USAID Failed to Ensure Palestinian Aid Dollars Kept from Terrorists, GAO Says

Agency downplays report as Biden admin moves to restart aid to Palestinians

Masked militants march with guns
Masked Palestinian militants march with guns / AP
April 1, 2021

The United States Agency for International Development is downplaying the significance of a recent government oversight report highlighting the agency’s failure to ensure that taxpayer aid dollars sent to the Palestinian government did not ultimately make their way to terrorists.

The Government Accountability Office, a federal watchdog group, recently cited USAID over its failure to certify from 2015 to 2019 that taxpayer funds did not benefit organizations tied to terrorism. While the agency did check its primary grantees for terrorism ties, it "did not consistently ensure" that awards these entities made to others, known as subawards, were compliant with "antiterrorism requirements," according to the GAO’s findings.

The disclosure comes amid a larger debate about the Biden administration’s decision to restart aid to the Palestinian government. The State Department announced last week that it is giving $15 million to the Palestinians to help combat the coronavirus pandemic. A Wednesday Associated Press report claims the administration quietly approved another $75 million in aid already set to be disbursed by USAID.

Congressional Republicans oppose a restart in Palestinian aid, which was frozen by former president Donald Trump, and the watchdog’s latest findings are likely to add fuel to these calls. The Palestinian government is known to use international dollars on a program known as "pay-to-slay," in which donor funds are spent caring for terrorists and their families. The State Department recently informed Congress in a private report that the Palestinians spent at least $151 million in 2019 on that program. There are also concerns that the resumption in aid violates a bipartisan 2018 law called the Taylor Force Act, which bars the federal government from providing the Palestinians with aid until they officially end the "pay-to-slay" program.

USAID downplayed the GAO’s findings in comments to the Washington Free Beacon, saying it is already implementing a series of reforms meant to ensure that taxpayer dollars do not reach terrorists.

"We are already taking steps to increase oversight of subawardees in the future," a USAID spokesman said, adding that the GAO "found no cases of USAID funding to parties who failed vetting."

As new aid money begins to flow, USAID’s Mission at the West Bank and Gaza will conduct compliance reviews for all prime and subawardees "within the first 18 months of program implementation," the spokesman said.

The GAO found systemic issues in USAID’s oversight methods with regard to Palestinian aid. Organizations and individuals who were given grants did not consistently vet its partner organizations and individuals for ties to terrorism. Furthermore, USAID took no action to investigate these shortfalls.

In some cases, "these instances of noncompliance [with anti-terrorist laws] were found after the award ended, with no remedial action pursued by USAID," according to the GAO. Subsequent investigations into the agency "identified deficiencies in internal controls that could lead to further instances of noncompliance," the report states.

In other cases, USAID did not complete its vetting of a grantee until after aid agreements were signed. The GAO estimates between 37 and 262 grants did not comply with antiterrorism vetting procedures.

USAID’s mandatory compliance reports also were found to be lacking in many cases. Of 86 compliance reports reviewed by the GAO, "32 contained one or more failures to comply with vetting requirements for subawardees, trainees, or other recipients of direct cash or in-kind assistance." This includes a repeated failure to ensure that trainees participating in these aid programs did not have ties to terrorism.

Investigators additionally determined that "USAID did not ensure that prime awardees included mandatory provisions in their subawards that required subawardees to attest that the organization does not provide material support or resources for terrorism."

Responding to the watchdog’s findings, the USAID spokesman said the organization "takes seriously its commitment to ensuring American taxpayer funds are spent as intended and do not inadvertently support entities or individuals associated with terrorism."

The GAO recommends that before any resumption in Palestinian aid, USAID should verify that its awardees adhere to anti-terrorism laws and proper vetting procedures. It also recommends that the agency conduct post-award compliance reviews to ensure that money is not being misused or ending up in the hands of terrorists.

Since 1993, the United States has provided more than $6.3 billion in assistance to the Palestinians to help foster a permanent peace with Israel.