
OWN GUIDANCE
---------------------------------------------------------- Chapter 2:2
AID guidelines have established only a few requirements for AID
oversight of donations to WFP. First, AID must ensure that WFP
projects are technically sound and carefully planned. The U.S.
delegation to WFP's governing body can do this by recommending
improvements in WFP projects on the basis of AID's, USDA's, and
State's analyses of the projects. Second, AID missions are expected
to be aware of project mismanagement and report such matters to
AID/Washington. We found that AID was not meeting either of these
requirements.
U.S. DELEGATION IS NOT
RAISING CRITICAL MANAGEMENT
ISSUES
-------------------------------------------------------- Chapter 2:2.1
The U.S. delegation to WFP's governing body, the Committee on Food
Aid Policies and Programs, is headed by an AID official and includes
officials from USDA and the Department of State. The governing
body's Subcommittee on Projects evaluates proposed WFP projects for
their approval by the Committee. WFP provides AID a summary of
proposed projects 6 weeks before the meetings to allow AID time to
evaluate the proposals and make recommendations at Subcommittee
meetings for project improvements. The Committee approves an average
of 12 to 15 projects at its semi-annual meetings.
AID believes the United States can have its greatest impact on WFP
projects by recommending improvements during the Subcommittee
approval process. AID is to share the WFP proposals with officials
from USDA, the Department of State, and AID missions in the countries
of the proposed projects and seek input for the U.S. position paper
on each proposed project. AID is to consolidate these comments prior
to the Subcommittee meetings. During the Subcommittee meetings, WFP
officials present each proposed project for suggested improvements by
member delegations.
We found that AID officials did not seem to view their preparation
for the Subcommittee on Projects as a priority. According to a
senior AID official, AID officials often arrived at the meetings
without the missions' analyses of WFP projects. In addition, AID
officials did not coordinate their comments with the delegates from
the State Department or USDA before arriving in Rome for the
meetings. The official also said that there was no set format for
the position papers and that the U.S. positions rarely consolidated
AID, State, and USDA comments because comments were rarely received
from more than one source. Of the five projects that we reviewed,
which were approved between 1988 and 1992, we found no U.S. position
papers in AID files in Washington, D.C. We found formal U.S.
position papers in AID's Rome office for only the India development
and Pakistan refugee projects. For the other three projects, we
found a cable either from the mission, AID, or the Department of
State, but no formal position paper that appeared to consolidate or
formalize their positions.
We found that the U.S. delegation often did not raise serious
commodity management problems for consideration during Subcommittee
project renewal discussions. For example, during our review of WFP's
protracted refugee operation in Ethiopia, which was extended for an
18-month period beginning July 1, 1992, U.S. mission officials in
Ethiopia told us that neither the Ethiopian government nor WFP could
adequately manage or monitor the project. The mission had previously
reported widespread losses of donated food due to corruption and
recommended that future U.S. donations be contingent upon increased
monitoring of donated commodities.\3
However, the mission did not raise these issues in its 1992 comments
on the project, and the U.S. delegation did not raise them in the
Subcommittee.
We found that when the U.S. delegation raised concerns about project
proposals, WFP generally tried to incorporate its recommendations.
In each case we reviewed, WFP had either incorporated the U.S.
concerns or had valid reasons for not doing so. For example, in the
one case we examined in which the U.S. delegation raised concerns
about serious commodity mismanagement, WFP acted to stem theft of WFP
donations. In that case, the U.S. delegation, at a December 1991
Subcommittee meeting, raised concerns that the Afghan protracted
refugee operation census was fraudulently inflated--by as many as
300,000 people in one province alone. The delegation recommended
that future support be conditioned on an accurate census. In 1992,
WFP, the host government, and UNHCR negotiated a new refugee
population figure and reduced the refugee census in the province from
720,000 to 450,000.
A knowledgeable senior AID official agreed that the U.S. delegation
to WFP had not been effective at raising or resolving serious
commodity management problems. However, he said that a primary
function of AID's liaison office in Rome is to try to resolve
commodity management problems raised by the missions on a bilateral
basis with WFP. He said these actions were not documented in cables
and that these problems were rarely consolidated into U.S. position
papers for the U.S. delegates to raise in the Subcommittee. Because
these actions were not documented, we could not directly assess their
effectiveness; however, we found that the missions were generally
unaware of many of the serious commodity management problems that we
identified. Furthermore, most of the project problems had been
ongoing for several years without resolution.
--------------------
\3 This has been a long-standing problem in Ethiopia and was
discussed in our report entitled Refugees: Living Conditions Are
Marginal (GAO/NSIAD-91-258, Sept. 11, 1991).
MISSIONS DO NOT ADEQUATELY
ANALYZE WFP PROPOSALS
-------------------------------------------------------- Chapter 2:2.2
AID relies heavily on mission comments of WFP projects to develop its
position papers for the Subcommittee on Projects. AID guidelines
state that it is "particularly important" that AID missions report to
headquarters promptly on the merits of WFP project proposals.
Because ongoing WFP projects must be reapproved periodically,
missions should have knowledge about local WFP operations and be
aware of management or accountability problems needing resolution.
According to these guidelines, the missions should evaluate, among
other things, whether (1) the recipient government has the ability to
manage the project and (2) WFP field staff has the capacity to
monitor it.
We found that, although the missions often provided general comments
on WFP proposals, the missions were generally not assessing whether
WFP and the host governments could effectively monitor and manage the
project. Each project that we reviewed was being considered for an
extension and had been in operation for 3 years or longer. As a
result, the AID missions should have been aware of any operational
problems needing resolution. Only in the India project did the
mission raise concerns about WFP and host government management
capabilities. In the remaining four projects, the missions did not
assess their management capabilities. For example, despite AID's
knowledge of widespread management and monitoring problems in the
Ethiopia refugee operation, U.S. mission officials there did not
point out these problems in the mission's 1992 comments on the
project. The mission supported approval of the project despite the
problems.
FFP's former Acting Director stated that missions do not always
provide comments on projects. An AID official who worked closely on
WFP matters said that the missions' responses vary by mission and the
priority each places on WFP matters. The official indicated that the
lack of mission comments was a weak link in the U.S. process to
ensure that WFP proposals were well designed.
MISSIONS' MONITORING OF WFP
PROJECTS IS LIMITED
-------------------------------------------------------- Chapter 2:2.3
AID missions have limited requirements for monitoring U.S. donations
to WFP projects. AID regulations state that, although the missions
have no responsibility concerning control, management, or accounting
for any WFP project, they are expected to have a general knowledge of
how the projects are functioning and develop a close working
relationship with WFP representatives in the field. Missions are
encouraged to be alert to any WFP program management shortcomings and
to bring any instances of misuse of commodities to the attention of
WFP representatives. If the matter cannot be resolved,
AID/Washington should be notified.
For every project that we reviewed, except the Pakistan development
project, the missions were performing monitoring functions through
various means, including participation on WFP assessment missions,
contacts with WFP officials, and occasional visits to WFP projects.
In spite of this, missions were unaware of commodity management
problems in three of the five projects we reviewed. For example, AID
officials were not aware of the theft of over 700,000 workdays of
food (totaling 2,200 tons of commodities) from the Pakistan
development project.
WFP'S ACCOUNTABILITY PROCEDURES
ARE INADEQUATE
---------------------------------------------------------- Chapter 2:3
AID relies on WFP's accountability procedures to safeguard U.S.
contributions. WFP, however, turns contributions over to recipient
host governments and nongovernmental organizations without providing
adequate guidance on how recipients are to account for, monitor, or
report on the donations. In project agreements, WFP binds the host
governments or nongovernmental organizations to only a few general
requirements.
For development projects, host governments and nongovernmental
organizations are obligated to (1) provide managers, accountants,
guards, supervisors, and other necessary personnel to manage and
administer the projects; (2) implement systems to monitor, report,
and evaluate the movement of WFP donations; and (3) provide quarterly
commodity use reports and annual audited reports. WFP procedures
require that WFP monitor its implementing partners to ensure that
commodities are properly used, but WFP's development manual provides
few instructions for monitoring development projects.
For emergency and protracted refugee operations, host governments and
nongovernmental organizations are responsible for (1) ensuring that
commodities are properly received, handled, distributed to target
beneficiaries, and accounted for; (2) monitoring and reporting food
use to WFP; and (3) providing commodity reports every 6 months of the
operation and a final audited report within 3 months of the final
distribution. WFP is required to monitor deliveries of WFP-supplied
food and observe its distribution. In addition, host countries are
required to provide access to all ports, stores, transshipment
points, and distribution points to allow WFP officials to observe
operations at all stages.
ACCOUNTABILITY FOR REFUGEE
PROJECTS
-------------------------------------------------------- Chapter 2:3.1
Since 1985, WFP has increased its reliance on UNHCR to distribute its
food in refugee operations. An agreement between WFP and UNHCR that
became effective January 1, 1992, assigned WFP responsibility for
mobilizing all basic food commodities (including salt, sugar, and
processed foods) as well as the necessary cash resources for milling,
ocean transport, internal transport, storage, and handling to inland
storage points for all major UNHCR refugee operations. (UNHCR had
been, and remained, responsible for providing other food items and
condiments as needed.) UNHCR and the host government are responsible
for arranging for final food distribution and monitoring at the
refugee camps. However, WFP remained responsible for monitoring, on
a spot-check basis, storage and handling conditions and observing the
final food distribution whenever possible. UNHCR was supposed to
coordinate with local WFP offices to provide information on food
stocks, requirements, and losses. However, the WFP-UNHCR agreement
did not provide specific guidance on how UNHCR should account for,
monitor, and report on its use of WFP food donations.
In commenting on a draft of this report, WFP stated that during the
past year, it had become obvious that the additional responsibilities
resulting from the January 1992 arrangement with UNHCR had placed a
significant workload burden on WFP staff and its infrastructure. WFP
said that it had completed negotiating a new Memorandum of
Understanding with UNHCR to address concerns about (1) the
determination and registration of accurate refugee beneficiary
numbers and (2) the consequences of that process that results in a
lack of proper monitoring and accountability in the subsequent
distribution. WFP said that UNHCR remains responsible for refugee
registration but that this must now be the result of a joint
assessment conducted by WFP, UNHCR, and either the host country or
the implementing partner. According to WFP, it insisted on this role
in the process because it believes accurate caseload figures are
essential for maintaining credibility with donor countries.
WFP stated that the new agreement enumerates the clear-cut
responsibilities between UNHCR and WFP in the joint implementation of
refugee feeding operations. Whereas WFP will be responsible for
resource mobilization, external transport, and in-country delivery of
all food to the extended delivery points, UNHCR will be responsible
for actually arranging food distribution to the targeted
beneficiaries at the refugee camps or distribution sites. UNHCR will
remain responsible for the final distribution and monitoring of all
supplies (e.g., tents, medicines, blankets, tools, etc.) and will
also assume the same responsibilities for food beyond the extended
delivery points. In most cases, UNHCR makes these distribution
arrangements through either an implementing partner or a government
agency. The designation of this distribution agent will continue to
be jointly decided by the government and UNHCR in consultation with
WFP.
According to WFP, UNHCR will be responsible for implementing an
adequate reporting and monitoring system for refugee feeding
operations and will report to WFP on the distribution of food. WFP,
in turn, will account to donors for the food received.
INEFFECTIVE ACCOUNTABILITY
-------------------------------------------------------- Chapter 2:3.2
On the basis of our review of WFP's accountability procedures and
WFP's performance in safeguarding U.S. donations in five projects,
we believe that WFP's accountability procedures have not been
effective in ensuring that (1) donor contributions reach their
intended recipients and are properly safeguarded and accounted for
and (2) use and loss rates for donated commodities were identified
and reported to donors. We found that WFP's accountability
requirements were vague and did not provide sufficient mechanisms for
ensuring that donations were properly safeguarded. Moreover, in
almost no instance was WFP meeting its stated requirement to observe
actual commodity distributions to beneficiaries. Because WFP
provided scant instructions for field monitoring, WFP monitoring
varied from effective to nonexistent. As a result, WFP was unable to
identify or halt the continuing theft of commodities in some of the
projects we examined.
WFP's insufficient accountability requirements allowed governments
and nongovernmental organizations to apply their own procedures to
safeguard WFP donations. As a result, each project had differing
accountability controls, and the ability of each one to safeguard WFP
donations ranged from effective to non-effective. Although two
projects had effective accountability systems, the systems were
primarily developed and executed by host governments and
nongovernmental organizations and were not the results of WFP
procedures. In India, WFP relied upon the accountability procedures
established by the government of India. We found that the system
effectively controlled commodities, reduced the likelihood of theft,
and provided reasonable assurance that commodities were used as
intended. In the Cote d'Ivoire segment of the Liberian refugee
project, WFP relied on the Red Cross to distribute and account for
its donations. The Red Cross accountability system was designed by
the League of Red Cross/Red Crescent Societies. WFP monitoring
provided good control over the commodities and resulted in losses of
less than 1 percent of all donations. The Red Cross's ability to
safeguard WFP donations was especially notable given the civil strife
in the region.
In the remaining three projects, however, WFP reliance on deficient
host government systems allowed massive losses of donor contributions
through theft and mismanagement. In Ethiopia, WFP performed no
monitoring for years, although it knew the government was corrupt and
theft and mismanagement of WFP commodities was rampant. In the
Afghanistan refugee project and the Pakistan development project, WFP
monitoring identified many examples of commodity mismanagement, but
WFP was generally unable to take corrective actions to halt losses
and improve project management. In the Afghanistan refugee project,
WFP continued to provide food based on an inflated census until 1992,
even though, as early as 1981, it suspected the census was inflated.
Since 1987, WFP has provided approximately 204,120 metric tons of
wheat and edible oil, worth almost $35 million, to people holding
fraudulent passbooks. The United States donated 40 percent of all
wheat donations and provided most of the oil during this period.
Further information on our project findings is in appendix I.
WFP REPORTING IS INCOMPLETE
AND INACCURATE
-------------------------------------------------------- Chapter 2:3.3
WFP provides commodity loss reports to donors annually at Committee
on Food Aid Policies and Programs meetings. The loss reports,
developed by the Office of the Executive Director, provide
consolidated loss figures for the three program types. Although WFP
collects loss information on a project-by-project basis,
project-specific data are not provided to donors. The annual loss
reports do not identify the project or country where the losses
occurred.
The April 1993 commodity report stated that WFP losses from October
1, 1991, to September 30, 1992, totaled 1.7 percent of the value of
the commodities handled. The breakdown by project type was 1.1
percent for development projects, 1.3 percent for protracted refugee
operations, and 6.8 percent for emergency operations. According to
the report, civil strife accounted for almost one-third of WFP's
total losses, with 90 percent of the losses taking place in war-torn
Somalia.
We found that WFP loss reports did not accurately reflect commodity
losses for three of the five projects we examined and that losses
were actually much higher than reported to donors. For example, the
commodity reports to WFP headquarters in Rome from the Ethiopia and
Afghanistan refugee projects did not count as losses commodities for
the 670,000 people that obtained commodities fraudulently. Moreover,
the loss reports provided to WFP officials by the government of
Ethiopia were so unreliable that the officials did not forward them
to WFP headquarters. We could not determine how WFP derived loss
rates for Ethiopia, as WFP/Ethiopia did no project monitoring during
the period.
WFP headquarters officials could not verify the accuracy of the loss
rates reported by their country representatives. The WFP official
who consolidates country loss reports did not know how the loss
reports were compiled in-country or how accurate they were. Another
WFP official questioned the reports' accuracy because the loss rates
reported to donors were so low. A WFP-Rome official with experience
in WFP operations in Africa said that loss reports from Ethiopia and
Somalia were unrealistically low but that minimum losses were
reported to Rome only to satisfy a paper requirement, not because
anyone really cared. A WFP official in the Office of the Executive
Director acknowledged that he was unsure of the accuracy of WFP
reports to donors.
In commenting on this report, WFP stated that under its current
procedures, WFP only reports losses to the Committee on Food Aid
Policies and Programs that WFP can assess and quantify precisely. As
a result, losses reported to donors are only those officially
reported by governments. Losses in the Ethiopia, Pakistan, and
Afghanistan projects were presumably not officially reported by the
governments. WFP agreed that it needs to tighten its procedures as
well as review all legal documents between entities for consistency
and responsibility.
WFP PROJECT ASSESSMENTS HAVE
NOT DISCUSSED MANAGEMENT
PROBLEMS
---------------------------------------------------------- Chapter 2:4
WFP conducts periodic assessments of its projects. For development
projects, these assessments, called evaluation-cum-appraisals, are
conducted whenever an extension of a project is proposed. The
assessments are intended to focus on, among other things, critical
issues and operational problems in implementing the project. WFP
also conducts less comprehensive assessments of some emergency
programs, called food assessment missions, which focus on refugee
estimates and their food requirements. These assessments are made in
conjunction with UNHCR. Both types of assessments are provided to
the Subcommittee on Projects and the full governing body for
consideration prior to approving requests to extend projects.
According to WFP officials, WFP assessments generally do not report
on problems associated with inadequate accountability, monitoring, or
reporting. A WFP official in charge of evaluation-cum-appraisals
said that WFP had never conducted a formal evaluation of an emergency
program because the Executive Director had not authorized such an
assessment.\4 Although WFP does perform limited food assessment
missions on emergency programs, these have concentrated on refugee
numbers and feeding requirements rather than management issues.
In theory, WFP assessments could provide donors information necessary
to evaluate the overall management of WFP projects. However, the
assessments WFP provided for donors prior to approving extensions of
the projects in Ethiopia, Afghanistan, and Pakistan did not include
the operational problems that we identified, even though WFP
officials in charge of each program were aware of them. Without this
information, donors may not be able to make informed decisions about
whether to approve project extensions.
--------------------
\4 According to WFP, subsequent to the completion of our field work,
the new Executive Director instructed the WFP evaluation service to
carry out a formal evaluation of the southern Africa emergency.
WFP AUDIT REPORTS DOCUMENT
ACCOUNTABILITY PROBLEMS
---------------------------------------------------------- Chapter 2:5
Audits of WFP activities are performed by WFP's external auditor (the
Comptroller and Auditor General of the United Kingdom) and WFP's
internal auditor. The external auditor, which reports primarily on
WFP's financial accounts but also conducts reviews of WFP programs,
reports biennially to WFP's governing board. The internal auditor
reports directly to the Office of the Executive Director. We found
that WFP has not corrected many of the accountability problems cited
by its auditors.
Both external and internal auditors have reported accountability
problems to WFP. The external audit reports that we examined,
covering 1983 to 1991, made numerous recommendations aimed at
improving WFP's accountability procedures. The audit reports also
state that WFP had not fully implemented many of the external
auditor's earlier recommendations. According to an external audit
official, WFP has no mechanism to ensure that external audit
recommendations are implemented, and WFP did not act on many of the
audit recommendations in the past.
According to the staff of WFP's external auditor, WFP internal audit
reports also contained recommendations to improve WFP's
accountability procedures. The external auditor's 1991 report noted
that of the internal auditor's 100 recommendations made in 1989, 39
centered around the need to improve WFP's accountability procedures.
The external auditor reported that many of these recommendations
complemented the external auditor's findings and, if fully
implemented, should lead to improvements in accountability controls.
According to an official with the Office of the Executive Director,
the internal auditor's recommendations were often not implemented.
Neither WFP's governing body nor donor countries know what
recommendations have been made by the internal auditor or how WFP has
responded to them because the reports were not made available to
them.
Under the AID-WFP agreement, AID can request that its Inspector
General audit WFP projects if WFP fails to provide adequate
accountability for U.S. contributions. The agreement between AID
and WFP governing the transfer of title II commodities requires WFP
to (1) supervise and control the program in the country of
distribution, (2) determine that the recipients to whom they
distribute the commodities are eligible, (3) avoid losses due to
improper actions, and (4) maintain adequate records to determine if
the commodities are properly used. The agreement states that, upon
its request, the U.S. government shall be given access to and the
right to examine WFP records. Further, should the U.S. government
find at any time that WFP reports to the Committee on Food Aid
Policies and Programs are inadequate, WFP shall provide additional
information related to its handling and disposition of the
commodities. If the U.S. government believes additional information
or an audit of the program is needed, the agreement provides that the
U.S. government may seek WFP's concurrence in the implementation of
the required action by either WFP or U.S. government personnel. To
date, AID has not requested that its auditors audit WFP records.
CONCLUSIONS
---------------------------------------------------------- Chapter 2:6
AID is legislatively responsible for managing and accounting for
Public Law 480, title II, commodities. AID has relied on WFP to
safeguard U.S. donations without ensuring that WFP's accountability
procedures are sound. According to AID officials, AID has no
responsibility to monitor WFP's projects because WFP is a U.N.
agency. Further, these officials said that once food is provided to
WFP, it becomes WFP's responsibility.
We believe that although WFP is an international organization and is
exempt from AID's accountability regulations, AID has a fiduciary
responsibility to protect U.S. government resources by ensuring that
proper accountability for U.S.-provided assistance is maintained.
This responsibility is recognized in AID's title II agreement with
WFP that gives AID the right to examine WFP records and seek a U.S.
audit of the program. Furthermore, AID's regulation requires AID
missions to be alert to WFP project mismanagement and resolve
management problems through either WFP or AID. Because AID did not
follow its own procedures or satisfy itself that WFP was capable of
proper accountability (1) massive commodity losses--including losses
of U.S. donations--occurred and (2) donated commodities have not
been adequately monitored or reported on. Because WFP's commodity
utilization and loss reports were incomplete and inaccurate, AID
cannot fully account for the more than $370 million in commodities
and related transportation that the United States provided to WFP in
fiscal year 1992.
For years, WFP's external and internal audit reports have recommended
improvements in WFP's accountability, monitoring, and reporting
procedures. However, WFP has not implemented many of these
recommendations, and WFP's governing body has not established
mechanisms for ensuring that audit recommendations, from either the
external or internal audit reports, are addressed. WFP has also not
met its agreement with the United States to (1) effectively control
its projects, (2) ensure that only eligible recipients receive U.S.
donations, (3) avoid losses, and (4) maintain adequate records. It
was presumably for these reasons that AID's title II agreement with
WFP gave AID the right to seek an audit of WFP projects with
substantial U.S. donations and indications of commodity
mismanagement.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 2:7
We recommend that the Administrator of AID and the Secretary of State
direct the head of the U.S. delegation to WFP's Committee on Food
Aid Policies and Programs to work with other delegations and WFP's
Executive Director to (1) develop effective procedures with strong
internal controls for distributing, monitoring, and safeguarding
donated commodities; (2) require complete and accurate commodity loss
reports to donors on a project-by-project basis; (3) include in WFP's
project evaluations commodity management problems and actions taken
by WFP to correct project deficiencies; and (4) require annual
reports to the Committee on the status of principal external and
internal audit findings and recommendations affecting the program.
To strengthen the U.S. delegation's ability to assist WFP in
establishing more effective accountability procedures, we also
recommend that the Administrator of AID
require missions to fulfill their requirements to periodically
assess and report on host government and WFP capabilities to
manage and monitor WFP projects, and
require that the U.S. delegation to WFP develop comprehensive
position papers on WFP project proposals, including comments on
host government and WFP capabilities, to ensure adequate
accountability practices for presentation and consideration at
the Subcommittee on Projects.
AGENCY COMMENTS AND OUR
EVALUATION
---------------------------------------------------------- Chapter 2:8
AID COMMENTS
-------------------------------------------------------- Chapter 2:8.1
AID did not disagree with our specific findings or recommendations
for improved accountability for U.S. donations. However, AID
contended in its comments (reprinted in app. II) that (1) since the
United States relies on the management, audit, and accountability
policies and procedures of international organizations when making
contributions to them, it is not responsible for ensuring that U.S.
contributions are properly managed and not wasted; (2) management
problems at WFP and losses of commodities were not as severe as we
portrayed; and (3) even if some losses did occur, we did not
sufficiently appreciate the management challenge WFP confronted in a
difficult and sometimes hostile operating environment.
We recognize that the United States, by agreement, relies on the
management and audit capability of international organizations to
appropriately use and safeguard U.S. contributions. However, this
does not relieve U.S. government agencies such as AID from their
fundamental responsibility to protect U.S. government funds. In the
case of WFP, AID could have protected U.S. funds by (1) ensuring
that WFP had the capability and systems to properly manage and
safeguard U.S. donations before donations were made, which it did
not do, or (2) finding other means to provide the assistance, such as
through private voluntary organizations.
AID particularly objected to our characterization of its role and
responsibility for ensuring that U.S. government resources were not
lost, stolen, or otherwise misused. However, the record clearly
shows that AID officials (1) were almost totally unaware of WFP's
accountability problems and (2) when they were aware of them did
little if anything to get these problems resolved.
We did not overstate the severity of WFP's management problems or the
losses that occurred. Commenting on this report, WFP itself
acknowledged that it had not dealt with many of the management,
administrative, and accounting issues as effectively as it could
have. However, it is not surprising that AID would minimize WFP's
management and accountability problems given AID officials' lack of
knowledge about WFP accountability procedures, the accuracy or
reliability of WFP loss reports, or the contents of WFP audit
reports. AID said that we should "be more cautious in asserting
claims of losses" and charged that we were "speculating on the
magnitude of losses." The losses cited in our report are not
speculation. We confirmed losses of over 200,000 metric tons in the
Pakistan and Afghanistan projects. We also identified significant
loss rates above this level that we were unable to quantify; however,
we did not include those losses that could not be quantified in our
loss figures.
We fully appreciate the difficult challenge WFP continues to face in
meeting emergency and development needs; however, even WFP
acknowledges that this cannot be held out as an excuse for having
inadequate systems to ensure accountability.
WFP COMMENTS
-------------------------------------------------------- Chapter 2:8.2
WFP agreed with our findings and observations; however, unlike AID,
WFP's comments (reprinted in app. III) presented a positive and
detailed statement on actions WFP has already taken and intends to
take to address the accountability and reporting issues we raised.
These steps, approved in WFP's 1994 budget, included
improving financial management capabilities in field offices,
including the installation of a Field Controller system and the
hiring of dedicated financial officers in the field;
increasing resources for accountability functions in headquarters,
including doubling the number of internal auditors and placing
greater emphasis on commodity control and accountability;
increasing headquarter's Financial and Information Systems
functions to enable Country Offices to carry out these
accountability functions;
decentralizing the budget system where managers will be responsible
and accountable for managing their resources; and
strengthening WFP's capacity for monitoring in all WFP emergency
programs and introducing emergency training to implement
efficient delivery systems for relief operations.
In addition, WFP stated that its Evaluation Division and Internal
Audit unit would begin reporting directly to the Office of the
Executive Director, who approves the unit's work plans concerning
projects and countries to be audited. For the first time, WFP
emergency and protracted refugee operations are being evaluated by
the Evaluation Division. The Internal Audit unit will now include
assessments of management issues as a standard part of its inquiry.
The Evaluation Division is also conducting a one-time review of WFP's
entire development portfolio to recommend the elimination of
projects, if necessary.
In commenting on our report, the WFP Executive Director raised an
issue not discussed in our report because it was outside of the scope
of our review. Nevertheless, we believe it is an important issue
that needs to be considered. According to WFP's Executive Director,
WFP's ability to resolve many of the problems identified in our study
are hindered by a shortage of operating funds. During the past 4
years, WFP's annual operating budget has not increased, while its
assistance to emergency and protracted refugee operations has
doubled. She pointed out that WFP's operating expenses from 1988 to
1992 have averaged $80 million while WFP's total expenditures have
averaged $1.3 billion. WFP receives mostly food and cash to
transport food from donors. WFP receives no cash contributions from
the United Nations, and the major donors (including the United
States) are not contributing sufficient funds to cover necessary
operating expenses. The United States has provided WFP only $1
million to $2 million annually to cover WFP's operating expenses. As
a result of these constraints, WFP said that its operating budget is
severely constrained.
We discussed this matter with AID officials who agreed that the
United States should provide additional funding for operating
expenses to safeguard U.S. commodities; however, so far this has not
been possible. According to AID officials, the U.S. policy is to
provide only food and transportation costs. According to the State
Department, the U.S. position has been that other donors should
contribute cash for WFP's administrative costs. However, other
donors' cash contributions have not kept pace with WFP's rapid
increase in emergency operations. AID acknowledged that its policy
on this matter may have a negative affect on WFP's ability to closely
monitor the rapid expansion of the program.
THE UNITED STATES DOES NOT ALWAYS
RESPOND QUICKLY TO WFP
EMERGENCIES, BUT THE IMPACT HAS
BEEN MINIMAL
============================================================ Chapter 3
The United States has responded quickly to some WFP food requests for
overseas emergencies but often has responded slowly to such requests.
On average, U.S. donations to WFP emergency operations in fiscal
year 1992 arrived almost 8 months after WFP's initial request for
food aid. The slow U.S. responses were due to AID and USDA's
treating some emergency requests as nonemergencies. AID did not give
priority to many of the requests, and USDA's procurement and shipping
procedures are generally the same for emergency and nonemergency
requests. WFP has been able to accommodate slow U.S. responses by
using other stocks until U.S. donations arrive. We found no cases
in which slow U.S. responses caused victims of emergencies to go
without food.
AID'S REVIEW OF EMERGENCY
REQUESTS
---------------------------------------------------------- Chapter 3:1
WFP provides food aid to both sudden- and slow-onset emergencies
throughout the world, including natural disasters, droughts, and the
early stages of situations involving refugees or displaced persons.
When an emergency occurs and a foreign government requests
assistance, WFP helps to assess the extent of need for food aid,
design a response, and solicit donor nations for contributions. It
sends requests for title II food aid to AID.
Because the United States does not pledge to WFP emergency operations
in advance, each WFP emergency request is reviewed and approved
separately by AID. During AID's review of the request, FFP officials
consider (1) the legitimacy of need, (2) the appropriate level of
U.S. response, (3) the appropriate type(s) of food, (4) the adequacy
of administrative and logistical structures, and (5) the
participation of other donors and the host government. Finally, FFP
officials determine whether food aid or funding that has already been
committed by AID could be applied to the emergency. In reviewing
emergency requests, FFP solicits the views of other AID offices,
including overseas missions, regional bureaus, and the Office of
Foreign Disaster Assistance. In some cases, AID may also consult
with the State Department, USDA, or other U.S. agencies.
FFP must also find and commit title II funds for the donation. When
food aid programs are competing for resources, FFP must prioritize
the requests and decide which ones to fund. FFP gives funding for
emergency requests priority over other new food requests, but funds
are limited by commitments to ongoing emergency and development
projects. Another constraint is that Public Law 480 requires about
75 percent of title II food aid to go to nonemergency programs. FFP
officials said that when emergency needs are high and title II funds
are limited, they may try to transfer funds from titles I or III of
Public Law 480, reprogram title II funds committed to sponsors who
will not use all of them, or ask USDA to consider providing section
416(b) commodities.
EMERGENCY DONATIONS USUALLY
ARRIVED LATE
---------------------------------------------------------- Chapter 3:2
The United States donated 156,916 metric tons of commodities to ten
countries through WFP emergency operations in fiscal year 1992, with
a combined commodity and shipping value of $54.4 million. For these
emergency donations, we found that, on average, the commodities
arrived overseas almost 8 months after WFP's request. The fastest
U.S. response took slightly over 3 months and the slowest, more than
11 months
(see fig. 3.1). These response times include the time for AID to
approve the donation and submit an order for commodities to USDA and
for USDA to procure the commodities and ship them to the foreign
port.
Figure 3.1: U.S. Response
Time for Donations to WFP
Emergency Operations in Fiscal
Year 1992
(See figure in printed
edition.)
\a Countries listed more than once received more than one shipment.
\b Time for approval of Afghanistan request is estimated.
\c There was no WFP request (and, therefore, no approval period) for
the Malawi donation.
\d No procurement was needed for the Mozambique shipment.
Source: GAO analysis of AID, USDA, and WFP data.
AID LACKS A SYSTEM TO EXPEDITE
EMERGENCY REQUESTS
---------------------------------------------------------- Chapter 3:3
Approving emergency and nonemergency food aid programs in a timely
fashion has been a persistent problem for AID. In 1986, we reported
that approvals for a limited sample of emergency requests to
alleviate a drought in Africa took, on average, about 2 months in
1984 and 21 days in 1985. These approval times contributed to slow
arrivals of food during the rainy season.\1 (WFP was not necessarily
the program sponsor for these requests.) Recently, we reported that
FFP does not ensure compliance with a legislated requirement that it
approve or deny food aid proposals from private voluntary
organizations within 45 days.\2
We found that, on average, AID took about 3-1/2 months to approve WFP
requests for emergency food in fiscal year 1992. This includes the
time from WFP's submission of a food request to AID to the
finalization of the donation agreement between AID and WFP.
Approvals for individual requests ranged from 5 weeks to nearly 7
months. In most of these cases, FFP speeded up the delivery of food
aid by submitting the commodity order to USDA before the agreement
was completed. Nevertheless, it took nearly 3 months (on average)
from the time of WFP's request until the food was ordered. FFP's
Director agreed that some of these approval times were too long. He
said that a recent reorganization of FFP into emergency and
nonemergency divisions may help to improve the timeliness of AID's
response to emergency requests.
We found that FFP lacked a system to expedite the review of emergency
requests, and no single individual was responsible for ensuring that
WFP requests were responded to promptly. In addition, FFP did not
formally prioritize the review of emergency requests, which may have
contributed to slow approvals. Although FFP has a database to help
it manage information about requested and approved food aid
donations, FFP does not require that it be used to log in emergency
requests or track their progress toward approval or denial.\3 FFP
officers who are responsible for handling the requests told us that
WFP emergency requests can get "lost in the shuffle" of the FFP
workload, particularly if they are not perceived as high-priority
programs. We also noted that some FFP divisions used different
procedures to obtain management approval for donations. FFP
officials said that other factors can also slow AID's approvals,
including slow responses by AID missions to FFP requests for
information about WFP proposals, difficulty in identifying adequate
uncommitted title II funds to finance donations, and AID ambivalence
about specific emergency programs.
In a few cases, AID approved WFP requests quickly, but these were
highly visible and of strong interest to the United States. For
example, during the Gulf War, AID approved a request for additional
food aid for refugees in
5 weeks. AID also responded to the 1992 regional drought in southern
Africa before other donors did, including WFP. In that case, the FFP
officer alerted the AID Administrator of the need for food relief
early on, and AID acted quickly by sending a shipment of corn to
Africa before a definite program sponsor was identified. While the
shipment was en route, AID made an agreement with WFP to handle the
commodities, which were used in Malawi. Because the cargo was a bulk
commodity, which could be procured and loaded quickly, the shipment
arrived at the foreign port only 6 weeks after it was initially
approved and ordered. Another donation to mitigate the drought in
Mozambique was approved in 5 weeks.
More typical, however, are examples of AID's taking several months to
approve an emergency donation. A WFP request for a U.S. donation of
40 metric tons of corn-soya milk to support Bhutanese refugees in
Nepal took about 4-1/2 months to approve. According to the FFP
officer responsible for the approval, this was caused by the small
size of the request, the low priority of the program to AID, and the
officer's heavy workload. The commodities arrived at the foreign
port 11-1/2 months after they were requested. In another case, AID
took 7 months to approve a WFP request for emergency food for
displaced persons and refugees in Angola, although the food was
ordered 10 weeks before the final approval. According to the
responsible FFP officer, the donation was not considered urgent, and
FFP placed a higher priority on meeting emergency needs elsewhere.
There was also uncertainty about whether the State Department would
pay internal transport costs. The commodities arrived at the foreign
port 10 months after they were requested. For both the Nepal and
Angola operations, AID knew that WFP could respond to the emergency
with stocks available in country until U.S. donations arrived.
--------------------
\1 Famine in Africa: Improving U.S. Response Time for Emergency
Relief
(GAO/NSIAD-86-56, Apr. 3, 1986).
\2 Food Aid: Management Improvements Are Needed to Achieve Program
Objectives (GAO/NSIAD-93-168, July 23, 1993).
\3 For example, FFP could not tell us how many WFP emergency requests
had been denied during fiscal year 1992. FFP did not have this
information because it did not have a system to identify or track
emergency requests.
PROCUREMENT AND SHIPPING TOOK
AN AVERAGE OF 5 MONTHS
---------------------------------------------------------- Chapter 3:4
Besides approval, the other major component of responding to
emergency food requests involves buying, processing, and shipping the
food. We found that once AID approved WFP's request, USDA took, on
average,
5 months to buy and ship the food overseas. USDA officials said this
amount of time was typical for title II shipments, as they would
expect the cargo to reach the foreign port 90 to 120 days after
receiving the order from AID under the best circumstances. The
amount of time needed to transport the commodities inland to a
warehouse or distribution site is not included in this figure. A WFP
official said that unloading and inland transportation might take
from 1 to several additional weeks.
USDA treats an order for an emergency program the same as a
nonemergency order unless AID asks for it to be expedited. Once a
month, USDA purchases processed commodities for all title II program
requests.\4 According to USDA officials, the standard procurement
schedule for processed commodities allots about 1 month for USDA to
review commodity orders, prepare and distribute an invitation for
bids, and make contract awards; 1 to 2 months for suppliers to
manufacture the products and ship them to the loading port; and 1
month, more or less, depending on the destination, for ocean
transportation.
Procurement and shipping times for WFP requests included in our
review were generally in line with USDA's standard time frame,
although preparing the food for shipping took somewhat longer than
USDA indicated was typical. The average time from receiving the
order to awarding the commodity contract was 27 days, from
procurement to loading the vessel was 79 days, and from loading to
discharge at the foreign port was 50 days. There was considerable
variation in the period between procurement and loading, with a range
of 7 days (for a bulk shipment) to 139 days. Part of the variation
occurred because bulk grains can be purchased and loaded much more
quickly than processed commodities. USDA officials also said that,
while commodity suppliers are usually prompt in delivering food to
the U.S. port, ships are often late in picking it up, thus delaying
delivery overseas.
--------------------
\4 Processed commodities are refined, fortified, or bagged; examples
are vegetable oil, cornmeal, and bagged beans. Whole, unbagged
grains are not considered processed commodities.
EMERGENCY RESPONSE TIME COULD
BE IMPROVED
---------------------------------------------------------- Chapter 3:5
We discussed several ways to speed up the delivery of food aid with
officials at AID and USDA's Kansas City Commodity Office, which
procures commodities for foreign and domestic food aid programs.
These methods include pledging in advance to WFP's emergency
operations, making special purchases outside of the standard
procurement schedule, purchasing bulk grains instead of processed
commodities, prepurchasing commodities for an evolving emergency
before a definite request is received from a program sponsor, and
waiving legal requirements to purchase commodities in the United
States and to use U.S.-flag vessels in order to purchase food
overseas for emergencies. According to the officials, some of the
mechanisms (such as special purchases) are already used occasionally
in emergency situations, and other methods have serious drawbacks.
Generally, the USDA officials believed that USDA's procurement system
is efficient and that timeliness could be improved very little within
reasonable cost.
Special procurements are used occasionally by AID to hasten emergency
shipments. According to a USDA official, a special procurement with
an abbreviated bidding process and tighter time requirements for the
supplier can cut about 1 month off the standard procurement schedule,
although the commodity price may be higher than usual. It is AID's
responsibility to request expedited handling by USDA for emergencies.
However, AID did not request a special purchase for any of the
emergency donations we reviewed.
WFP has created two mechanisms to encourage donors to pledge
commodities or funds before emergencies occur: (1) the Immediate
Response Account for cash donations, which are used to pay for local
food purchases and transport costs during the initial response to
emergencies, and (2) the International Emergency Food Reserve for
commodities. Commodity pledges made in advance without restrictions
could be called upon at any time by WFP, potentially speeding donor
response to emergencies if donors were to forego an extensive review
of WFP's plans.
AID does not pledge to either emergency account. According to FFP
officials, AID does not contribute to the Immediate Response Account
because Public Law 480 funds are generally intended for U.S.
commodities and ocean transportation, not cash donations. FFP
officials said AID does not pledge food in advance to the
International Emergency Food Reserve because the agency wants to
retain flexibility in deciding how to respond to emergencies. In
some situations, AID prefers to work through nongovernmental
organizations or governments rather than through WFP. According to
WFP officials, most other donors have also chosen to donate to WFP
emergency operations on an ad hoc basis, instead of pledging.
A 1992 AID-funded study of the U.S. management of food aid programs
for refugees and displaced persons found that the pledging and
donation process hampered WFP's capacity to respond quickly and
flexibly to rapidly developing emergency situations.\5 The study
noted that WFP's difficulties in providing food for refugee
situations included (1) donors' reluctance to make firm advance
pledges, (2) the slow process of approaching donors one by one until
needs are met, (3) the difficulty of matching commodity availability
from donors with nutritional needs, (4) donors' reluctance to provide
funds for internal shipping and handling costs and overhead costs,
and (5) donor restrictions on the use of commodities.
FFP's Director suggested that pledging a small percentage of title II
commodities to the Emergency Food Reserve would be a first step in
improving U.S. responsiveness to WFP emergency requests. He said
AID always contributes a large amount to WFP emergency operations,
even though it does not pledge to them. In his view, a small pledge
could be made on a test basis to see if this would help WFP plan its
emergency programs. Pledging would also eliminate the possible need
for FFP to transfer or reprogram funds for the operations that the
pledge supports.
--------------------
\5 Stark Biddle and Steve Hansch, A Management Assessment of U.S.
Government Emergency Feeding Programs for Refugees and Displaced
Persons (Datex, Inc., Oct. 1992).
WFP ACCOMMODATES SLOW U.S.
RESPONSE BY USING OTHER STOCKS
---------------------------------------------------------- Chapter 3:6
Despite the slow U.S. response to WFP emergency requests, we found
no evidence that emergency victims suffer from slow delivery of U.S.
food aid. Although some WFP officials complained that the United
States is slower in providing food aid than other donors, they told
us that they have become accustomed to the slow response and have
been able to accommodate for it by diverting ships with WFP cargo
originally committed to other projects or by borrowing food supplies.
According to WFP's annual report, over half of WFP's emergency
operations approved in 1992 were started with food borrowed from
government stocks or WFP development project stocks already in the
country. WFP is able to do this on a regular basis because of its
large portfolio of development programs and the large number of
vessels carrying WFP cargo at any one time. WFP officials said these
actions minimize the impact of slow deliveries on food aid
recipients, but they result in higher costs for WFP.
CONCLUSIONS
---------------------------------------------------------- Chapter 3:7
The United States is frequently slow in responding to emergency food
requests from WFP. AID and USDA share responsibility for the U.S.
response because AID must review and approve WFP emergency requests
and USDA must procure and transport the commodities. AID approved
WFP requests quickly when the emergencies were a high AID priority.
However, AID did not systematically review and expedite all WFP
emergency requests, taking 3 months, on average, to process and
approve the requests. While we recognize AID's responsibility to
assess emergency requests, we believe it should develop a procedure
for expediting the review process. AID could also help WFP plan and
respond quickly to emergencies by pledging a small amount to the
International Emergency Food Reserve.
USDA took 5 months, on average, to procure and ship emergency
donations once they were approved by AID. We found that USDA's
procurement and shipping procedures were generally the same for
emergency and nonemergency requests. However, given the complexities
of providing commodities, which requires nationwide procurement,
commodity processing, U.S. transport, and overseas shipping, USDA's
procurement schedule appears fairly efficient. Although USDA could
save about a month by following expedited procedures, which might
also increase the costs of the commodities, these procedures were not
requested in the cases we reviewed because AID officials did not
believe they were necessary.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 3:8
To improve U.S. responsiveness to WFP emergency operations, we
recommend that the Administrator of AID
establish a system to expedite the approval of WFP requests for
emergency food aid and
on a test basis, pledge a limited amount of title II commodities to
WFP's International Emergency Food Reserve.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 3:9
AID stated that our recommendations concerning an early contribution
to WFP's International Emergency Food Reserve, although a change in
long-standing U.S. policy, deserves consideration. According to
AID, the State Department's Bureau of Refugee Programs has proposed
development of new blended foods that have extended shelf lives and
can be stockpiled. AID also agrees that this proposal should be
pursued.
GAO FINDINGS ON WORLD FOOD PROGRAM
PROJECTS
=========================================================== Appendix I
During our review, we evaluated five World Food Program (WFP) refugee
operations and development projects in four countries--Ethiopia,
Pakistan, Liberia, and India. We selected these projects because
they represented a mix of WFP activities in different situations and
locations and because they were among the largest recipients of U.S.
title II donations in fiscal year 1991. Our reviews focused on WFP's
project accountability procedures, including host country
responsibilities and activities; WFP's project monitoring activities;
and WFP and host country commodity reporting practices. Descriptions
of the projects and our findings are discussed below.
ETHIOPIA REFUGEE OPERATION
--------------------------------------------------------- Appendix I:1
WFP's Protracted Refugee Operation (Project 4856) is a continuation
of WFP emergency and protracted refugee operations in effect in
Ethiopia since 1987. The latest extension was approved by WFP's
Committee on Food Aid Policies and Programs for an 18-month period
beginning July 1, 1992, at a cost of $188 million. WFP planned to
provide 176,000 metric tons of food (about 71 percent of the total
amount needed for the project) at a cost of over $84 million. The
United States contributed $21.8 million in fiscal year 1991 and $11.7
million in fiscal year 1992 in title II contributions to these
projects.
WFP's implementation agreement with the government of Ethiopia
(specifically, with the Administration of Refugee and Returnee
Affairs) contained few accountability requirements.\1 The agreement
required the government to (1) provide WFP a bimonthly report on
commodity use and losses, (2) suggest ways to improve the project,
and (3) file a final project report.
In general, we found that WFP's and the host government's
accountability procedures were grossly deficient, allowing massive
losses of commodities. WFP did not monitor project operations from
1987 to 1992, and we found that WFP's and the government's current
monitoring practices were inadequate. Host government loss reports
were so inaccurate that WFP representatives in Ethiopia did not
forward them to WFP in Rome. The inaccurate host government
reporting hindered WFP's ability to accurately report to donors.
--------------------
\1 Another government organization, the Relief and Rehabilitation
Commission, also handled and distributed WFP commodities. However,
WFP had no implementing agreement with the Commission.
MASSIVE LOSSES OF
COMMODITIES OCCURRED
------------------------------------------------------- Appendix I:1.1
Massive losses of commodities (as estimated by WFP, U.N., and U.S.
officials) were indicative of the government's deficient
accountability procedures. We found that losses occurred from the
time food arrived in port to the time it reached its intended
beneficiaries.
Significant and sustained losses occurred at the Djibouti port, which
handles a significant amount of the WFP commodities for the regional
refugee project. For example, the U.S. ambassador in Djibouti
estimated losses at the port at 10 percent a year, WFP officials
estimated losses at 25 percent a year, and WFP's independent port
surveyor reported losses of over 46 percent between November 1991 and
April 1992. A WFP official said that WFP lost an entire 4-month
buffer stock of wheat (a key commodity) due to infestation,
contamination, bad storage, and theft in 1992. According to WFP and
U.S. officials, corruption and mismanagement is rampant at the port.
They said numerous officials of the government of Djibouti, the Port
Authority, and others were involved in fraud and theft of WFP
commodities.
In commenting on this report, WFP stated that the large amount of
spoilage at the Djibouti port was the result of massive congestion at
the port. The congestion occurred because ships bound for Ethiopia
were diverted to Djibouti due to port closures and because food for
the Somalia emergency was also shipped to Djibouti. In addition,
poor security conditions on Eastern Ethiopia's roads adversely
affected WFP's ability to move food out of the port. In response,
WFP rented extra warehouses to protect the food. However, heavy
rains and flooding in the port in early 1992 resulted in food
spoilage. According to WFP, the situation at the Djibouti port has
since been brought under control.
Loss of WFP food also resulted from poor management by WFP officials.
For example, in November and December 1992, several trains carrying
WFP cargo had been dispatched from Djibouti to Dire Dawa, a WFP
suboffice in Ethiopia, but WFP/Djibouti staff had not notified anyone
in Dire Dawa of the shipment. As a result, when the trains arrived
in Dire Dawa, they were parked unattended for several days, and some
of the wheat was stolen. Meanwhile, there was no wheat in stock in
Jijige, a major WFP food storage site in Ethiopia, to distribute to
refugees.
In addition, according to WFP and U.N. officials, WFP's suboffice in
Dire Dawa frequently dispatched convoys of trucks to Jijige and other
distribution points without advance notification. For example, in
January 1993, the suboffice sent an unannounced convoy of corn-soya
blend, a U.S. contribution, to Jijige. The convoy carried enough
for 16 months of distribution even though the food's shelf life is
only 6 months. WFP officials told us that most of the food would
eventually be destroyed because it would become unfit for human
consumption before it could be distributed.
A key failure of the Ethiopia project was the inflated refugee
census. The Ethiopian government and representatives from the U.N.
High Commissioner on Refugees (UNHCR), which had the main
responsibility for establishing the number of refugees that receive
assistance, placed the official number of registered beneficiaries
with ration cards at over 600,000 when the actual number was closer
to 200,000. As a result, WFP provided food for 400,000 people,
perhaps for several years, who were not eligible.
Although WFP was obligated to ensure that only intended beneficiaries
received U.S. donations, neither WFP nor UNHCR knew who got the food
once it was given to representatives of the refugee community. For
example, WFP delivered enough food for an estimated 250,000 people at
the Hartisheik refugee camp, when the actual number of persons living
there was estimated at only 80,000. Some food was diverted from the
intended recipients, and the poorest people sometimes got left out of
the distribution. UNHCR officials estimated that less than half the
official number of food recipients actually lived at the camp and
that 40 percent of the food at the camp was reloaded and sent to
Somalia for sale in markets there.
U.S., WFP, UNHCR, and other officials acknowledged that many ration
card holders sold their cards to traders and merchants. Because WFP
commodities were distributed to refugee representatives (and not
directly to the beneficiaries), merchants and traders were able to
come to refugee camps with the ration cards they bought, collect
rations for as many as 500 persons, load the commodities into trucks,
and sell the commodities in nearby towns.
WFP COULD NOT STOP LOSSES
------------------------------------------------------- Appendix I:1.2
When emergency operations began in Ethiopia in 1987, WFP/Ethiopia
neither had a monitoring system nor monitored many aspects of the
project. Although WFP has always been responsible for monitoring its
donations, WFP/Ethiopia did not specifically include monitoring in
its project activities until 1992--5 years after the initial
emergency operation. Even though WFP officials in Ethiopia were
aware that losses were occurring, they did not regard monitoring as
their obligation until 1992, when a new WFP-UNHCR agreement specified
WFP's monitoring responsibilities. Since the agreement, WFP has
hired seven of ten planned monitors.
Until late 1992, WFP relied principally on monitoring by the host
government. However, its monitoring practices did not ensure that
commodities were adequately accounted for. We found that the
government's warehouses were not well organized or managed, and
government officials could not provide us complete or accurate
project data or any indication that they were monitoring the project.
WFP officials stated that the government staff lacked the skills and
training necessary to manage the commodities. They acknowledged
that, despite this, WFP neither monitored the government nor insisted
on improved government management because WFP did not view monitoring
as its responsibility.
Furthermore, government staff have prevented WFP from monitoring
government use of WFP stocks and have violated the WFP-Ethiopia
agreement. For instance,
government staff have denied WFP staff access to project
operations, particularly to ports and refugee camps;
in some cases, Djibouti port officials have allowed WFP staff entry
to the port only in exchange for bribes;
at some locations, WFP officials were not permitted to visit
refugee camps without prior written permission from the
government; and
the government distributed food to committees of refugees or tribal
elders (not directly to the beneficiaries), and thus WFP
monitors cannot ensure that the intended beneficiaries received
food. (At the Hartisheik refugee camp, commodities for over
20,000 people were provided to about
200 elders.)
What follows are examples of monitoring shortcomings that we
identified:
Food leaving port in trucks was not weighed, so underweight bags
were not identified.
Independent monitors were not always present when food was
delivered to warehouses, and when they were present, they did
not count the food to ensure none was stolen.
WFP food monitors did not check the accuracy of stocks in
warehouses as required; when we conducted an inventory at a
warehouse, we found less than 3,500 metric tons of wheat
compared with the 4,850 metric tons reported by the WFP monitor.
Independent observers were not always present at distributions to
verify that proper rations were given only to intended
beneficiaries. For example, at the Hartisheik camp, food was
trucked to different locations at the same time, so the one
UNHCR monitor could not possibly verify the amount of food
unloaded and the losses incurred at each location.
In November 1992, WFP/Ethiopia created staff positions for one
monitoring coordinator and nine food monitors. As of February 1993,
six monitors had been hired. Given the large number of distribution
sites and concurrent distributions, nine monitors will not be able to
monitor food distribution as required by WFP guidelines. The three
monitors that we observed said they had not monitored distributions
at camps and had no plans to do so, primarily because they had too
many other responsibilities. They also told us that they lacked
training, communications capability, and transportation to
effectively carry out their responsibilities. Although WFP/Ethiopia
has requested additional monitors, WFP has yet to provide them.
WFP DOES NOT ENSURE THAT THE
GOVERNMENT FULFILLS ITS
REPORTING REQUIREMENT
------------------------------------------------------- Appendix I:1.3
WFP has not required the government to meet its limited reporting
responsibility. For example, monthly reports on food stocks and camp
population at the Hartisheik refugee camp were inaccurate; the
government did not record the beginning stock balance or the amount
of food received or lost.
Government agencies frequently did not submit bimonthly reports as
required. When the reports were submitted, WFP/Ethiopia considered
them unreliable. As a result, WFP did not provide loss rates to WFP
headquarters. On the basis of our observations and review of
documents, WFP was not able to determine the amount of food that was
lost, stolen, damaged, or mishandled. Because WFP/Ethiopia does not
provide the amounts of in-country loss to WFP Headquarters, we are
uncertain if these losses are included into the annual consolidated
loss reports provided to donors.
The WFP-host country agreement also required the government to
provide a final report on the project. Previous government reports
to WFP indicate that the government had problems meeting its
reporting requirements. The final reports on the three projects that
preceded the 1992 extension of the operation were inaccurate,
incomplete, and did not specify how food was lost.
Because the current phase of the 1992 project extension was scheduled
through December 1993 (past our review period), we reviewed the final
reports on the previous phases of the project. We found the final
reports on these to be inaccurate, incomplete, and late. For
example, although WFP requires an audited report within 3 months of
project completion, the government submitted an audited report on a
previous phase of the project 2 years after the first phase was
completed. The report stated that nearly 51 percent of the 20,000
metric tons of wheat was unaccounted for. We verified the math and
found that it incorrectly stated the losses: Sixty percent was lost.
The audited reports from earlier phases were also incomplete. They
contained no information on the amount of commodities lost due to
theft, mismanagement, or spoilage.
AFGHANISTAN REFUGEE OPERATION
--------------------------------------------------------- Appendix I:2
WFP Protracted Refugee Operation (Project 4256) provides food for
Afghan refugees registered and residing in Pakistan. Over 3 million
people fled Afghanistan after the 1978 Soviet invasion, and WFP
established feeding projects for the refugees in 1980. When the
projects ended in 1989, the current project was approved and the
operation began on January 1, 1990. The project was extended
annually in 1991, 1992, and 1993. As of April 1991, over 3.2 million
Afghans had registered for benefits, and another 500,000 were
believed to be in Pakistan unregistered. In 1991, WFP, UNHCR, and
the Pakistan government began a repatriation initiative that pays
refugees in cash and wheat to turn in their ration passbooks and
return to Afghanistan.
The United States contributed 40 percent of all commodities donated
to the project from 1980 to 1992, excluding sugar. The United States
donated over 1.9 million tons of the 4.8 million tons of WFP wheat
deliveries, which made it the single largest contributor of wheat.
The United States was also the largest contributor of cooking oil
during this period. In fiscal year 1992, the United States
contributed 130,000 tons of food worth $31.2 million. The U.S.
contribution to this project was the second largest U.S.
contribution to a WFP project; the largest was the U.S. contribution
to the Liberian refugee project in fiscal year 1992.
WFP works in conjunction with the government of Pakistan, provincial
governments, and the UNHCR. The project is governed by an
implementation agreement between WFP and the host government. The
implementation agreement leaves the design and implementation of the
accountability system to the host government. The agreement requires
the government to report monthly to WFP on commodity use but does not
specify how the information in the reports should be gathered or
verified prior to report submission.
Provincial government staff provide monthly food distributions, and
these distributions are controlled through the use of ration
passbooks issued to the head of each registered refugee family. Each
month, each family head receives a 1-month ration for each person
listed in the passbook.
We found that the accountability procedures used by WFP and the host
government were insufficient, as indicated by continuing problems
with losses, theft, and mishandling of WFP food from at least 1987 to
1993. Although WFP monitors identified many instances of
mismanagement, WFP was generally ineffective at correcting the
problems. WFP and host government monthly loss reports consistently
under-reported the amount of food stolen and mishandled.
POOR ACCOUNTABILITY
PROCEDURES
------------------------------------------------------- Appendix I:2.1
WFP did not provide the host government guidance on setting up an
adequate accountability system. WFP/Pakistan officials told us that
the government did not need WFP's assistance in developing a
commodity accountability system because one was already in place.
WFP determined the adequacy of the government's system on the basis
of informal observations and never formally examined it before
initiating the project.
We found the government's accountability system was not sufficient to
prevent misappropriation of commodities. Numerous and continuing
instances of losses, theft, and mishandling of WFP commodities
occurred. On the basis of our estimates, approximately 204,120 tons
of food valued at almost $35 million had been stolen or
misappropriated since 1987. Most of the losses occurred as a result
of people fraudulently registered as refugees. Losses included
194,400 metric tons of wheat, valued at $25.3 million, and 9,720
metric tons of vegetable oil, valued at $9.7 million. During this
period, the United States donated 40 percent of all wheat donations
and provided most of the oil.
Refugee registration was a key internal control failure in the Afghan
project. From 1987 to 1992, WFP provided over 200,000 tons of food
to over 270,000 fraudulently registered people. WFP had to rely on
the government and UNHCR to implement a registration system, but the
system allowed fraudulent registrations and the subsequent
over-distribution of commodities. Because WFP's mandate is to
provide food, not conduct refugee registrations, WFP accepted the
refugee registration figures even though it believed the census
figures were unrealistically high.
In 1992, UNHCR, WFP, and the host government negotiated a new refugee
population figure for Baluchistan and reduced the registration figure
from about 720,000 to about 450,000. The reduction was based on a
limited estimate of refugees in a few of the camps. Because
officials could not determine which ration passbooks were obtained
fraudulently, the host government and UNHCR continue to honor all
passbooks. To protect donors, WFP reduced rations to all registrants
by the amount of food that would normally have fed 270,000 refugees.
But the solution allows the fraud to continue because no passbooks,
including those fraudulently obtained, were invalidated.
WFP and the host government acknowledge that they could pay benefits
to persons holding fraudulent passbooks under the repatriation
effort. Each ration passbook entitles the bearer to wheat and cash
when he or she turns in the passbook and repatriates to Afghanistan.
We estimate that UNHCR could pay nearly $6 million in cash and WFP
could provide an additional 13,500 metric tons in wheat to persons
holding fraudulent passbooks.
Many instances of mismanagement (that are more in WFP's control than
the fraudulent registration problem) continue even though WFP
monitors identified some of them many years ago. For example, since
January 1990, WFP/Pakistan staff have uncovered numerous examples of
underweight wheat distribution, unauthorized sales of donated
commodities, and short weight bags of wheat in storage. In March
1991, WFP field monitoring staff reported underweight distribution
due to skimming by provincial government officials who were trying to
take as much as possible before the refugees repatriated and the
project ended. Although WFP notified the government about these
unauthorized activities, problems with underweight distribution
continued.
In June 1990, at least seven refugee villages in Punjab Province
received empty or partly full containers of cooking oil. WFP field
monitors investigated and found that the village warehouse staff were
pressured to (1) sign receipt documents indicating receipt of full
weight shipments and (2) provide underweight distributions to
refugees to cover up the theft.
WFP monitors found that provincial government staff were charging
refugees a fee to receive their rations. The implementation
agreement clearly prohibits this. However, although WFP/Pakistan
notified the host government that this practice had occurred,
Pakistan officials were not able to effectively stop it.
Finally, provincial governments routinely distribute food to tribal
elders or other representatives of the refugee groups who are to
deliver the food to intended beneficiaries. We were told that elders
sometimes collected hundreds of individual rations this way. This
distribution procedure is prohibited by the implementation agreement
because it affords no assurance that (1) full rations reach their
intended beneficiaries or (2) elders represent as many refugees as
they have managed to register. Moreover, when pressed, some tribal
elders could not produce any family members, and some could produce
only a few. WFP/Pakistan acknowledged that distribution to tribal
elders continued on a routine basis but provided no evidence that any
serious attempt was made to prevent this unauthorized practice.
We found that while WFP/Pakistan's monitoring of the Afghan refugee
project effectively identified commodity management problems, it was
not effective at resolving them. Monitoring for the project included
(1) a plan to ensure that all field monitors eventually visit all
project activity sites, (2) a standardized monitoring checklist and
standardized report formats to improve consistency and help identify
problems, (3) the assignment of monitors to different locations to
maintain independence from the government staff they must monitor,
and (4) a new consolidated stock register to track numerous transfers
among commodity warehouses and refugee villages in the Northwest
Frontier Province.
WFP REPORTS UNDERSTATE
INCURRED LOSSES
------------------------------------------------------- Appendix I:2.2
WFP's monthly status reports on the project are unreliable. What
follows are examples in which WFP under-reported losses by excluding
actual losses identified by its own monitors:
WFP and the host government did not report the fraudulent
distribution of food in Baluchistan as a loss, although the loss
was substantial. WFP knew that fraudulent distribution of food
was occurring as early as 1982, and the negotiated reduction of
270,000 was an attempt to estimate the extent of the fraud.
WFP has not reported the underweight distributions that occurred
between January 1990 and November 1992 in five districts that
WFP reviewed. While the quantity of underweight distribution
was often less than 10 pounds per refugee, the aggregate loss
could be substantial. Our estimate showed that the potential
for loss of up to 900 metric tons of food if 1-pound underweight
distributions occurred just once to each registered refugee in
the five districts.
From January 1990 to December 1992, WFP under-reported wheat losses
on its commodity reports by up to 312 tons. These were losses
identified by WFP monitors but excluded from WFP's monthly
reports.
In August 1992, ten host government staff members were suspended
for misappropriation of WFP food. The quantity of food
misappropriated was never determined or reported as a loss.
According to WFP/Pakistan officials, WFP has not reported these
losses because of a provision in the WFP-Pakistan agreement. The
agreement states that WFP must wait for the government to investigate
a loss before it can be reported. WFP officials say that these
investigations can be time-consuming and some are never completed.
Because so much time has elapsed since the discovery of these losses,
we believe that it is unlikely that they will ever be reported.
PAKISTAN DEVELOPMENT PROJECT
--------------------------------------------------------- Appendix I:3
Rural Development Works in the Northwest Frontier Province
(Project 2309) is a food-for-work project designed to assist Pakistan
in making infrastructure improvements in the rural province. The
project promotes the construction of roads, irrigation systems, and
other facilities while providing employment opportunities for local
residents. In addition, it attempts to strengthen democratic
institutions by permitting democratically elected local governing
bodies, known as union councils and district councils, to select and
implement individual projects. The democratically elected councils
select and manage the development projects. Construction work is
carried out by local workers who receive food and cash as
compensation for their labor.
WFP approved the development project in April 1980 and reapproved it
in 1984, 1988, and 1990. The project was suspended in 1991 when the
host government dissolved the union councils for political reasons;
WFP plans to restart the project are underway.
WFP signed the implementation agreement with the government of
Pakistan. The government designated the Ministry of Food and
Agriculture as the point of contact with WFP for policy matters, and
the Northwest Frontier Province's Department of Local Government and
Rural Development for implementation issues. Under the WFP-Pakistan
agreement, the host government was responsible for storing and
distributing commodities. The agreement does not provide guidance on
specific accountability procedures but does require that the
government and WFP monitor the project and submit commodity use and
audit reports.
Our review found problems with a series of special allocations made
between 1988 and 1990.\2 We found that inadequate accountability
controls over these allocations resulted in hundreds of thousands of
staff days of food being stolen or mishandled. WFP monitoring
practices were not effective and follow-up on losses was inadequate.
We did not verify loss reports because the program was in suspension
and, therefore, adequate data were not available.
--------------------
\2 Special allocations are large-scale, one-time allotments of food
provided in exchange for work on a specific development project.
LOSSES INCURRED IN SERIES OF
SPECIAL ALLOCATIONS
------------------------------------------------------- Appendix I:3.1
WFP experienced a series of losses in the food-for-work projects
involving special allocations made between 1988 and 1990. These
allocations totaled 985,000 workdays,\3 and of this amount, WFP found
that food for 710,000 workdays was stolen or misappropriated. The
losses totaled 2,085 metric tons of food, including 1,775 metric tons
of wheat valued at approximately $230,750, 53 metric tons of
vegetable oil, 177 metric tons of pulses (such as lentils, beans, or
peas), 71 metric tons of sugar, and 8.5 metric tons of tea.
Of the 710,000 workdays of food that was misappropriated, WFP found
that 200,000 workdays of food was stolen and sold in Peshawar.
Another 100,000 workdays of food was stolen with no trace of
distribution to the intended recipients. WFP monitors verified the
misallocation and notified provincial government authorities. The
authorities disagreed with WFP and never compensated it for the
thefts.
In three additional special allocations of 250,000, 100,000, and
60,000 workdays of food, none of the allocations were ever brought to
the intended worksites or distributed to workers. Furthermore, files
were faked to show that work had been completed when, in fact, most
of the work was not done at all. Unlike the earlier cases, Northwest
Frontier Province officials agreed that the commodities had been
misused and claimed to have remedied the situation. However, as of
April 21, 1993, WFP had not reverified that any such work had
occurred in spite of past problems on the projects. In 1991, to
prevent such problems in the future, WFP eliminated the practice of
distributing special allocations.
In contravention to normal WFP procedures, WFP also permitted the
provincial government to give commodities to the district and union
councils before the food-for-work projects were selected. In other
food-for-work projects that WFP oversees, it requires project
selection before commodity allocation. This practice prevents WFP
from providing more workdays of food than necessary. In the Pakistan
project, however, WFP had no assurance that it maximized its
food-for-work ratio. According to WFP/Pakistan, when the development
project restarts, the process will be changed to require that project
selection and approval occur before commodity allocation.
--------------------
\3 Under the project agreement, each worker was entitled to
approximately 6.5 pounds of food for each day of work, or workday,
performed on the project.
MONITORING PRACTICES WERE
INADEQUATE
------------------------------------------------------- Appendix I:3.2
We found little evidence of coordination between monitoring visits,
no consistency in reporting, and no organized follow-up of identified
deficiencies. We could not reconstruct the monitoring activity for
the most recent monitoring year. The monitoring reports did not
follow a consistent format, making it difficult for WFP management to
determine whether monitoring was sufficient or which weaknesses were
identified. In addition, WFP monitors were not present for the
distribution of the special allocations of 710,000 workdays of food
made during the 1988-90 period.
The monitoring system also lacked an organized follow-up system. It
appeared that follow-up on deficiencies was entirely ad hoc and,
therefore, complicated by frequent staff changes. For example, in
the case of the misappropriation of 250,000 workdays of food,
government officials agreed that no work had been performed and
assured WFP that the responsible parties were forced to complete the
work that was originally planned. However, WFP staff during that
period never verified that any work was performed. Because of staff
turnover, the new staff was unaware of the case until we brought it
to their attention during our review.
WFP officials in Pakistan told us that the monitoring system is in
the process of being changed. When the project restarts, field
monitors will use a monitoring checklist, currently being revised at
the WFP office in Islamabad, to standardize the type of information
collected during field visits. Also, WFP has begun using a standard
report format to improve the consistency of information collected on
all WFP projects in Pakistan. Although we did not assess the
potential impact of these changes, they do not address WFP's
inability to assure government officials properly safeguard WFP food
donations.
LIBERIA REFUGEE PROJECT
--------------------------------------------------------- Appendix I:4
The Regional Protracted Refugee Operation (Project 4604) serves
refugees and displaced persons in Cote d'Ivoire, Guinea, Liberia, and
Sierra Leone. The refugee operation is an extension of a continuous
succession of projects that have provided assistance in the
four-country region since March 1990. The latest extension is a
1-year operation that began in January 1993 and is intended to
provide food to about 2 million beneficiaries in the region. The
estimated cost of the project is $171 million, including WFP costs of
$118 million and UNHCR and other donor costs of $53 million. The
United States provided 67,530 metric tons of food and transportation
costs for a total contribution of $39 million in fiscal year 1992.
This represents the largest U.S. commitment of title II resources to
any WFP emergency in fiscal year 1992.
Because we were not permitted to visit Liberia due to security and
administrative problems, we reviewed the Cote d'Ivoire portion of the
regional operation. WFP's regional headquarters is located in Cote
d'Ivoire, and the country hosts 240,000 refugees. WFP has
implementation agreements with the Cote d'Ivoire government. Because
of inadequate resources, Cote d'Ivoire delegated its implementing
responsibilities to the local Red Cross.
ACCOUNTABILITY WAS GOOD
------------------------------------------------------- Appendix I:4.1
The WFP project that we visited in Cote d'Ivoire had adequate
accountability practices in large part because the local Red Cross
had higher standards of commodity control than WFP. In addition, the
government had not used WFP food as a potential resource and allowed
the Red Cross and WFP to manage, monitor, and report on all project
activities.
WFP generally monitors commodities from the time they arrive at port
until the time they are delivered to the local Red Cross. WFP relies
on the local Red Cross to distribute food in Cote d'Ivoire, and often
WFP does not fulfill its requirement to observe food distribution.
Nevertheless, our work indicates that the Red Cross is providing
reasonable assurances that proper rations are provided to eligible
beneficiaries.
The local Red Cross staff received training from the International
League of Red Cross/Red Crescent Societies on how to manage and
distribute food. The only shortcoming we found at Cote d'Ivoire was
the Red Cross failure to always be accompanied by an independent
observer at food distribution sites. The presence of an independent
observer provides a validation check on reported disbursements.
In our visits to Cote d'Ivoire warehouses, we found only one case of
mismanaged food. In this instance, a small amount of U.S.- supplied
corn-soya blend was not adequately stored. Several bags were torn
apart and exposed. Red Cross staff told us that WFP field staff had
not responded to its requests to declare the food unfit for
consumption and suitable for disposal.
WFP RELIES ON THE RED CROSS
TO REPORT ON COMMODITY USE
------------------------------------------------------- Appendix I:4.2
WFP relies almost solely on Red Cross officials to report on
commodity use, and the commodity reports provided by Red Cross to WFP
in Cote d'Ivoire appeared to be reasonably accurate and timely. WFP
does not have an implementation agreement with the Red Cross;
therefore, the Red Cross is not required to use the standard WFP
reporting format. However, on the basis of our review, WFP was
generally able to determine the amount of food that was lost, stolen,
damaged, or mishandled. WFP has taken corrective actions based on
problems identified in the commodity reports.
INDIA DEVELOPMENT PROJECT
--------------------------------------------------------- Appendix I:5
The Supplementary Nutrition Project in India (Project 2206) began in
1976 as part of the government of India's Integrated Child
Development Scheme. The scheme is intended to provide supplemental
nutrition and other services to eligible children 6 years old and
under and to pregnant and lactating mothers. WFP's project is to
fill the nutrition gap between the minimum calorie requirement and
the average amount that this nutritionally vulnerable group is
actually consuming.
WFP approved the fifth extension of the program in December 1988,
food distribution began in October 1990, and distribution is
scheduled to last until December 1993. WFP required about 84,000
metric tons of soya-fortified bulgur wheat, 18,000 tons of corn- soya
blend, and 12,500 tons of vegetable oil, valued at a total of $45.6
million. The United States was the sole donor of all resources,
except for 15 percent of the vegetable oil, which was supplied by
Sweden.
WFP has an implementation agreement with the government of India.
The agreement does not specify accountability requirements but does
require that the government submit quarterly commodity reports and
annual audit reports. State social welfare agencies implement the
projects for the government. Each of the state agencies subdivides
its state by sectors, and each sector has about 20 feeding centers.
These centers are headed by center workers who manage the center,
provide hot meals daily using WFP-supplied foods, and arrange for
other social services.
We found generally adequate accountability procedures in use for this
project. WFP and the state agencies provided reasonable assurances
that food would be used as intended. Monitoring was systematic, and
irregularities were reconciled. WFP commodity reports were generally
submitted on time, and we found no anomalies in the reports.
INTERNAL CONTROLS AND
MONITORING PRACTICES WERE
EFFECTIVE
------------------------------------------------------- Appendix I:5.1
The government of India provides adequate accountability over WFP-
supplied commodities. It maintains tight control over the process of
accounting for commodities lost during distribution. We identified
only one potential weakness in the accountability system: The state
agencies sometimes left vacant supervisor positions that are critical
to the effective application of internal controls.
Supervision is an important control because food distribution workers
are not always sufficiently literate to adequately fulfill their
reporting responsibilities and, therefore, need supervisory guidance.
Although the supervisors are responsible for ensuring that these
workers meet all their responsibilities, only two of the six
supervisor slots in the sector of the state that we visited were
filled during our visit. The existing supervisors were left to cover
too many feeding sites. This shortfall increases the risk of errors
in the monthly reports prepared by the workers. According to WFP,
the salary paid to these workers is insufficient to always attract
literate or educated staff.
WFP in India effectively monitored the India development project by
obtaining and reconciling independent reports from various stages in
the distribution process and making field visits to follow up on
irregularities. WFP also has an ongoing initiative to improve
monitoring by developing an automated commodity reporting system
known as "Nutrimonitor." WFP is developing the Nutrimonitor system,
which automates a reconciliation system on various commodity reports,
with a grant provided by AID. WFP also conducts planned field
visits, checks warehouse operations and stocks balances, and monitors
feeding centers.
QUARTERLY REPORTS WERE
ACCURATE, BUT AUDIT REPORTS
DID NOT MEET REQUIREMENTS
------------------------------------------------------- Appendix I:5.2
State government commodity reports accurately reflected commodity
use. All but one of the five Indian states participating in the WFP
project had submitted the reports to WFP on time at the time of our
review. WFP used these reports as the basis for commodity reporting.
We were able to trace shipments from port to distribution and found
no significant irregularities on our review of the commodity reports.
Unlike quarterly commodity reports, most state annual audit reports
did not meet WFP requirements. At the time of our review, only one
of the five states had provided the reports on time. WFP/India also
had difficulty reconciling the annual audit reports with the
quarterly reports due to the complex nature of the project structure.
(See figure in printed edition.)Appendix II
COMMENTS FROM THE AGENCY FOR
INTERNATIONAL DEVELOPMENT
=========================================================== Appendix I
(See figure in printed edition.)
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The following are GAO's comments on the Agency for International
Development's letter dated November 24, 1993.
GAO COMMENTS
--------------------------------------------------------- Appendix I:6
1. We have not suggested that AID should exercise direct management
control over WFP activities, and our report fully recognizes that AID
must work through the WFP governing board to achieve the desired
management improvements. Nevertheless, we believe that AID cannot
avoid its responsibility for ensuring that U.S. government
contributions are properly managed. AID's regulations recognize this
responsibility by requiring AID overseas missions to (1) determine
whether WFP and the host government can effectively manage U.S.
donations prior to the provision of U.S. assistance and (2)
periodically assess WFP and host country management and alert WFP and
AID of any program mismanagement for resolution. This responsibility
is further recognized in AID's title II agreement with WFP that gives
AID the right to examine WFP records and to seek a U.S. audit of the
program if necessary.
2. Our draft report recommended that AID either apply regulation 11
to WFP or work with other delegations and WFP's Executive Director in
specific areas to improve WFP's management and accountability
procedures. AID's objection to applying regulation 11 to WFP rests
on the fact that this regulation includes direct audit authority over
grantees by AID's Inspector General. AID argued in an attachment to
its comments (which we did not reprint due to its length) that the
United States generally does not have authority to audit
international organizations to which the U.S. contributes, such as
WFP, unless a fund is established at the international organization
to which the United States is the sole contributor. AID stated that
executive branch policy excludes international organizations from
uniform U.S. administrative requirements that are applied when
federal departments and agencies make grants or otherwise provide
assistance.
We agree with AID that to condition AID's support for WFP on WFP
acceptance of AID regulation 11, with the right to audit reserved for
the Inspector General, would be inconsistent with executive branch
policy and practice in providing assistance to U.N. agencies, and
may be inconsistent with international agreements to which the United
States is a signatory. We also agree with AID that even without
regulation 11, the United States currently has the tools and the
opportunity both to affect WFP's procedures for approving and
monitoring projects and to improve AID participation in the process.
As indicated by AID's Office of General Counsel, the United States
should use its membership on the Committee on Food Aid Policies and
Programs to (1) help WFP improve its procedures and internal controls
for distributing, monitoring, and safeguarding donated commodities;
(2) require complete and accurate commodity loss reports to donors on
a project-by-project basis; (3) include in WFP's project evaluations
commodity management problems and actions taken by WFP to correct
deficiencies; and (4) require annual reports to the Committee on Food
Aid Policies and Programs about the status of important findings of
the external auditor and recommendations affecting the program.
According to AID's General Counsel, AID should be more diligent in
following existing guidance and using current authority with respect
to WFP comments on proposed WFP projects in forming positions about
approval of projects by the Committee on Food Aid Policies and
Programs. If necessary, the U.S. delegation should insist on
receiving additional information, including changes in project
design, to be satisfied that the recipient country can implement the
project effectively and WFP has the capability to supervise and
monitor it responsibly. If missions suspect program irregularities
during implementation, they should inform both local WFP personnel
and AID, which can raise the problems with WFP's Executive Director
or the Committee on Food Aid Policies and Programs if appropriate.
When necessary, AID may exercise its rights under the standard
Transfer Authorization to request additional information from WFP
about the handling and disposition of donated commodities and an
audit of the program by WFP.
We have modified our recommendation to delete the references to AID
regulation 11.
3. We agree that the delivery of food is both difficult and risky
and that losses will inevitably occur. However, we believe that
adequate visibility over the losses incurred during distribution of
the commodities and feedback to donors on the effectiveness of the
distribution process are vital to continued support for such
operations.
4. WFP has recently taken or plans to take numerous actions to
improve its management and accountability processes. This
information has been included in chapter 2.
5. We believe that WFP's reliance upon host government
accountability procedures and the problems identified in three of the
five projects we reviewed, illustrate the weaknesses in WFP's
accountability procedures. Furthermore, as the text of this report
states, the fact that the projects in India and for Liberian refugees
in Cote d'Ivoire were well managed cannot be attributed to WFP's
procedures or policies, but instead occurred because WFP's partners
already had in place acceptable procedures.
6. Information on WFP's budgetary constraints has been included in
chapter 2. We agree with AID that WFP's ability to adequately
monitor and report on the distributions of food may require
additional resources; however, evaluating WFP's administrative
structure was outside of the scope of this report.
7. We reviewed in detail the multi-step process used to review and
approve WFP projects. We found that while the United States had a
process in place, it was not using the process effectively to ensure
proper safeguards over U.S. donations. We found that (1) missions
were generally not assessing WFP and host country management
capabilities, (2) the U.S. delegation members generally did not
coordinate their positions prior to arriving in Rome, and (3) the
delegation members did not generally raise management problems, such
as those in Ethiopia, even when they were aware of them.
A review of AID headquarters files did not indicate that the U.S.
delegation had adequately prepared for the Subcommittee on Projects
meetings. Further, we found that of the hundreds of projects
proposed by WFP, the U.S. delegation had never rejected a proposal.
While the United States has developed a multi-step review process, we
saw no evidence that this corrected WFP program management problems
that had been ongoing, in some projects, for years.
8. We confirmed losses of over 200,000 metric tons of food in the
Pakistan and Afghanistan projects. We also identified significant
loss rates above this level that we were not able to quantify. We
did not include those losses that could not be quantified in our loss
figures.
9. We agree that we found no evidence that emergency victims had
suffered as a result of AID's slow emergency response time. However,
this was the result of WFP's shifting commodities destined from one
project to the emergency rather than because of prompt U.S.
responses to WFP's requests. In fact, WFP officials told us that
AID's slow response resulted in significant and costly administrative
burdens on their part.
10. We agree that some losses will inevitably occur in the commodity
distribution process, particularly in the difficult environment in
which the commodity distributions sometimes take place. However, we
believe that adequate systems to monitor, safeguard, and account for
the commodities would have significantly reduced the losses. At a
minimum, such systems could have alerted donors to high losses as
they occurred and placed them in a position to discontinue
distribution, thereby avoiding continued losses. The fact that the
losses were not being identified or reported hampered (1) WFP from
strengthening its procedures for safeguarding and accounting for the
commodities and (2) the donors from making informed decisions over
whether to continue the contributions. Nevertheless, since a direct
causal relationship cannot be proven, we have modified the report
language.
11. AID objected to our characterization that it had abdicated its
responsibility because such a characterization implies a "willful
giving up," which AID said was not the case. Our review clearly
shows that AID neglected to ensure that WFP had the capability and
systems to provide proper accountability for U.S.
government-provided resources. However, we cannot judge whether this
neglect was willful and we have therefore deleted the word
"abdication" from our report.
12. Our draft report did not suggest that AID missions have a
responsibility to resolve management problems of WFP projects. AID
regulations state that missions should be alert to any WFP program
management shortcomings and bring any instances of misuse of
commodities to the attention of WFP representatives. If the matter
cannot be resolved, the missions are directed to notify
AID/Washington for resolution.
(See figure in printed edition.)Appendix III
COMMENTS FROM THE WORLD FOOD
PROGRAM
=========================================================== Appendix I
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The following are GAO's comments on the World Food Program's letter
dated November 17, 1993.
GAO COMMENTS
--------------------------------------------------------- Appendix I:7
1. We have included this information in chapter 2 to reflect recent
steps taken by WFP to improve its accountability, monitoring, and
reporting.
2. We have included information on WFP financal resources in chapter
2.
(See figure in printed edition.)Appendix IV
COMMENTS FROM THE DEPARTMENT OF
AGRICULTURE
=========================================================== Appendix I
(See figure in printed edition.)
MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V
NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C.
--------------------------------------------------------- Appendix V:1
David R. Martin, Assistant Director
Edward J. George, Jr., Evaluator in Charge
Ann L. Baker, Evaluator
EUROPEAN OFFICE
--------------------------------------------------------- Appendix V:2
Paul M. Aussendorf, Assignment Manager
George A. Taylor, Jr., Senior Evaluator
Peter J. Bylsma, Evaluator
FAR EAST OFFICE
--------------------------------------------------------- Appendix V:3
Priscilla M. Harrison, Assignment Manager
Brian J. Lepore, Senior Evaluator
Mark D. Ulanowicz, Evaluator