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A real civics lesson.

Promoting democracy worldwide can sometimes be a messy business. That's what investigators from the General Accounting Office learned when they took a good look at the books of the National Endowment for Democracy. The N.E.D., a foundation created and funded by Congress ostensibly to strengthen democratic institutions around the globe, has since 1984 handed out $152 million in grants to foreign political groups, often with a neoconservative twist [see Corn, `Foreign Aid for the Right:' December 18, 1989]. The G.A.0. concluded that the N.E.D. has failed to monitor its programs closely and that many of its recipients have not properly managed their finances. Of the thirty-six N.E.D. projects investigated-which together absorbed $20 million-only one had been evaluated adequately.

Given the absence of strict monitoring, it was not surprising that the G.A.0. discovered many cases of misused funds. Sometimes expense accounts were not accurately kept. One group applied 10,000 in grant money toward office renovation without obtaining approval. Another lent N.E.D. funds to an employee. It also rented a car for someone who was later arrested for drug dealing, and then it spent $1,500 in N.E.D. moneys to cover the rental fees for the impounded vehicle. This is petty graft. More troubling was what the G.A.0. saw-or didn't see-in Portugal. The case involved the General Workers Union of Portugal and a $2.6 million contribution administered through the Free Trade Union Institute, a foreign policy arm of the A.F.L.-C.I.O., which manages at least 40 percent of the N.E.D.'S grants. After the institute had not done an audit, G.A.0. investigators went to check on how the money had been spent. But the local labor union officials were uncooperative. The G.A.0. asked F.T.U.I. to assist, but the institute was not able to persuade its Portuguese comrades-in-democracy to supply financial records to the watchdogs of Congress.

In a response to the report, the N.E.D. notes that the groups it supports are mostly small activist organizations working under trying circumstances. But some of its recipients are clearly learning one vital lesson of U.S.-style democracy: Taxpayer dollars dispensed in an atmosphere of lax oversight are funds just waiting to be burned.

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Title Annotation:Beltway Bandits; investigation of National Endowment for Democracy's accounting books by the General Accounting Office
Author:Corn, David
Publication:The Nation
Article Type:column
Date:Apr 29, 1991
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