Muzzling a watchdog.

THE INDEPENDENT WATCHDOG OF Congress. That's the impressive-sounding catch phrase often used to describe the General Accounting Office (GAO), the nonpartisan government outfit that conducts hundreds of investigations a year for the legislators of Capitol Hill. Its 2,500 evaluators investigate subjects ranging from acquisition problems at the Pentagon to the efficiency of penny manufacturing at the U.S. Mint, and they often do a good job. Readers of The Washington Monthly are well aware of the GAO's importance and of the need for an objective evaluator of government programs that is immune to political pressures and bureaucratic power plays.

Yet the independence of the GAO was challenged recently when it dared to question the existence of a small, obscure, government-financed foundation that happens to be a personal favorite of major players across Washington. What happened doesn't constitute a major scandal. But if the GAO softpedaled a report for political reasons, that ought to worry any citizen concerned about government accountability.

Several years ago, the House Foreign Affairs Committee asked the GAO to look into the proliferation of pro-democracy programs run by federal agencies. With the end of the Cold War, the State Department, the US. Agency for International Development (AID), the U.S. Information Agency, the Pentagon, and others were each grabbing for a piece of this growth industry. One small but significant participant in the pro-democracy field has been the National Endowment for Democracy (NED), which receives up to $50 million a year from Congress and disburses these federal funds to organizations supposedly promoting democracy in foreign lands. Most of its money is funneled to four "core grantees"-the international arms of the Democratic and Republican parties, the AFL-CIO, and the U.S. Chamber of Commerce.

With this quartet of politically wired organizations as the prime beneficiaries of the NED, influential people throughout the capitol have a vital stake in the foundation. To say the NED is well connected is an understatement. Its board members and supporters include such political luminaries as Richard Lugar, Zbigniew Brzezinski, Walter Mondale, John McCain, and Jeanne Kirkpatrick.

Using NED dollars, the core grantees and other recipients conduct assorted activities, from worthy projects like how-to-register-voters seminars in newly democratic nations, to more questionable exercises like flying operatives and consultants to fancy overseas hotels for conferences. Managed since its creation by a small band of neoconservatives who use government funds to wage their own foreign policy, the foundation bears a troublesome past. It has assisted groups with agendas other than the promotion of democracy, such as a thuggish far-right outfit in France and a Costa Rican policy institute that schemed to unseat an elected president. Past government audits have found lax financial management. In other words, the foundation could use a little outside inspection.

In 1993, a team of General Accounting Office evaluators began studying the crazy quilt of federal democracy programs, and subsequently they divided up the project into portions. One was to be a review of the NED. "The GAO was so appalled by the lack of oversight at NED and other matters that it wanted to issue a separate report on NED," says a former foundation official. "This made people at NED very nervous. They were praying it wouldn't be too negative."

Their prayers were answered. And although the way it happened is a matter of contention, the episode prompts questions about the independence of GAO and suspicion about potential, if not actual, conflicts of interest within the investigative arm of Congress. It also shows how a government program can be rigged so it becomes a political sacred cow.

Over the course of two years, several GAO employees toiled on the NED study, examining grants in several countries, interviewing past and present staff members, and preparing statistical analyses that compared NED and AID programs. Then in the spring of 1995, a slightly odd event occurred. The GAO evaluators were told to speak to John Brademas, the former Democratic congressman who chairs the NED. The investigators were well aware of Brademas's position with the foundation. But, according to Joe Kelley, the GAO manager supervising the project, they were surprised to learn that Brademas also sat on the Comptroller General's Consultant Panel, a collection of prominent people who advised Charles Bowsher, then the head of the GAO. Thus the GAO evaluators were probing an organization overseen by an adviser to their boss. This situation, Kelley remarked, "troubled me and other people"

Several GAO people, including Kelley, traveled to New York to see Brademas, now president emeritus at New York University. At that meeting, according to Kelley, Brademas expressed disappointment that the investigators had not contacted him earlier. "He tried to put pressure on the evaluators," another former GAO official says. "He was upset he had not been notified of the investigation and that he did not know about it until we were about halfway through. Our position was that we don't notify everybody on the board of organizations we evaluate" Brademas denies ever applying pressure.

The Brademas meeting did not alter the evaluators' plans, and in the summer of 1995 a draft report was finished. It held bad news for the foundation. The report, according to Kelley, concluded that there was significant overlap between the NED and AID. "The programs looked very similar," he said. "We asked, if AID gets into [democracy programs, why do we have to have two agencies? Why are we spending money for both?" The evaluators also concluded that AID, long a target of congressional criticism, was doing the better job in democracy promotion. The draft report recommended that the NED be defunded.

In September of that year, Judith McCloskey, the lead evaluator, briefed the renamed House International Relations Committee on the evaluators' findings. McCloskey refuses to discuss the report's contents or the reaction on Capitol Hill, but according to Kelley and others, committee aides were angered and expressed an obvious fear: Such a report could have dire consequences for NED'S funding. The GAO investigator suspected the Republican side of the committee had hoped that the report would supply ammunition for Republican efforts to shrink AID'S budget. For a committee that loyally supported the NED-chairman Benjamin Gilman and ranking Democrat Lee Hamilton both backed the foundation-the GAO had come up with exactly the wrong answer.

Shortly after that, GAO staff members met with NED officials, including president Carl Gershman and program director Barbara Haig. "The [NED officials] were stunned," says a source familiar with the meeting. Word spread through the democracy-promotion community that the GAO had NED in its crosshairs.

About this time, Theodore Barreaux, counselor to the GAO's chief, became "very concerned" about the NED draft report, Kelley recalls-particularly its defunding recommendation. Barreaux informed the evaluators that he considered the NED to be a "very important program," Kelley says. Another source familiar with these deliberations says that Barreaux reminded GAO investigators that the foundation was "very politically loaded" and argued that the agency could not release such an anti-NED report. Some GAO staff people found Barreaux's involvement out of the ordinary and wondered if he was functioning as a political commissar in an agency that is supposed to be devoted to producing hard-headed, let-the-chips-fall investigations. "Never heard of this guy," says an evaluator in another division. "But if he's reading draft reports out of political sensitivity, it's outrageous." Barreaux declines to talk about the affair.

Kelley had been gung ho to release the report. Ben Nelson, who replaced the now-retired Kelley in the fall of 1995, took a different view: He and other agency officials, according to a former GAO official, "did not want to raise controversies and cause themselves extra headache" Nelson now claims that the draft report did not prove its point and that the accounting office actually found no evidence of significant overlap between the NED and the AID.

For months, the draft report languished in the GAO bureaucracy. It was revised several times, retaining much of its original gist. In early 1996, GAO officials met with Brademas again. Prior to the session, the team had been ordered to send a copy of the draft report to Brademas, the NED's chair. (The GAO often shares its findings with the subject of an investigation before issuing a final report, but sources familiar with GAO procedure say sending a draft to Brademas, rather than NED's day-to-day managers, was unusual) Now Brademas was "furious," according to a former GAO official familiar with the meeting. Brademas says he argued that overlap between NED and AID had been resolved and boasted that "NED enjoys widespread support across party lines and ideological lines."

There were further discussions inside the accounting office on what to do with the report. If the final report recommended defunding the NED and asserted that the much-scorned AID was the agency to manage the democracy-promotion brief, the GAO would be sticking a finger in the eye of Congress and irritating important people all over town. Would that be a wise move at a time when budgets were being cut throughout Washington and some House Republicans were questioning the need for the accounting office? In the previous year, the Republican-controlled Congress had slashed the GAO's budget. "That's only made us more timid," says an evaluator.

Finally, GAO decided to kill the draft report. "This was done for political reasons," says a former official who was involved with the report. "The Brademas relationship might have been part of the reason. But NED is connected to labor, the Chamber of Commerce, and both parties. They pretty much have everybody in their pockets. The report was too hot to handle. I was mad. Some of us had spent years on it." A former GAO official says, "Ultimately, this may be self-censorship": GAO bureaucrats may have been intimidated just by the prospect of getting a call. The most effective power play is the one that doesn't have to happen.

Both Bowsher, who recently retired as GAO chief, and Brademas vehemently deny that Brademas's positions as head of a GAO target and GAO adviser posed even the slightest appearance of a conflict of interest. "It's outrageous to make such a suggestion," an indignant Brademas huffs. "That charge is insulting." As to Joe Kelley's assertion that GAO evaluators themselves were troubled by Brademas's connections to GAO, Brademas dismisses the former GAO supervisor: "I don't regard him as an authoritative source. I don't think he is accustomed to someone putting sharp questions to him."

In June, the GAO sent a letter to the House committee that conveyed its findings regarding "the potential for overlap and duplication of activities between USAID and NED." The letter noted that the growth in democracy programs had made "NED'S previously more distinct role much less clear" and that the accounting office had found that "NED and USAID were funding similar activities in the same countries," sometimes even funding the same groups. (This letter contradicts Ben Nelson's claim that no programmatic overlap was uncovered by GAO.) Yet the letter noted that measures proposed by AID should "mitigate" the evaluators' concerns, and said that "We do not plan to report further on USAID or NED democracy programs at the time." This letter received no public attention. It will not show up in any GAO database available to the public. The House committee would not release it to a reporter.

The NED got off easy. Not only had the evaluators wanted to see the foundation defunded, they even had considered probing other aspects of the foundation. According to a former NED official, there are plenty of rocks worth turning: "There was a lack of oversight of NED. It gives money to emigre dissidents who in meetings with us questioned their own capacity to achieve program objectives. It's run as a private shop where friends get money and relatives of program officers get money. There is a high level of waste, with a lot of people flying around the world and holding very expensive and unneeded programs. I am appalled that the GAO report was not released."

NED's political protection is built in: Dole out money to all sides and you are near invincible in Washington's budget wars. The NED did receive a scare recently when the Senate's proposed 1997 budget zeroed out its funding; but the House proposed continuing the NED's finding at $30 million, and that figure won out.

What is most troubling in this episode is the possibility that a foundation created to enhance democracy prompted the undermining of an action necessary to ensure accountability. Presumably, the need for government accountability is covered in those how-to-run-a-democracy seminars that the foundation subsidizes throughout the world. If so, there are some people associated with both the GAO and the NED who might benefit from such instruction.