Inter-American Foundation projects in Argentina and Haiti: Staff Rpt. To U.S. Sen. Comm. on For Rela., v+33p


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JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
ROD GRAMS, Minnesota JOHN F. KERRY, Massachusetts
STEPHEN E. BEGUN, Staff Director
EDWIN K. HALL, Minority Staff Director


January 13, 2000.
The Honorable JESSE HELMS
Committee on Foreign Relations
The Honorable JOSEPH BIDEN
Ranking Minority Member,
Committee on Foreign Relations
Following the discovery in late 1998 that the Inter-American
Foundation funded groups in Ecuador responsible for kidnapping
American citizens, Committee staff increased oversight of the ac-
tivities of the Foundation. Foreign Relations Committee staff in-
creased its contact with the Foundation's Board of Directors and
staff (including attending several board meetings) and increased
scrutiny of program notifications sent to the Committee.
As a result of this, other problem grants were discovered. One
such grant was to an Argentine group that took over a Catholic Ca-
thedral during a violent street demonstration and held people in-
side the church hostage while it made demands on the local gov-
ernment. Another grant in Honduras was to a group that lead dem-
onstrations forcing the government to uphold a law it intended to
rescind that discriminates against American citizens.
The Foundation implemented procedures with the State Depart-
ment to attempt to ensure that future grantees are not terrorists,
criminals, or anti-American subversives. However, the Foundation
has not yet agreed to the Chairman's request that it allow the Cen-
tral Intelligence Agency to review its current list of grantees to en-
sure that no other terrorists, criminals, or anti-American subver-
sives are currently receiving funds provided by the U.S. taxpayers.
In response to these and other problems, the fiscal year 2000
Foreign Operations Appropriations bill reduced the Inter-American
Foundation's appropriation to $5,000,000-a $15,000,000 reduction
from the previous fiscal year. As a further indication of Congres-
sional displeasure with the Inter-American Foundation, the bill
also authorizes the President to abolish the Foundation. It is not
expected that the President will choose to exercise this authority.
On November 30, 1999, you approved my request to travel over-
seas to visit Inter-American Foundation projects, inasmuch as few,
if any, such visits have taken place for many years. From Decem-
ber 4-11, I traveled to Argentina (one of the wealthiest countries
where the Foundation operates) and Haiti (the poorest country
where the Foundation operates) to evaluate its projects.

The reason for undertaking this review was not based on infor-
mation about problem grants in these countries, rather it was to
evaluate the following: whether desirable results are achieved by
current and past Inter-American Foundation projects; whether or
not the projects are sustainable; and to what extent the projects
have any relation to U.S. interests in two very different countries.
The enclosed trip report describes the projects visited and pro-
vides my general impressions. Also included are key findings and
recommendations, including my recommendation that Congress se-
riously consider abolishing the Inter-American Foundation as rec-
ommended in the fiscal year 2000 Foreign Operations Appropria-
tions bill.
Deputy Staff Director.


Letter of Transm ittal ............................................................................................... iii
Key Findings and Recommendations ............................................................. 1
M ap of Argentina ............................................................................................... 3
Asociacion Civil Nortesur .................................................... ..................... 4
Federacion Asociaciones Centros Educativos para la Produccion Total
(FACEPT) ........................................... ................ ................................... 4
Centro de Estudios de Estado y Sociedad (CEDES) .................................... 5
Fundacion Universidad Nacional de General Sarmiento (FUNAS) ............. 6
Fundacion ARCOR (FUNARCOR) .......................................................... 7
Fundacion Juan M inetti ...................................................... ..................... 7
Institute para la Cultura, la Innovacion y el Desarrollo (INCIDE) ............. 9
Union de Organizaciones de Base por los Derechos Sociales (UOBDS) ....... 9
Map of Haiti ........................ 11
Pwogram Fomasyon pou Organizasyon Dyakona (PWOFOD) ................... 11
Fundacion La Ruche (FLR) (The Beehive Foundation) ................................ 12
Haitian Association of Voluntary Agencies .................................................. 13
Haitian Artisan Committee (CAH) ........................................................ 14
Asosyasyon Transpo Ak Lojistik (ASTRAL) .............................................. 14
Sere Pou Chofe (SPC) ........................................................ ...................... 15
Fondasyon Enstitisyon-yo pou Devlopman ki Soti nan Baz-la (FIDEB) ...... 16

A. Inter-American Foundation Legislation .......................................................... 17
Enabling Legislation for the Inter-American Foundation [Partial text of
P.L. 91-175] (Part IV of H.R. 14480, Foreign Assistance Act of 1971) .... 17
Authority to Abolish Inter-American Foundation [Sec. 586 of H.R. 3422]
(Appropriations for foreign operations, export financing, and related
programs for the fiscal year ending September 30, 2000, and for other
purposes) .................................................................................................. 20
B. Correspondence between Chairman Helms and Inter-American Founda-
tion .................................................................................................................. 22
C. Letter of December 2, 1999 from Chairman Helms to President Clinton ...... 33

* The purpose of the Inter-American Foundation is to help poor
people in Latin America by implementing small-scale self-help
development programs. The enabling legislation of the Inter-
American Foundation as well as its Congressional Presentation
Document indicate that the purpose of the Foundation is to im-
prove the quality of life of the poorest people of the Western
Hemisphere in a direct and cost effective manner. The Founda-
tion distinguishes itself from the Agency for International De-
velopment (AID) by stating that it works directly with the poor
on projects that beneficiaries design themselves. The Founda-
tion justifies its independence from AID and its existence by
claiming to work directly with poor people.
* A majority of Inter-American Foundation projects visited in Ar-
gentina and Haiti do not appear to be improving the lives of
poor people in a tangible way. While some Inter-American
Foundation projects appear to work with the poor directly and
have enhanced their quality of life, it appears that most Inter-
American Foundation funds are provided either to inter-
mediary organizations or constitute subsidies and are clearly
not sustainable. A majority of the projects reviewed during this
trip had little or no direct or indirect impact on the lives of the
poor. Moreover, some of the project managers admitted this to
be the case and spoke about project goals that are designed to
support macro policies or social changes which are more in line
with the approach of the Agency for International Development
or international financial institutions and not the mission of
the Foundation. In several instances, it was difficult to ascer-
tain the purpose of a project or how it could reasonably lead
to tangible and direct quality of life improvements for poor peo-
ple. It appeared that poor people themselves rarely designed
and participated in the formulation of project proposals.
* The Inter-American Foundation funds a number of organiza-
tions that can operate successfully without U.S. taxpayer sup-
port. A number of the projects visited in Argentina receive sub-
stantial financial support from other organizations or are well
endowed by corporate sponsors and do not require additional
U.S. taxpayer assistance. While some of these activities have
merit, it is also a fair question to ask whether these projects
should be supported with U.S. taxpayer funds when sufficient
private sector support is forthcoming.
* Many of the organizations visited would not exist absent sub-
stantial funding from the Inter-American Foundation and
should not be described as grassroots organizations. Many or-
ganizations supported by the Foundation are not sustainable
because they lack genuine grassroots appeal and because they
lack an income generation component or adequate and predict-

able sources of income from other than the Inter-American
Foundation. Additionally, many of the projects visited did not
reach the poor directly but rather benefitted relatively well-to-
do employees of non-government organizations. Significant re-
sources are provided for the salaries of project managers and
employees of these organizations rather than to the poor people
whom the Foundation purports to assist.
* The Foundation should reconsider whether it is appropriate to
operate in Argentina, which is prospering economically and has
a high standard of living compared to other Latin American
countries where the Foundation operates. With limited foreign
assistance funds and far higher levels of poverty elsewhere, the
United States Government should not be providing foreign aid
to countries such as Argentina, which have achieved a high
level of economic development.
* Congress should seriously consider abolishing the Inter-Amer-
ican Foundation as recommended in the fiscal year 2000 For-
eign Operations Appropriations bill. One of the reasons Con-
gress gave consideration to establishing a small foreign aid
agency to benefit directly the poorest-of-the-poor in Latin
America was because Soviet-supported Cuban insurgents were
making headway in poor communities in Latin America where
AID programs were having no impact in the late 1960s. Given
the end of the Cold War, one of the fundamental rationales for
the existence of the Inter-American Foundation has dis-
appeared. Furthermore, the concept of working with non-gov-
ernmental organizations may have been novel 30 years ago,
but it is clear that most, if not all, of the legitimate projects
funded by the Inter-American Foundation today would be eligi-
ble for support from the Agency for International Development
or other public or private international development agencies.
While operating differently from the Foundation, the Peace
Corps has a solid record of working to help poor people in for-
eign countries at the grassroots level and could accomplish
many of the results the Foundation seeks to obtain. Moreover,
the Peace Corps would likely do so in a more cost effective and
people-to-people approach. A senior U.S. Government official in
one of the countries visited bluntly stated that the Inter-Amer-
ican Foundation "is not a player" in the U.S. Government's eco-
nomic development strategy for that country. AID officials in
Washington have also privately made similar points. Given the
Foundation's lack of relevance to U.S. foreign policy and inter-
national development strategy, its redundancy in light of the
programs AID and the Peace Corps currently carry out, the
end of the Cold War, its recent funding of terrorists and anti-
American subversives, as well as the problems illustrated in
this report, Congress should seriously consider following
through on the recommendation in the fiscal year 2000 Foreign
Operations Appropriations bill to abolish the Inter-American
Foundation (See appendix A, page 20, for the text of the legis-



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Asociacion Civil Nortesur
(North/South Civil Association)
Buenos Aires, Argentina
Inter-American Foundation grant: $394,590
On Monday, December 6, I met with two representatives from
the North/South Civil Association at the Inter-American Founda-
tion's regional office in Buenos Aires. According to the Foundation's
project notification documents, the Association will administer a
project to improve the quality of life in four low-income municipali-
ties of Argentina.
The documents enumerate the purpose of the project activities,
which are summarized as follows: (1) train training teams; (2) co-
finance socioeconomic development initiatives; (3) generate and
promote integrated management information systems; (4) train mu-
nicipal employees, civic, and business leaders; (5) design and install
documentation centers; (6) carry out pilot projects; and (7) conduct
training and technical assistance activities. Inter-American Foun-
dation funds will cover salaries, training, publications, administra-
tive support, and pilot projects.
Unfortunately, after several hours of discussion, I was unable to
ascertain exactly what the Association actually does, how the
project activities directly or indirectly benefit poor people, or what
its accomplishments are to date. The description of the project by
Association representatives was heavy on theoretical concepts and
devoid of specific examples of how the lives of poor people are im-
proved or in any meaningful manner affected by the project. The
impression was left that the vast majority of resources provided by
the Foundation are expended on seminars and meetings attended
by mid-level Argentine municipal bureaucrats.
While some grassroots Argentine organizations may be involved
with the project at some level and, therefore, derive some intangi-
ble benefit (although that was never made clear during the meet-
ing), it is not accurate to describe the Association's activities as
having any measurable positive impact on the lives of poor people.
Given the description of the activities, it is also difficult to under-
stand how the results of the project can be measured.

Federacion Asociaciones Centros Educativos para la Produccion
Total (FACEPT)
(Federation of Educational Centers and Associations for Total Pro-
Buenos Aires, Argentina
Inter-American Foundation grant: $300,000
The meeting with FACEPT occurred at the Argentine Ministry of
Education with a FACEPT representative who was previously a
consultant with the Ministry. FACEPT promotes a method of edu-
cational instruction which alternates periods of study at school
with home stays, where students apply what they have learned.
The Argentine Government has adopted this method of educational
instruction in a number of rural areas in an effort to stem the mi-
gration of young people from rural to urban centers.
According to Inter-American Foundation project notification doc-
uments, the Foundation will fund salaries, consultants, training,

_ _~

travel, per diem, educational materials, a revolving loan fund to
support income-generating projects, and a database. The central
component of the project, however, appears to be the revolving loan
fund, the operation of which was well described and easily under-
The revolving loan fund is a $55,000 pool of money used to make
loans not to exceed $2,000 each to graduates of schools that use
FACEPTs educational program. The loans are made to sons and
daughters of farmers for a variety of agricultural projects. Project
proposals are submitted by graduates to the local FACEPT board
of directors which is comprised of interested local adults with an
expertise in agriculture. These loans are made essentially to sup-
port family farms since, according to FACEPT's representative, Ar-
gentine banks do not make small loans to family farmers.
After our meeting with the FACEPT representative, we visited
one such board of directors that was discussing recently received
proposals. The board was comprised of parents (farmers) of past
graduates, local government officials and other agricultural ex-
perts. All the proposals were of an agricultural nature designed to
help increase the productivity of the family farm.
As some of the members of the board of directors were parents
of past graduates, it gave us an opportunity to meet some past
beneficiaries of the program. It was clear that these farmers were
not the desperately poor campesinos one would expect the Inter-
American Foundation to assist. Rather, they appeared to be middle
class farmers not unlike the average family farmer in the United
States who might be in need of some technical assistance.
While this project seems to be having a positive impact on indi-
viduals in rural areas, which is its goal, it does not appear that the
assistance necessarily supports poor people. It is, therefore, dif-
ficult to understand why the Foundation chose to fund FACEPT.
Furthermore, given the relative wealth of Argentina as compared
to other Latin America economies, the Argentine Government's offi-
cial acceptance of FACEPT's educational methods, and the support
of local Argentine Government officials, it is difficult to argue that
FACEPT cannot carry out its program absent Inter-American
Foundation funding.

Centro de Estudios de Estado y Sociedad (CEDES)
(Center for Studies of the State and Society)
Buenos Aries, Argentina
Inter-American Foundation grant: $291,750
This grant is the fourth provided to CEDES by the Inter-Amer-
ican Foundation. CEDES is the Argentine affiliate of Johns Hop-
kins University International Comparative Research project on the
Third Sector (non-government organizations). CEDES is the recipi-
ent of generous funding from such institutions as the Argentine
National Council for Scientific and Technical Research, Canada's
International Development Research Center, and the Ford, Mellon,
MacArthur, and Kellogg Foundations of the United States.
Inter-American Foundation funding helps support three CEDES
studies on corporate philanthropy which are designed to (1) review
the philanthropic activities of U.S. companies in Argentina; (2) sur-

vey and analyze fundraising techniques of Argentine non-govern-
ment organizations; and (3) identify factors leading to greater
transparency in the philanthropic practices of corporations and
foundations. Specifically, the Foundation covers the costs of sala-
ries, travel, per diem, dissemination of its studies, and some ad-
ministrative expenses.
CEDES cited as results of its Inter-American Foundation sup-
ported project that it was instrumental in the American Chamber
of Commerce instituting a corporate citizen award, and raising the
visibility of the issue of corporate philanthropy in Argentina.
This project appears to support indirectly the Inter-American
Foundation's new emphasis on working with the corporate commu-
nity in Latin America on development projects. While CEDES' find-
ings will be interesting and perhaps generate some pressure on the
private sector to help improve the quality of life for poor people, it
has no immediate or direct impact on the lives or income of poor
people, nor does it claim to do so. Accordingly, it is difficult to un-
derstand why the Foundation would choose to support such a
project whose purpose is so different from the Foundation's gen-
erally understood mandate to help poor people at the grassroots

Fundacion Universidad Nacional de General Sarmiento (FUNAS)
(The General Sarmiento National University Foundation)
Buenos Aries, Argentina
Inter-American Foundation grant: $250,000
The President of the Universidad Nacional de General Sarmiento
and the Director of FUNAS met with us at the Inter-American
Foundation regional office in Buenos Aires. For the past two years,
FUNAS' predecessor (Instituto del Conurbano) has been conducting
participatory assessments of community needs and problems within
seven local municipalities.
Using Inter-American Foundation funds, FUNAS plans to dis-
seminate the results of the assessments of its predecessor and pro-
vide training and technical assistance to facilitate public-private
partnerships among various community organizations. Specifically,
Foundation funding will cover costs for consultants, equipment,
material, supplies, documentation and dissemination of the assess-
ments, and travel.
As with the North/South Civil Association, it was difficult to as-
certain exactly what FUNAS does, how the project directly or indi-
rectly benefits poor people, or what its accomplishments are. Sim-
ply put, FUNAS seems to undertake studies, conduct seminars, and
issue reports for the benefit of local municipal officials and inter-
ested non-government organizations.
It does not appear that FUNAS works with grassroots organiza-
tions as these are generally defined and understood. As described
by FUNAS representatives, their organization's activities only im-
pact the lives of poor people (if at all) indirectly and incidentally.

(The ARCOR Foundation)
Cordoba, Argentina
Inter-American Foundation grant: $240,000
FUNARCOR is the philanthropic foundation of ARCOR S.A.I.C.,
a 50-year old, one billion dollar Argentine candy corporation with
more than 30 plants in five countries, employing more than 10,000
people. In 1991, ARCOR spun off its philanthropic activities to
FUNARCOR in order "to identify and work toward solutions that
will support the needs of local communities in particular and of Ar-
gentine society in general".
Between 1991 and 1994, FUNARCOR provided more than one
million dollars for research grants and projects in health, nutrition,
education, and culture. FUNARCOR concentrates on projects that
involve the family and local community in youth development and
which are sustainable and replicable.
The Inter-American Foundation's involvement with FUNARCOR
is an example of the Foundation's new emphasis on working with
the private sector in Latin America to address development prob-
lems. Inter-American Foundation and FUNARCOR funds will help
establish a development fund to provide grants to community-based
organizations to carry out health, youth, and non-formal education
projects. FUNACROR and Inter-American Foundation will also col-
laborate to promote greater social responsibility within the Argen-
tine corporate community by producing publications and conducting
The FUNARCOR project I visited on Tuesday, December 7, was
located in a shanty town on the outskirts of Cordoba, Argentina's
second largest city. The project was a child care center where work-
ing mothers can drop off their children to stay while they are at
work. The center provides lunch and activities for the children.
Inter-American Foundation funds are used to train the women who
operate the 44 centers in nutrition, food preparation, and hygiene.
FUNARCOR also works with the Catholic church and other groups
to provide the 44 centers with food and supplies.
The FUNARCOR project directly involves the lives of poor peo-
ple, especially children. FUNARCOR representatives stated that
they benefitted from their association with the Inter-American
Foundation because they were so new to development/philanthropic
work. Specifically, they have learned from the Foundation about
the importance of measuring the results of projects and about the
methods to do so.
In the very near future, FUNARCOR will have learned all that
it needs to know from the Inter-American Foundation, and the only
role for the Foundation will be to provide additional funds, which
in this case, is not needed.

Fundacion Juan Minetti
(The Juan Minetti Foundation)
Cordoba, Argentina
Inter-American Foundation grant: $348,100
The Juan Minetti Foundation is the philanthropic arm of Juan
Minetti S.A., one of the largest cement companies in Latin America

employing 840 people located at its facilities throughout Argentina.
The Juan Minetti Foundation was established in 1987, and it con-
ducts programs and provides grant support in the areas of edu-
cation and social development.
The Inter-American Foundation and the Juan Minetti Founda-
tion have entered into a partnership to promote social responsibil-
ity and resource mobilization within the corporate sector. They
have established the Tendiendo Puentes fund through which they
provide support to non-government organizations carrying out de-
velopment projects. After meeting with several members of the
board of directors (the daughter and granddaughter of Juan
Minetti and the Foundation's staff) at its headquarters in Cordoba,
we visited an organization that assists street children and which
receives Inter-American Foundation funding through the Minetti
Foundation administered Tendiendo Puentes development fund.
The children being assisted are not homeless, rather, they are
generally school dropouts and those at risk of quitting school before
graduation. They spend the day on the streets of Cordoba hustling
to make several dollars. The organization supported by the Foun-
dation oversees a program that produces and circulates a magazine
written, produced, and delivered by street children. The magazine
reports on issues confronting street children and sells for one dol-
lar. The magazine is well known throughout the region and has
won critical acclaim. The children are supposed to sell the maga-
zine on the streets instead of participating in their usual schemes
to earn money, although we were told that many sell the magazine
and also hustle for additional money by shining shoes, washing car
windows, or begging.
The organization's facility is a house in a poor section of Cordoba
where activities are carried out after school hours. (While the tar-
gets of the program are dropouts, they are required to attend
school or study to pass an equivalency exam to graduate in order
to participate in the program.) There were a number of computers
used for desktop publishing, a small printing press, and a class-
Tendiendo Puentes funds are used by this organization to conduct
classes in conjunction with the magazine so that dropouts can
eventually graduate. Several young people have participated in this
program and have graduated from high school.
The Inter-American Foundation's involvement with the Juan
Menitti Foundation is another successful example of its new em-
phasis on working with the private sector and corporate sectors on
development projects. While the project visited is only one of many
funded by the Tendiendo Puentes development fund, it clearly is
one which directly impacts the lives of poor disadvantaged children.
As in the case with FUNARCOR, the Inter-American Foundation
will soon impart all the knowledge and skills necessary for the
Juan Minetti Foundation to support independently successful
projects. Foundation funding is not necessarily essential given the
Juan Minetti Foundation's impressive track record of philanthropic
activities, in addition to the fact that a majority of the Minetti com-
pany was recently purchased by a Swiss firm that provides gener-
ous financial support to the Juan Minetti Foundation. In light of
its financial position, and given the success of its programs, the

Juan Minetti Foundation should be considered for graduation from
Inter-American Foundation assistance in the near future.

Institute para la Cultura, la Innovacion y el Desarrollo (INCIDE)
(Institute for Culture, Innovation and Development)
Cordoba, Argentina
Inter-American Foundation grant: $146,700
INCIDE is a non-profit organization dedicated to assisting grass-
roots organizations in northern Argentina. INCIDE has provided
technical assistance to poor farmers as well as local governments
and other non-government organizations.
Inter-American Foundation funding will allow INCIDE to
strengthen the capacity of local governments and non-government'
organizations to plan and carry out local development projects. Spe-
cifically, the Foundation will finance salaries, training, technical
assistance, and dissemination of information on project activities.
The project activities described that use Inter-American Founda-
tion funds focused on training for poor farmers so that they can
more successfully produce and market their products. INCIDE con-
centrates on the poorest region of Argentina where crops are dif-
ficult to grow and little or no infrastructure exists to enable farm-
ers to transport their products to market. INCIDE representatives
appeared to be dedicated to working strictly with the poor on solu-
tions relevant to the everyday problems faced by the poor in rural
northern Argentina.
INCIDE expressed difficulty in measuring the results of their
work due to the nature of their training-which they described as
"leadership training"-which may not result in the immediate solu-
tion of problems. They expressed confidence that their training pro-
gram was beneficial to poor farmers and INCIDE is working with
the Inter-American Foundation to determine the best ways to
measure the results of their work.

Union de Organizaciones de Base por los Derechos Sociales
(Confederation of Base Organizations for Social Rights)
Cordoba, Argentina
Inter-American Foundation grant: $256,476
UOBDS is a former grantee of the Inter-American Foundation
whose support was suspended after it organized violent demonstra-
tions in Cordoba, in which the local Catholic Cathedral was taken
over and the people in the church were taken hostage while certain
demands were made on the government (see appendix B, on page
29, a July 14, 1999 letter concerning this episode from Chairman
Jesse Helms to the Chairman of Inter-American Foundation Board
of Directors). This meeting was scheduled in order to evaluate the
sustainability of organizations previously supported by the Founda-
The subject of the violent demonstrations was not discussed with
UOBDS as it was obviously a sensitive point of contention. UOBDS
did not discuss its current activities, but made an obvious plea to
heal its relationship with the Inter-American Foundation in order
to be eligible for additional funding.

UOBDS members made clear their opposition to former Presi-
dent Menem's economic policies and predicted that the policies of
the new government would not satisfy them either. Rather, they
candidly expressed their opposition to the free market approach
which has greatly improved the Argentine economy claiming that
poor people are worse off because of these policies. Based on this
short meeting, it is difficult to understand why the Inter-American
Foundation chose to provide funding to UOBDS in the first in-
stance and how this grant was in any way in the interests of the
United States.
(A meeting was also requested with another former Inter-Amer-
ican Foundation grantee in Argentina which received at least
$404,655 in U.S. taxpayer funded grants: the Programa Habitat in
Buenos Aires. This grant was made to rehabilitate a dilapidated
building in the San Telmo district of Buenos Aires and to convert
the building, occupied by unemployed squatters, into condominiums
for the squatters that would be self-supporting through rental in-
come from shops that would occupy its first floor. But after an ex-
tensive search by the Inter-American Foundation's regional office
and by the U.S. Embassy, no one from the organization could be
found. It was later determined that Programa Habitat no longer
exists. In response to questions raised by the Foreign Relations
Committee, the Foundation stated that no improvements were ever
made to the building although $404,655 was provided to Programa


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Pwogram Fomasyon pou Organizasyon Dyakona (PWOFOD)
Formation Program for Organizations in Dyakona
Port-au-Prince, Haiti
Inter-American Foundation grant: $173,227
PWOFOD is a private Haitian non-government organization
which began operations during the U.S. embargo to help better the
lives of poor Haitians. It is an outgrowth of the U.S.-based Chris-
tian Reform World Relief Committee (CRWRC), which has operated
in Haiti since 1976. PWOFOD works with church laymen and
women to improve the economic and social well being of the poor
through education and training, specifically in the areas of adult
literacy and community banking.
Inter-American Foundation funds will be used to finance a micro-
credit fund and to cover the costs of the literacy program, local de-

velopment project investment, construction, education, and train-
ing, and program operation and administration. The micro-credit
fund made 20 loans in 1999, will make 30 this year, and 50 in
2001. Church leaders identify reliable and trustworthy potential
borrowers who already operate a business and wish to expand their
After visiting PWOFOD headquarters the morning of Thursday,
December 9, we visited several recipients of micro-credit loans. The
first recipient was a young man who used the funds to help market
honey which his family produces in the Central Plateau region of
Haiti. That same evening, we visited a woman who used her loan
funds to help organize and operate a school that teaches women
how to cook, sew, and carry our other similar activities. The young
man is an active member of a church whose leaders are associated
with PWOFOD and the woman was the wife of a pastor. Both were
considered excellent credit risks and they seemed to be enthusiastic
about the program.
Additionally, Inter-American Foundation funds have been used
to build a second floor to PWOFOD's headquarters. CRWRC paid
for the construction of a third floor. PWOFOD intends to rent the
second and third floors of its office and use the revenue to support
its programs. They appeared to be serious about the sustainability
of their program, and the construction project is a direct result of
this approach.
PWOFOD's headquarters are well organized and its representa-
tives appear to be professional and motivated. Their program objec-
tives are understandable and there is no doubt that the main bene-
ficiaries of the project are poor Haitians who are learning the skills
necessary to improve their quality of life. Of all the grassroots or-
ganizations visited, PWOFOD seemed to understand the need to di-
versify its sources of income from local and foreign contributors
with the goal of becoming sustainable and self-sufficient. If
PWOFOD operations are successful and it continues to gain addi-
tional financial support, it may not be long before it graduates from
Inter-American Foundation assistance.

Fundacion La Ruche (FLR)
(The Beehive Foundation)
Port-au-Prince, Haiti
Inter-American Foundation grant: $255,940
The Beehive Foundation was founded by Edwige Balutansky,
whose father was a U.S. Marine in Haiti during the 19-year U.S.
occupation and who married and stayed in Haiti. Ms. Balutansky
is a journalist by training and traveled widely for the Reuters
News Agency before starting the Beehive Foundation in Port-au-
According to Inter-American Foundation briefing documents, the
mission of the Beehive Foundation is to promote and make acces-
sible development information for socially responsible journalism
and to disseminate information on development methods. The main
focus of the program is to encourage businesses to support develop-
ment activities.

Ms. Balutansky expressed great frustration with the current po-
litical and economic situation in Haiti and with the lack of under-
standing about economic and social development among Haitian
business leaders. The Beehive Foundation established a board of
directors comprised of prominent Haitian businessmen who ap-
peared to support the concept of development. However, after work-
ing with the board of directors for a year, it became apparent to
the Beehive Foundation that the businessmen wanted to contribute
only to those projects that would directly benefit their businesses-
usually as a means to publicize a company's support for good works
in poor neighborhoods.
As there is not yet a Beehive Foundation demonstration project
established as an example to the businessmen, the Beehive Foun-
dation, using Inter-American Foundation funding, is starting a pro-'
gram in Jacmel on the southern coast of Haiti which will assist
poor farmers and fishermen to market their goods.
The Beehive Foundation's history illustrates the many obstacles
facing organizations and individuals working on development
projects in Haiti. Ms. Balutansky candidly discussed her problems
working with businessmen who have mixed motives concerning
their involvement in development projects. Furthermore, she found
that many businessmen were cynical and pessimistic about Haiti's
economic and political future. Most Haitian businessmen expressed
the opinion that it is not worth the money and effort to support de-
velopment activities inasmuch as they count on the political and
economic conditions in Haiti deteriorating, even if funding for these
activities are not wasted or misappropriated, which is their expec-
The other main obstacle for the Beehive Foundation and others
is that the vast majority of grassroots organizations have become
corrupted and politicized since the return of Jean-Bertrand Aristide
and the Lavalas political party to Haiti, according to Ms.
Balutansky, who was an Aristide supporter until he returned and
the situation did not improve.
While the intentions of the Beehive Foundation are admirable,
and the sincerity of Ms. Balutansky to help Haiti is unquestion-
able, there is little to show for the Inter-American Foundation con-
tribution thus far. Ms. Balutansky acknowledged this fact, but stat-
ed the view that Haiti is in such a miserable condition-economi-
cally, politically, environmentally, and in nearly every other re-
spect-that quick results cannot be expected. Nevertheless, results
must be forthcoming or the Foundation should seriously consider
whether its resources could not be better used elsewhere.

Haitian Association of Voluntary Agencies
Port-au-Prince, Haiti
Former Inter-American Foundation grantee
In response to my request to meet with past Inter-American
Foundation grantees to access the sustainability of their projects in
the absence of Foundation funding, a meeting with Philippe
Becoulet was arranged. Mr. Becoulet is a former board member of
the Haitian Association of Voluntary Agencies (HAVA) and is cur-
rently Director of the Intermediate Technology Group of Haiti.

HAVA, which was an umbrella organization of Haitian non-gov-
ernment organizations, carried out a variety of projects for the
Inter-American Foundation, including the provision of legal serv-
ices for poor Haitians, the operation of a credit fund, and the man-
agement of a training program. HAVA received at least $1,149,353
from the Inter-American Foundation between 1985 and 1995.
Rather than discuss HAVA's past and current programs, Mr.
Becoulet told me why he thought the Inter-American Foundation
and funding agencies like it are important, and lamented various
problems currently confronting the Foundation.
According to the Inter-American Foundation representative in
Haiti, HAVA only exists on paper and it is not carrying out any
projects. HAVA is an example of an unsustainable program sup-
ported by the Inter-American Foundation, that, after receiving an
enormous amount of money (by both Haitian and Inter-American
Foundation standards), ceased to exist once Inter-American Foun-
dation funding ended.

Haitian Artisan Committee (CAH)
Port-au-Prince, Haiti
Former Inter-American Foundation grantee
The Haitian Artisan Committee is another former recipient of
Inter-American Foundation funds. From 1980 to 1983 it received
$48,500 to market handicrafts. The Committee currently operates
a well furnished arts and crafts store in Port-au-Prince catering to
tourists. It also exports its products to the United States and Eu-
CAH is an Inter-American Foundation graduate whose oper-
ations are demonstrably sustainable. In fact, CAH appears to be
thriving-its facility is attractive and it had an excellent selection
of handicrafts for sale. There were a number of people on hand
making purchases. Besides providing a living for those working at
the store, its operations support many artisans who depend on
CAH to sell their products. This is an example of sustainable grass-
roots development that appears to have generated tangible results.

Asosyasyon Transpo Ak Lojistik (ASTRAL)
(Association for Transportation and Logistics)
Papaye, Haiti,
Inter-American Foundation grant: $109,750
On Friday, December 10, I visited ASTRAL's headquarters in
Papaye, Haiti which is several miles outside of Hinche in Haiti's
Central Plateau region. ASTRAL is a cooperative that imports bicy-
cles and bicycle parts from Taiwan and assembles and sells them
throughout Haiti. ASTRAL's first order from Taiwan occurred this
past year and was for about 800 bicycles. The day of our meeting,
ASTRAL had placed an order for an additional 750 bicycles.
Inter-American Foundation funds will be used to help ASTRAL
decentralize its operations, purchase tools and materials, and pro-
vide basic training for ASTRAL's bicycle assembly operations.
ASTRAL sells bicycles through a network of other cooperatives in
24 locations throughout Haiti. The bicycles are on consignment,
and Jean-Baptiste Bazelais, the project coordinator, admitted that

a major problem confronting ASTRAL is payment by the 24 affili-
ate cooperatives for the bicycles that they sell. It appears that at
least three people were employed assembling bicycles at this loca-
According to ASTRAL, the cooperative makes a very small profit
from the $85-$100 price of each bicycle. Many of the bicycles are
sold in large quantities to other cooperatives or organizations, al-
though Mr. Bazelais insisted that individuals also make purchases
(Haiti's gross domestic product per capital is $330, according to the
World Bank).
Given the small profit ASTRAL makes on each sale, and the dif-
ficulty in obtaining payment for bicycles it does sell, there are seri-
ous questions as to whether ASTRAL can remain in business ab-
sent long-term Inter-American Foundation funding. Accordingly,
this is another example of the provision of subsidies for a project
that, as currently operated, cannot function absent long-term and
sustained Inter-American Foundation financial support.

Sere Pou Chofe (SPC)
(Credit Cooperative Network)
Papaye, Haiti
Inter-American Foundation grant: $151,225
After visiting ASTRAL, I visited Sere Pou Chofe, a cooperative
savings and loan society also located in Papye, Haiti. During our
visit, SPC was conducting a meeting of its members, so there was
an opportunity to exchange views on its project activities.
SPC makes loans to its members based on the amount of funds
invested in the organization by its members. Apparently, a loan
can be made for practically any purpose. As an example of the
flexibility, one member said that it helps pay for the first commun-
ion of a child, another SPC member volunteered that it helps cover
the costs of funerals (in Haiti, a funeral may be one of the largest
single expenses incurred by a family). The diversity of what con-
stitutes grassroots development activities was astonishingly broad.
Inter-American Foundation funding will pay for project training,
publication, and administrative costs. More importantly, Founda-
tion funds will match SPC funds on a 2:1 basis with regard to con-
tributions made to its Capital Access Fund. The Inter-American
Foundation also intends to match savings by members in an In-
vestment Challenge Fund on a 1:4 basis.
SPC is a grassroots, self-help organization helping poor people in
rural Haiti. However, based on information provided during the
meeting, it is evident that not all of SPC's activities can be consid-
ered "self help," as the term is generally defined, since some loans
are made to support nonproductive activities in which repayment
is less likely and whose purpose, from a development perspective,
is questionable. Bearing this in mind, there is a legitimate concern
about the sustainability of SPC's activities absent continued fund-
ing from outside sources such as the Inter-American Foundation.

Fondasyon Enstitisyon-yo pou Devlopman ki Soti nan Baz-la
(Foundation of Institutions for Development and Education at the
Port-au-Prince, Haiti
Inter-American Foundation grant: $143,480
Upon returning to Port-au-Prince on Friday evening, I met with
the Foundation of Institutions for Development and Education at
the Grassroots, which dispenses grants to small grassroots and
civil society organizations in Haiti. The Inter-American Foundation
has provided $143,480 to FIDEB, which has been operating less
than two years. Over half of the Foundation's grant is allocated to
a pool of funds from which FIDEB makes grants; the other half
pays for education and training programs. Individual members of
the FIDEB board of directors are responsible for oversight of the
projects in their respective region.
According to FIDEB representatives, small grassroots groups
present proposals to finance development projects to the FIDEB
board of directors and the best projects are selected and funded. All
of the projects are in rural areas, and no project is larger than
$1,500. Projects usually receive additional support from the grass-
roots organization itself as well as from the local authorities. Typi-
cal projects include repairing a road or bridge, building a small
school, building a public park, or digging a well.
FIDEB will support about 20 projects annually during a three-
year period. Currently, the Inter-American Foundation is the only
source of funding for FIDEB. While the FIDEB board of directors
agreed with my recommendation that it identify additional sources
of funding, they readily admitted that they had made no effort and
there were no plans to do so.
While no FIDEB projects were actually visited, the presentation
by FIDEB's board of directors led me to believe that its grants may
have the potential to benefit poor Haitians, although measuring re-
sults is not this organization's strong point. There also appears to
be a lack of emphasis on a self-help component to the projects sup-
ported. Most importantly, since FIDEB's approach to development
is to provide grants, and since the Inter-American Foundation is its
only source of funding, FIDEB's activities and the organization
itself are not sustainable. When the Inter-American Foundation
ceases its support for FIDEB, that will also be the end of FIDEB
projects and the organization will have to discontinue operations.


A.-Inter-American Foundation Legislation
P.L. 91-175] (PART IV OF H.R. 14480, FOREIGN ASSISTANCE ACT OF 1971)
SEC. 401 INTER-AMERICAN FOUNDATION.--(a) There is created as an agency of the
United States of America a body corporate to be known as the Inter-American Foun-
dation (hereinafter in this section referred to as the "Foundation").
(b) The future of freedom, security, and economic development in the Western
Hemisphere rests on the realization that man is the foundation of all human
progress. It is the purpose of this section to provide support for developmental ac-
tivities designed to achieve conditions in the Western Hemisphere under which the
dignity and the worth of each human person will be respected and under which all
men will be afforded the opportunity to develop their potential, to seek through
gainful and productive work the fulfillment of their aspirations for a better life, and
to live in justice and peace. To this end, it shall be the purpose of the Foundation,
primarily in cooperation with private, regional, and international organizations, to-
(1) strengthen the bonds of friendship and understanding among the peoples
of this hemisphere;
(2) support self-help efforts designed to enlarge the opportunities for individ-
ual development;
(3) stimulate and assist effective and ever wider participation of the people
in the development process;
(4) encourage the establishment and growth of democratic institutions, pri-
vate and governmental, appropriate to the requirements of the individual sov-
ereign nations of this hemisphere.
In pursuing these purposes, the Foundation shall place primary emphasis on the en-
largement of educational opportunities at all levels, the production of food and the
development of agriculture, and the improvement of environmental conditions relat-
ing to health, maternal and child care, family planning, housing, free trade union
development, and other social and economic needs of the people.
(c) The Foundation shall carry out the purposes set forth in subsection (b) of this
section primarily through and with private organizations, individuals, and inter-
national organizations by undertaking or sponsoring appropriate research and by
planning, initiating, assisting, financing, administering, and executing programs
and projects designed to promote the achievement of such purposes.
(d) In carrying out its functions under this section, the Foundation shall, to the
maximum extent possible, coordinate its undertakings with the developmental ac-
tivities in the Western Hemisphere of the various organs of the Organization of
American States, the United States Government, international organizations, and
other entities engaged in promoting social and economic development of Latin Amer-
(1) shall have perpetual succession unless sooner dissolved by an Act of Con-
(2) may adopt, alter, and use a corporate seal, which shall be judicially no-
(3) may make and perform contracts and other agreements with any individ-
ual, corporation, or other body of persons however designated whether within
or without the United States of America, and with any government or govern-
mental agency, domestic or foreign;

(4) shall determine and prescribe the manner in which its obligations shall
be incurred and its expenses, including expenses for representation (not to ex-
ceed $10,000 in any fiscal year), allowed and paid;
(5) may, as necessary for the transaction of the business of the Foundation,
employ, and fix the compensation of not to exceed one hundred persons at any
one time;
(6) may acquire by purchase, devise, bequest, or gift, or otherwise lease, hold,
and improve, such real and personal property as it. finds to be necessary to its
purposes, whether within or without the United States, and in any manner dis-
pose of all such real and personal property held by it and use as general funds
all receipts arising from the disposition of such property;
(7) shall be entitled to the use of the United States mails in the same manner
and on the same conditions as the executive departments of the Government;
(8) may, with the consent of any board, corporation, commission, independent
establishment, or executive department of the Government, including any field
service thereof, avail itself of the use of information, services, facilities, officers,
and employees thereof in carrying out the provisions of this section;
(9) may accept money, funds, property, and services of every kind by gift, de-
vise, bequest, grant, or otherwise, and make advances, grants, and loans to any
individual, corporation, or other body of persons, whether within or without the
United States of America, or to any government or governmental agency, do-
mestic or foreign, when deemed advisable by the Foundation in furtherance Of
its purposes;
(10) may sue and be sued, complain, and defend, in its corporate name in any
court of competent jurisdiction; and
(11) shall have such other powers as may be necessary and incident to carry-
ing out its powers and duties under this section.
(f) Upon termination of the corporate life of the Foundation all of its assets shall
be liquidated and, unless otherwise provided by Congress, shall be transferred to
the United States Treasury as the property of the United States.
(g) The management of the Foundation shall be vested in a board of directors:
(hereafter in this section referred to as the "Board") composed of 6 members ap-
pointed by the President, by and with the advice and consent of the Senate, one of
whom he shall designate to serve as Chairman of the Board and one of whom he
shall designate to serve as Vice Chairman of the Board. Six members of the Board
shall be appointed from private life. Three members of the Board shall be appointed
from among officers or employees of agencies of the United States concerned with
inter-American affairs. Members of the Board shall be appointed for terms of six
years, except that of the members first appointed two shall be appointed for terms
of two years and two shall be appointed for terms of four years, as designated by
the President at the time of their appointment. A member of the Board appointed
to fill a vacancy occurring prior to the expiration of the term for which his prede-
cessor was appointed shall be appointed only for the remainder of such term; but
upon the expiration of his term of office a member shall continue to serve until his
successor is appointed and shall have qualified. Members of the Board shall be eligi-
ble for reappointment. All individuals appointed to the Board shall possess an un-
derstanding of and sensitivity to community level development processes. No more
than 5 members of the Board may be members of any one political party.
(h) Members of the Board shall serve without additional compensation, but shall
be reimbursed for travel expenses, including per diem, in lieu of subsistence, in ac-
cordance with section 5703 of title 5, United States Code, while engaged in their
duties on behalf of the corporation.
(i) The Board shall direct the exercise of all the powers of the Foundation.
(j) The Board may prescribe, amend, and repeal bylaws, rules, and regulations
governing the manner in which the business of the Foundation may be conducted
and in which the powers granted to it by law may be exercised and enjoyed. A ma-
jority of the Board shall be required as a quorum.
(k) In furtherance and not in limitation of the powers conferred upon it, the Board
may appoint such committees for the carrying out of the work of the Foundation
as the Board finds to be for the best interests of the Foundation, each committee
to consist of two or more members of the Board, which committees, together with
officers and agents duly authorized by the Board and to the extent provided by the
Board, shall have and may exercise the powers of the Board in the management of
the business and affairs of the Foundation.
(1)(1) The chief executive officer of the Foundation shall be a President who shall
be appointed by the Board of Directors on such terms as the Board may determine.
The President shall receive compensation at the rate provided for level IV of the
Executive Schedule under section 5315 of title 5, United States Code.

(2) Experts and consultants, or organizations thereof, may be employed as au-
thorized by section 3109 of title 5, United States Code.
(m) In order to further the purposes of the Foundation there shall be established
a Council to be composed of such number of individuals as may be selected by the
Board from among individuals knowledgeable concerning developmental activities in
the Western Hemisphere. The Board shall, from time to time, consult with the
Council concerning the objectives of the Foundation. Members of the Council shall
receive no compensation for their services but shall be entitled to reimbursement
in accordance with section 5703 of title 5, United States Code, for travel and other
expenses incurred by them in the performance of their functions under this sub-
(n) The Foundation shall be a nonprofit corporation and shall have no capital
stock. No part of its revenue, earnings, or other income or property shall inure to
the benefit of its directors, officers, and employees and such revenue, earnings, or
other income, or property shall be used for the carrying out of the corporate pur-
poses set forth in this section. No director, officer, or employee of the corporation
shall in any manner directly or indirectly participate in the deliberation upon or the
determination of any question affecting his personal interests or the interest of any
corporation, partnership, or organization in which he is directly or indirectly inter-
(o) When approved by the Foundation, in furtherance of its purpose, the officers
and employees of the Foundation may accept and hold offices or positions to which
no compensation is attached with governments or governmental agencies of foreign
(p) The Secretary of State shall have authority to detail employees of any agency
under his jurisdiction to the Foundation under such circumstances and upon such
conditions as he may determine. Any such employee so detailed shall not lose any
privileges, rights, or seniority as an employee of any such agency by virtue of such
(q) The Foundation shall maintain its principal office in the metropolitan Wash-
ington, D.C., area. The Foundation may establish agencies, branch offices, or other
offices in any place or places outside the United States in which the Foundation
may carry on all or any of its operations and business.
(r) The Foundation, including its franchise and income, shall be exempt from tax-
ation now or hereafter imposed by the United States, or any territory or possession
thereof, or by any State, county, municipality, or local taxing authority.
(s)(1) Notwithstanding any other provision of law, not to exceed an aggregate
amount of $50,000,000 of the funds made available for the fiscal years 1970 and
1971 to carry out part I of the Foreign Assistance Act of 1961 shall be available
to carry out the purposes of this section. Funds made available to carry out the pur-
poses of this section under the preceding sentence are authorized to remain avail-
able until expended.
(2) There are authorized to be appropriated $28,800,000 for the fiscal year
1992 and $31,000,000 for the fiscal year 1993 to carry out this section.
For necessary expenses to carry out the provisions of sections 103 through 106,
and chapter 10 of part I of the Foreign Assistance Act of 1961, title V of the Inter-
national Security and Development Cooperation Act of 1980 (Public Law 96-533)
and the provisions of section 401 of the Foreign Assistance Act of 1969,
$1,225,000,000, to remain available until September 30, 2000: Provided, That of the
amount appropriated under this heading, up to $20,000,000 may be made available
for the Inter-American Foundation and shall be apportioned directly to that Agency:
* *,,
(t) The Foundation shall be subject to the provisions of the Government Corpora-
tion Control Act.
(u) When, with the permission of the Foundation, funds made available to a
grantee under this section are invested pending disbursement, the resulting interest
is not required to be deposited in the United States Treasury if the grantee uses
the resulting interest for the purposes for which the grant was made. This sub-
section applies with respect to both interest earned before and interest earned after
the enactment of this subsection.
(v) Funds made available to the Foundation may be used for the expenses de-
scribed in section 1345 of title 31 of the United States Code (relating to travel,
transportation, and subsistence expenses for meetings).
(w) Funds made available to the Foundation may be used for printing and binding
without regard to section 501 of title 44, United States Code.

SEC. 586. (a) DEFINITIONS-In this section:
(1) DIRECTOR.-The term "Director" means the Director of the Office of Man-
agement and Budget.
(2) FOUNDATION.-The term "Foundation" means the Inter-American Founda-
(3) FUNCTION.-The term "function" means any duty, obligation, power, au-
thority, responsibility, right, privilege,activity, or program.
(b) ABOLITION OF INTER-AMERICAN FOUNDATION.-During fiscal year 2000, the
President is authorized to abolish the Inter-American Foundation. The provisions of
this section shall only be effective upon the effective date of the abolition of the
Inter-American Foundation.
(1) Except as provided in subsection (d)(2), there are terminated upon the abo-
lition of the Foundation all functions vested in, or exercised by, the Foundation
or any official thereof, under any statute, reorganization plan, Executive order,
or other provisions of law, as of the day before the effective date of this section.
(2) REPEAL.-Section 401 of the Foreign Assistance Act of 1969 (22 U.S.C.
62900 is repealed upon the effective date specified in subsection (j).
(3) FINAL DISPOSITION OF FUNDS.-Upon the date of transmittal to Congress
of the certification described in subsection (d)(4), all unexpended balances of ap-
propriations of the Foundation shall be deposited in the miscellaneous receipts
account of the Treasury of the United States.
(1) IN GENERAL.-The Director of the Office of Management and Budget shall
be responsible for-
(A) the administration and wind-up of any outstanding obligation of the
Federal Government under any contract or agreement entered into by the
Foundation before the date of the enactment of the Foreign Operations, Ex-
port Financing, and Related Programs Appropriations Act, 2000, except
that the authority of this subparagraph does not include the renewal or ex-
tension of any such contract or agreement; and
(B) taking such other actions as may be necessary to wind-up any out-
standing affairs of the Foundation.
(2) TRANSFER OF FUNCTIONS TO THE DIRECTOR.-There are transferred to the
Director such functions of the Foundation under any statute, reorganization
plan, Executive order, or other provision of law, as of the day before the date
of the enactment of this section, as may be necessary to carry out the respon-
sibilities of the Director under paragraph (1).
(3) AUTHORITIES OF THE DIRECTOR.-For purposes of performing the functions
of the Director under paragraph (1) and subject to the availability of appropria-
tions, the Director may-
(A) enter into contracts;
(B) employ experts and consultants in accordance with section 3109 of
title 5, United States Code, at rates for individuals not to exceed the per
diem rate equivalent to the rate for level IV of the Executive Schedule; and
(C) utilize, on a reimbursable basis, the services, facilities, and personnel
of other Federal agencies.
(4) CERTIFICATION REQUIRED.-Whenever the Director determines that the re-
sponsibilities described in paragraph (1) have been fully discharged, the Direc-
tor shall so certify to the appropriate congressional committees.
(e) REPORT TO CONGRESS.-The Director of the Office of Management and Budget
shall submit to the appropriate congressional committees a detailed report in writ-
ing regarding all matters relating to the abolition and termination of the Founda-
tion. The report shall be submitted not later than 90 days after the termination of
the Foundation.
in this section, the assets, liabilities (including contingent liabilities arising from
suits continued with a substitution or addition of parties under subsection (g)(3)),
contracts, property, records, and unexpended balance of appropriations, authoriza-
tions, allocations, and other funds employed, held, used, arising from, available to,

or to be made available in connection with the functions, terminated by subsection
(c)(1) or transferred by subsection (d)(2) shall be transferred to the Director for pur-
poses of carrying out the responsibilities described in subsection (d)(1).
(1) CONTINUING LEGAL FORCE AND EFFECT.-All orders, determinations, rules,
regulations, permits, agreements, grants, contracts, certificates, licenses, reg-
istrations, privileges, and other administrative actions-
(A) that have been issued, made, granted, or allowed to become effective
by the Foundation in the performance of functions that are terminated or
transferred under this section; and
(B) that are in effect as of the date of the abolition of the Foundation,
or were final before such date and are to become effective on or after such
date, shall continue in effect according to their terms until modified, termi-
nated, superseded, set aside, or revoked in accordance with law by the
President, the Director, or other authorized official, a court of competent ju-
risdiction, or by operation of law.
erwise provided in this section-
(A) the provisions of this section shall not affect suits commenced prior
to the date of the abolition of the Foundation; and
(B) in all such suits, proceedings shall be had, appeals taken, and judg-
ments rendered in the same manner and effect as if this section had not
been enacted.
(3) NONABATEMENT OF PROCEEDINGS.-No suit, action, or other proceeding
commenced by or against any officer in the official capacity of such individual
as an officer of the Foundation shall abate by reason of the enactment of this
section. No cause of action by or against the Foundation, or by or against any
officer thereof in the official capacity of such officer, shall abate by reason of
the enactment of this section.
the date of the abolition of the Foundation, the Foundation, or officer thereof
in the official capacity of such officer, is a party to a suit, then effective on such
date such suit shall be continued with the Director substituted or added as a
TIONS.-Orders and actions of the Director in the exercise of functions termi-
nated or transferred under this section shall be subject to judicial review to the
same extent and in the same manner as if such orders and actions had been
taken by the Foundation immediately preceding their termination or transfer.
Any statutory requirements relating to notice, hearings, action upon the record,
or administrative review that apply to any function transferred by this section
shall apply to the exercise of such function by the Director.
(1) AFRICAN DEVELOPMENT FOUNDATION.-Section 502 of the International Se-
curity and Development Cooperation Act of 1980 (22 U.S.C. 290h) is amended-
(A) by inserting "and" at the end of paragraph (2);
(B) by striking the semicolon at the end of paragraph (3) and inserting
a period; and
(C) by striking paragraphs (4) and (5).
(2) SOCIAL PROGRESS TRUST FUND AGREEMENT.-Section 36 of the Foreign As-
sistance Act of 1973 is amended-
(A) in subsection (a)-
(i) by striking "provide for" and all that follows through "(2) utiliza-
tion" and inserting "provide for the utilization"; and
(ii) by striking "member countries;" and all that follows through
"paragraph (2)" and inserting "member countries.";
(B) in subsection (b), by striking "transfer or";
(C) by striking subsection (c);
(D) by redesignating subsection (d) as subsection (c); and
(E) in subsection (c) (as so redesignated), by striking "transfer or".
(3) FOREIGN ASSISTANCE ACT OF 1961.-Section 222A(d) of the Foreign Assist-
ance Act of 1961 (22 U.S.C. 2182a(d)) is repealed.
(i) DEFINITION.-In this section, the term "appropriate congressional committees"
means the Committee on Appropriations and the Committee on Foreign Relations
of the Senate and the Committee on Appropriations and the Committee on Inter-
national Relations of the House of Representatives.

(j) EFFECTIVE DATES.-The repeal made by subsection (c)(2) and the amendments
made by subsection (h) shall take effect upon the date of transmittal to Congress
of the certification described in subsection (d)(4).

B.-Correspondence Between Chairman Helms and Inter-American
June 15, 1998.
The Honorable Maria Otero,
Chairman, Inter-American Foundation,
733 15th Street, N.W., Suite 700.
Washington, D.C. 20005.
DEAR Ms. OTERO: As you will recall, several staff members of the Inter-American
Foundation came by on April 14 to give us the facts about the embarrassing spec-
tacle of the Inter-American Foundation's actually providing cash grants-under-
written by the U.S. taxpayers-to groups in Ecuador clearly identified by the U.S.
State Department to be terrorist organizations.
I am fully aware that these organizations kidnapped Americans and threatened
their lives, as well as the lives and safety of other U.S. citizens while extorting
money from them. I am confident that the able staff of the Foreign Relations Com-
mittee conveyed my profound concern about such outrageous abuse and misuse of
U.S. taxpayers' money.
Needless to say, it is inexcusable that these groups received IAF funding in the
first place. And it is an outrage that one of the groups continued, to receive funds
after the U.S. Embassy in Quito determined that these were terrorist groups. The
funding, I understand, continued until my associates strenuously objected to it on
April 14.
I have been assured that steps are being taken to prevent this sort of outrage
from reoccurring. To this end, the U.S. Senate Foreign Relations Committee will ap-
preciate receiving from you a detailed report of your new guidelines and procedures
as well as the findings of any review.
I trust you will undertake to make certain that no other terrorist or subversive
groups are now, nor will in the future, receive U.S. taxpayer funds via the Inter-
American Foundation.
cc: The Honorable Mitch McConnell
The Honorable Sonny Callahan
The Honorable Madeleine Albright
The Honorable Neil Offen
The Honorable Harriet Babbitt
The Honorable Jeffrey Davidow
The Honorable Nancy Dorn
The Honorable Mark Schneider
The Honorable Patricia Hill Williams
The Honorable Frank Yturria

Inter-American Foundation,
June 29, 1998.
The Honorable Jesse Helms,
Chairman, Senate Foreign Relations Committee,
SD-450 Dirksen Senate Office Building,
Washington, DC 20515.
DEAR MR. CHAIRMAN: I have reviewed your letter of June 15, 1998, concerning
the financial support that the Inter-American Foundation provided to the
Coordinadora de Organizaciones Indigenas de the Cuenca Amaz6nica (COICA), the


Confederaci6n de Nacionalidades Indigenas de la Amazonia Ecuatoriana
(CONFENAIE), and the Organizaci6n de Pueblos Indigenas de la Pastaza (OPIP).
As expressed to your staff by the President of the Inter-American Foundation on
April 14, 1998, the Inter-American Foundation regrets that these former Inter-
American Foundation grantee organizations engaged in activities that are abhorrent
to the values of the American people. To that end, when the management of the
Inter-American Foundation became aware of these organizations' activities, with the
endorsement of the Board of Directors of the Inter-American Foundation, the man-
agement of the Inter-American Foundation undertook immediate and prudent meas-
ures to cease support to these organizations and to convey the displeasure of the
Inter-American Foundation. I have enclosed, for your information, a copy of a public
statement issued by the Inter-American Foundation on this matter on April 14,
1998. In addition, on June 8, 1998, the Board of Directors also ratified the course
of action undertaken by the management of the Inter-American Foundation concern-
ing this matter. I have also attached a copy of this resolution for your review.
I regret that the Inter-American Foundation grantees engaged in these activities
and can assure you that measures have been employed to ensure that similar inci-
dents are not repeated in the future. To that end, the Inter-American Foundation *
has revised its grant approval process and will coordinate more closely with the Em-
bassies of the United States throughout Latin America and the Caribbean. In addi-
tion, the President of the Inter-American Foundation recently wrote to each United
States Ambassador in Latin America and the Caribbean to furnish detailed and cur-
rent information on the grant portfolio and activities of the Inter-American Founda-
I have also requested that the President of the Inter-American Foundation review
the procedures through which the Inter-American Foundation seeks cross-reference
and background information about grant proponents and report his recommenda-
tions to me. I would be pleased to share these findings with you when this exercise
is completed.
Please know that I share your concerns fully, and will work to ensure that
incidences such as those which transpired in Ecuador are not repeated.

cc: The Honorable Madeleine Albright
The Honorable Mitch McConnell
The Honorable Sonny Callahan
Board of Directors of the Inter-American Foundation
Enclosure 1
JUNE 8, 1998
WHEREAS the Inter-American Foundation, an agency of the United States Gov-
ernment, is committed to the promotion of peaceful, equitable, and self-help develop-
ment efforts within a civil society framework;
WHEREAS the Inter-American Foundation opposes any threatening tactics, in-
timidation, threats, or violence as legitimate means of any organization to achieve
its institutional objectives;
WHEREAS the Inter-American Foundation considered wholly unacceptable the
use of intimidation by the Coordinadora de Organizaciones Indigenas de the Cuenca
Amaz6nica (COICA), and violence by the Confederaci6n de Nacionalidades Indigenas
de la Amazonia Ecuatoriana (CONFENAIE), and the Organizaci6n de Pueblos
Indigenas de la Pastaza (OPIP);
WHEREAS the Inter-American Foundation determined that all Inter-American
Foundation financial support to these organizations should cease;
WHEREAS the Board of Directors ratifies that the management of the Inter-
American Foundation acted in an appropriate and professional manner by ceasing
financial support to Inter-American Foundation grantees COICA, CONFENIAE, and
WHEREAS the Embassy of the United States in Quito, Ecuador, fully supports
the decision of the Inter-American Foundation to cease financial support to COICA,
CONFENIAE, and OPIP in the wake of the use of intimidation by COICA against
a U.S. citizen and because of the support for the abduction of two Americans by
members of CONFENIAE and OPIP;

NOW, THEREFORE, be it resolved that the Board of Directors unanimously sup-
ports the actions undertaken by the management of the Inter-American Foundation
to cease financial support of its former grantees COICA, CONFENIAE, and OPIP
and reaffirms that the Inter-American Foundation should cease any financial sup-
port of organizations that engage in intimidation threats of violence, or violence to
accomplish their institutional objectives regardless of the merits of those goals.

Enclosure 2
On June 27, 1996, the Coordinadora de Organizaciones Indigenas de la Cuenca
Amaz6nica (COICA), which at that time was a grantee of the Inter-American Foun-
dation, issued a press release which states that:
The Coordinative Council of COICA declares Mr. Loren Miller to be an
enemy of indigenous peoples in the nine states of the Amazon Basin and
prohibits his entrance or that of any official or technical assistant of the
International Plant Medicine Corporation to any Amazonian indigenous
community, and will not be responsible for the consequences to their phys-
ical safety should they choose to ignore this resolution.
In February 1997, the Confederaci6n de Nacionalidades Indigenas de la Amazonia
Ecuatoriana (CONFENIAE), which at that time was a grantee of the Inter-Amer-
ican Foundation, and which is a member of COICA participated in the armed kid-
napping of two American citizens among several others in Ecuador who were held
captive for a two million dollar ransom.
The Inter-American Foundation learned of these events in early 1998. Shortly
after, Inter-American Foundation officials met with representatives of COICA and
CONFENIAE on February 2 and 3, 1998, to request a clarification of the threaten-
ing language set forth in COICA's June 27, 1996 press release and a subsequent
resolution adopted by COICA members during a conference held in Guyana in May
of 1997. Officials of both COICA and CONFENIAE described the language of the
June 1996 press release as "excessive" and agreed to the inappropriateness of these
statements. However, both organizations have failed to clarify these offensive state-
In March 1998, the United States Embassy in Quito issued a public statement
which declares the threats in the press release issued by COICA to be "a repugnant,
illegal action" and a "terrorist threat." The U.S. Embassy also has condemned the
participation of organizations affiliated with COICA, including CONFENIAE, in the
kidnapping of two Americans in Ecuador.
The Inter-American Foundation did not terminate funding to COICA or
CONFENIAE. Rather, the grants to these organizations expired as scheduled on De-
cember 31, 1997, before the Inter-American Foundation was informed of COICA's
resolution or CONFENIAE's involvement in the kidnapping of Americans in 1997.
The Inter-American Foundation does not have, and has at no time expressed, an
opinion regarding COICA's dispute with the U.S. citizen regarding his acquisition
of a U.S. patent on the Ayahuasca plant. Moreover, the Inter-American Foundation
does not represent this U.S. citizen or any private party with regard to patent issues
in Ecuador.
As an agency of the Government of the United States, the Inter-American Foun-
dation is committed to the promotion of peaceful, equitable, and self-help develop-
ment efforts within a civil society framework. Accordingly, the Inter-American Foun-
dation opposes any threatening tactics, intimidation, or threats of violence as a le-
gitimate means for any organization to achieve its institutional objectives.

April 20, 1999.
The Honorable Maria Otero,
Chairman, Inter-American Foundation,
733 15th Street, N.W., Suite 700.
Washington, D.C. 20005.
DEAR MADAM CHAIRMAN: We genuinely appreciate your staffs efforts to attempt
to rectify the intolerable situation of the Inter-American Foundation funding groups
designated by the U.S. State Department as terrorists. Unfortunately, more needs to
be done to assure that this never happens again.
(Enclosed is an April 12, Washington Times article disclosing the fact that the ter-
rorists kidnappers who received Inter-American Foundation funds were trained in
Obviously, the Foundation's current grant approval and notification procedures
are inadequate and must be strengthened.
To ensure that terrorists, subversive and anti-American groups are not provided
with U.S. taxpayers' dollars again, we are considering introducing legislation to re-
quire the Foundation to have the U.S. Ambassador or his designee review and ap-
prove proposed Inter-American Foundation grants. If it becomes necessary that we
proceed with such legislation, we trust that you and the Foundation's board will
strongly support it.
Virtually all of the Inter-American Foundation's funding has been provided
throughout its history by U.S. taxpayers. It therefore goes without saying that the
Foundation's activities must be consistent with, and supportive of, America's foreign
policy objectives.
Please let us hear from you whether the Foundation is willing to work with us
in strengthening its procedures, thereby protecting U.S. citizens and promoting
American interests in Latin America.

cc: Board of Directors, Inter-American Foundation
Board of Directors, African Development Foundation
The Honorable Bill Frist

Every issue of Conde Naste Traveler, Outside magazine and the Sunday travel
section carries dozens of slick enticements for Americans to visit the world's most
exotic-and dangerous-places.
The publications bring full-color advertisements for African safaris, mountain
climbing, rafting and bird watching in Central and South America, trips to Russia
and its former republics, hiking in the Middle East, and trekking in Asia-all re-
gions where unsuspecting American travelers have been kidnapped and, in some
cases, killed.
But the upscale magazines, which thrive on fantasy, holiday adventure and good
times, rarely carry a cautionary tale on the possibility one might become a crime
victim. There are no instructions on what family members back home should do if
a loved one is grabbed.
Travel industry experts say that even with the well-publicized abductions and
killings in Uganda last month, adventure travel bookings are up.
"Overall, our Africa trips are up about 20 percent," said Tom-Stanley, director of
Africa operations for the Mountain Travel/Sobek adventure travel company.

Exotic destinations abound
Mountain Travel/Sobek took nearly 5,000 people to remote destinations all over
the world last year. In 20 years of operations, it has never had a kidnapping. Mr.
Stanley said that since the Uganda killings, trips there have been suspended, but
climbers traveling to Mount Kilimanjaro in nearby Tanzania have increased.
He said trips are also on hold to Yemen, after four foreign tourists were killed
and two were wounded during a botched government rescue attempt in December.
Mr. Stanley said his company suspended travel to Egypt and Cambodia-both of
which have suffered attacks on tourists-but is preparing to resume excursions to
"The people who travel with us are fairly sophisticated. They know there are
risks. I don't know if adventure travel is any riskier than living in America," he
said. "As far as I'm concerned, the riskiest thing we do overseas is drive."
Claudia and James Thurber of the District were thrust into the emotionally
wrenching world of international kidnapping and foreign intrigue two years ago.
It was 10:45 p.m., Feb. 15, 1997, when the phone rang and they learned of their
son's kidnapping in Ecuador.
"It was Mark's girlfriend. She said he wouldn't be coming [to a planned family
reunion]," said Mr. Thurber, Mark's father and a professor at American University.
Tip: Involve the FBI
Mark Thurber, 34, is an expert climber, guidebook author and geologist. He and
four of his colleagues were being held for $3 million ransom along the Peru-Ecuador
border by an "anti-development" splinter group of Cuban-trained Achuar Indians.
What the Thurbers did over the next few days ultimately led to their son's release
eight days later;'according to professional hostage negotiators and Ann Hagedorn
Auerbach, author of "Ransom: The Untold Story of International Kidnapping."
Without private insurance to pay the $2,500 a day from private hostage nego-
tiators, most families acquiesce to the State Department.
Experts say that instead, while working with the State Department, the family
should insist on bringing in the FBI.
"The Thurbers did it right. Most important, they got the FBI invited in. That was
critical," said Mrs. Hagedorn Auerbach, a former Wall Street Journal reporter who
spent three years researching the clandestine world of international kidnapping.
Since 1984 and the passage of the Hostage Taking Statute, the FBI has been re-
sponsible for negotiating for the release of American kidnapping victims anywhere
on the planet. It is widely accepted that the FBI has the best hostage negotiators
in the business. And the service is free to American citizens.
Abductions on the rise
"Unfortunately, kidnapping is a growth business. It is not going to go away," said
Gary Noesner, unit chief of the FBI's crisis negotiation unit in Quantico, Va. "There
is the expectation that every American tourist is a millionaire. ... I don't think
you'll see any of my children going off to the rain forest with my permission anytime
Bringing the FBI in on the kidnapping of an American is not automatic. It is a
two-step process.
First, the host country must agree to allow U.S. law enforcement officers to oper-
ate in the country. Mr. Noesner said this has never been a problem.
"We bring in experts in negotiation and resources, secure radios and other equip-
ment, and we work with the local law enforcement," he said. "There may be dozens
of other kidnapping they are working on. They are glad to have us."
Somewhat trickier is step two, which is securing an invitation from the State De-
partment. The FBI can move only after the local U.S. Embassy "invites" the FBI
Generally, this is pro forma, but there have been cases in which embassy person-
nel were reluctant to allow the FBI entry. Mr. Noesner would not comment on this,
except to say his unit's relations with the State Department are "good and getting
Diplomats' other priorities
But others note the State Department's primary responsibility is U.S. foreign rela-
tions, not the release of an American crime victim.
If there is a turf issue, and the ambassador forbids FBI involvement, as has hap-
pened in a few cases, the family can appeal to their congressional representatives,
said several experts.

This was echoed by the Thurbers and Mrs. Hagedorn Auerbach, who advised fam-
ilies with out high-level contacts to call their representative or senator immediately
and politely insist that they speak with the representative directly.
"A call from a congressman to the State Department usually gets their attention,"
she said.
When the Thurbers son was kidnapped, even with numerous high-level contact in
Washington, the Thurbers spent frustrating hours trying to break through the wall
of Washington's diplomatic bureaucracy. Eventually, they were directed to the FBI.
Mr. Noesner said that after a negotiating team is dispatched, the first job is to
persuade the kidnappers of reality.
He said the American hostage is often not wealthy, but someone who saved for
years to take a once-in-a-lifetime vacation. But kidnappers, whose families can be
abysmally poor by U.S. standards, generally view every American "as a walking
bank account."
Team has won 60 releases
"It is our job to convince the bad guys the [victim] is not wealthy. How do you
convince the kidnapper [the victim] does not have deep pockets?" he asked.
Since its creation in 1990, Mr. Noesner's specialized team has secured the release
of more than 60 victims, two as recently as February.
One was an 11-year old boy with dual U.S. and Colombian citizenship who was
held for three months in Colombia. The second case was similar, a 6-year-old child
with dual U.S.-Honduran citizenship, who was held in Honduras."As a father, I take
these thing personally," Mr. Noesner said.
The FBI negotiated the release of both children unharmed. Neither case was pub-
"We don't recommend contacting the news media. The bad guys watch TV. If CNN
is interviewing a family member in front of a middle class house, maybe with two
cars in the driveway, to the kidnapper this guy's rich," Mr. Noesner said.
Private negotiators offered similar counsel
Family should shun publicity
"We are not going to recommend that a client of ours go to the media," said Bob
Hoffman, the operations director of the Washington office of Control Risks Group.
"If publicity is what the group wants, it is possible that publicity will cause a group
to hold the hostage longer. Publicity can make the hostage more valuable, and they
might raise the ransom."
The Thurbers persuaded friends in the Washington media to suppress reports of
their son's kidnapping.
Although the U.S. government has a policy against negotiating with kidnappers,
Mr. Noesner said the FBI will do whatever it can to secure the release of a hostage.
"The U.S. government will not pay ransom, effect policy change or release pris-
oners," said Mr. Noesner. "We agree with that policy, but without negotiation there
is no way to get someone released. Negotiation means dealing with someone, not
giving concessions."
He said if the kidnappers want something inconsequential, like food, the FBI will
turn it over.
"If some sandwiches will keep these guys talking, and get the release of your
daughter, you bet I'm going to give it to them," he said.
Ransom left up to family
As for ransom, he said that is the family's decision.
"FBI policy is that to pay ransom or not is a decision for the family. ... But we
tell them the prognosis for release without some payment is not good," Mr. Noesner
He said the FBI advises "the least amount paid, in the shortest period of time
to effect the release of the victim."
What finally brought the release of Mark Thurber is unknown. At one point, the
Ecuadorian military issued a stark warning to the group.
"We don't know everything that went on behind closed doors. We don't even know
if a ransom was paid, but I think the credible threat of military action played a
role," said Mr. Thurber.
The FBI also will not comment on the Thurber case or the specifics of any other
kidnapping. But Mr. Noesner relishes his team's successes.
"Typically our presence will not be known," he said. "We like to be the masked
men riding off into the sunset," he said.

April 23, 1999.
The Honorable Jesse Helms,
Chairman, Senate Foreign Relations Committee,
SD-450 Dirksen Senate Office Building,
Washington, DC 20515.
My fellow directors and I have reviewed your letter of April 20, 1999, regarding
your concerns about the grant approval and notification procedures employed by the
Inter-American Foundation.
As noted in my previous correspondence to you on this matter, the Board of Direc-
tors of the Inter-American Foundation also considers the kidnapping incidents that
transpired in Ecuador in 1997 to be intolerable and inconsistent with the important
grassroots development work carried out by the Inter-American Foundation and the
values of the American people. To that end, the Board of Directors adopted a resolu-
tion condemning these activities and took corrective measures to ensure that similar
occurrences are not repeated in the future.
Specifically, prior to the receipt of your letter of April 20, 1999, the management
of the Inter-American Foundation, pursuant to the Board of Directors' instructions,
provided the U.S. Ambassador in every country in which the Inter-American Foun-
dation operates with detailed information on currently supported grantee organiza-
tions in their respective country of assignment. In addition, Inter-American Founda-
tion staff have been instructed to consult with U.S. Embassy personnel on every
field visit made to Latin America and the Caribbean to confer on prospective grant
proponents. I also wish for you to know that the Inter-American Foundation pro-
vides a summary of every grant it awards to U.S. and host country Ambassadors.
Nevertheless, the Board of Directors concurs with your recommendation that more
can be done to strengthen the grant review and approval process of the Inter-Amer-
ican Foundation to avoid unfortunate and isolated, incidents similar to those that
occurred in Ecuador in 1997. Accordingly, the Board of Directors has directed that
the management of the Inter-American Foundation develop refined grant review
procedures for consideration by the Board of Directors that include enhanced con-
sultation with State Department and U.S. embassy personnel.
My fellow directors and I. also plan to consult with you, other interested Members
of Congress, and State Department officials on the written procedures to be imple-
mented by the Inter-American Foundation. These procedures will permit the State
Department, prior to the award of any Inter-American Foundation grant, to review
the character of grant proponent organizations and to ascertain whether proposed
grant activities are consistent with the foreign policy objectives of the United States.
In addition, these procedures should enhance coordination among U.S. Government
agencies working in the region without affecting the valuable work of the Inter-
American Foundation to provide sustainable development assistance to the neediest
populations of Latin America and the Caribbean.
Please know that, this matter is a priority for the Inter-American Foundation and
that it will be addressed expeditiously. In closing, I wish to thank you and your col-
leagues for the offer to work closely with the Board of Directors of the Inter-Amer-
ican Foundation to address this concern.

cc: Board of Directors

July 14, 1999.
The Honorable Maria Otero,
Chairman, Inter-American Foundation,
733 15th Street, N.W., Suite 700.
Washington, D.C. 20005.
DEAR MADAM CHAIRMAN: I hope that you recall my mounting concern expressed
last year to you regarding the Inter-American Foundation when I learned that it
had supported organizations in Equador that (1) kidnapped Americans and (2) advo-
cated violence as a means to achieve their objectives.
I have recently learned that the program officer in charge of these grants ap-
proached the World Bank seeking support for one of the terrorist groups after the
Foundation had suspended its funding!
On July 8, the Foundation confirmed to us that it also supported an organization
in Argentina that had used illegal and violent tactics to advance its political agenda.,
Press articles reported, and Foundation management confirmed, that the Union de
Organizaciones de Base por los Derechos Sociales organized illegal demonstrations,
disrupted transportation in the city of Cordoba, Argentina, and commandeered Cor-
doba's Catholic Cathedral building as its site to protest the policies of the democrat-
ically elected local government. (These terrorist activities were being perpetrated by
UOBDS at the same time that the Inter-American Foundation was providing them
$256,476 in American taxpayer's money!)
You are aware that my representatives met with the President and General Coun-
sel of the Inter-American Foundation to discuss strengthening your grant review
and approval process after learning about the Foundation's activities in Ecuador.
Several weeks ago, Frank Yturria and I met to discuss the troubles at the Foun-
dation. On June 22, Senator McCain included in the State Department authoriza-
tion bill language to make A.I.D.'s Inspector General also the Inspector General of
the Foundation.
On June 24, less than three weeks ago, Senator Hagel and I requested that the
General Accounting Office conduct a review of the Foundation's activities and man-
agement. All of this occurred before it was disclosed that the Foundation had sup-
ported yet another terrorist organization in another country.
Despite the significant and highly commendable efforts by the Foundation's Presi-
dent and General Counsel to reform practices of the Foundation, it is becoming dis-
turbingly apparent that the Foundation's problems are endemic and may be imper-
vious to reform.
In lieu of my seeking a permanent suspension of funding for the Inter-American
Foundation, I request that all organizations currently receiving funds, directly or in-
directly, from the Foundation, and that all proposed grantees, be vetted by the Cen-
tral Intelligence Agency to insure that terrorist, communist or subversive organiza-
tions never again receive Foundation funding.
Additionally, the Committee will appreciate your directing the management to
conduct a thorough review of the performance of the Foundation's program officers,
including whether any of them have meet with, or sought support for, terrorist, com-
munist or subversive organizations, and if so, why.
It is very important that you keep me fully apprised of the board's efforts to re-
form the grant review and approval process.

cc: The Honorable Paul Coverdell
The Honorable Chuck Hagel
The Honorable Madeleine Albright
The Honorable George Tenet
Board of Directors

July 30, 1999.
The Honorable Jesse Helms,
Chairman, Senate Foreign Relations Committee,
SD-450 Dirksen Senate Office Building,
Washington, DC 20515.
DEAR MR. CHAIRMAN: I have reviewed your letter of July 14, 1999, concerning
matters related to the administration of the grantmaking program of the Inter-
American Foundation.
As you know, the Board of Directors of the Inter-American Foundation was grave-
ly concerned about past Inter-American Foundation support for organizations in Ec-
uador that engaged in illegal and inappropriate activities. As a consequence, the
Inter-American Foundation revised and implemented grant review and approval
procedures to ensure that organizations that engage in these types of activities are
not supported in the future. Specifically, all Inter-American Foundation grants and
grant supplements will be reviewed by the Department of State and the U.S. embas-
sies in which the Inter-American Foundation operates before these grants and grant
supplements are awarded by the Inter-American Foundation.
I wish to underscore that the management of the Inter-American Foundation has
taken decisive and appropriate action with respect to any grantees that have en-
gaged in any illegal or inappropriate activities. I am, therefore, appreciative of your
commendation of.the President and the General Counsel of the Inter-American
Foundation for their efforts in this regard. It is also my hope that Frank Yturria,
the Chairman of the Audit Committee of the Inter-American Foundation, will con-
tinue to discuss with you the many recent important enhancements that have been
implemented to better administer the grantmaking program of the Inter-American
With regard to your specific request that all organizations which currently receive
funds from the Inter-American Foundation, directly or indirectly, and all proponent
grantee organizations, be vetted by the Central Intelligence Agency, I respectfully
request that you permit the Board of Directors the opportunity to review the impli-
cations of such a procedure and to respond to you in writing in the near future. I
also request additional time to examine ways in which Inter-American Foundation
management can prudently conduct a thorough review of the performance of the
Inter-American Foundation's program officers and ascertain whether staff have met
with or sought to support subversive organizations.
Please know that the Board of Directors and I share your objective of supporting
only those initiatives in Latin America and Caribbean that further the interests of
the United States. Moreover, I wish to reassure you that the Board of Directors and
management of the Inter-American Foundation shall continue to make necessary
operational and grantmaking improvements.
I look forward to providing you with additional information and recommendations
on the specific matters set forth in your letter of July 14, 1999. I will also keep you
fully apprised of the continued efforts of the Board of Directors to reform the grant
review and approval process employed by the Inter-American Foundation.

cc: The Honorable Paul Coverdell
The Honorable Chuck Hagel
The Honorable Madeleine Albright
The Honorable George Tenet
Board of Directors of the Inter-American Foundation

September 23, 1999.
The Honorable Frank Yturria,
3201 Central Boulevard, Suite 200,
Brownsville, TX 75580.
DEAR FRANK: I hope your health continues to improve. (You certainly looked fit
when we got together on June 22.) Please take care of yourself.
Frank, I need your help regarding a critical situation at the Inter-American Foun-
On July 14, after learning that the Foundation had financed another terrorist or-
ganization-this time in Argentina-I wrote to Maria Otero requesting that the
Central Intelligence Agency investigate all organizations currently receiving funding
directly or indirectly from the Foundation to make certain that terrorist, communist
or subversives never again receive Foundation funding.
Chairman Otero replied to my letter on July 30 and met with the Foreign Rela-
tions Committee staff on September 15 to discuss further my request. Not only has
she not agreed to my request, she strongly opposes it. She claims it would destroy
the Foundation.
Her fear that the continued existence of the Inter-American Foundation is threat-
ened as a result of the CIA's being asked to disclose whether any terrorists, com-
munists or subversives currently receive taxpayers money is inconceivable. But if
I am wrong, and the Foundation finds itself unable to give away money to Latin
American non-government organizations because of our efforts to protect American
citizens and U.S. interests, then I suggest that the Foundation is not worth saving-
and non-government organizations rejecting funding do not deserve U.S. taxpayers'
As Chairman of the Foreign Relations Committee it would be irresponsible for me
to agree to anything less than conferring with our government's most comprehensive
intelligence organization-the Central Intelligence Agency-in response to the kid-
napping of Americans in Ecuador and the terrorist activities of a Foundation grant-
ee in Argentina. I will be surprised if any Senator, or a majority of the IAF board,
disagrees with me.
Therefore, since I have failed to receive timely action on this matter, I will genu-
inely appreciate your making a motion at the next board meeting incorporating my
original request and insisting on a recorded vote.
Please let me hear from you in this regard.
My best to you and your lovely bride.

Brownsville, Texas, 78520.
October 12, 1999.
The Honorable Jesse Helms,
Chairman, Senate Foreign Relations Committee,
SD-450, Dirksen Senate Office Building,
Washington, DC 20515.
DEAR MR. CHAIRMAN: I received your kind letter of September 23, and hope that
you are well. Both Mary and I were delighted to have had the opportunity to meet
with you during our visit to Washington in June. I hope that we will be able to have
lunch together when we are next in Washington.
Mr. Chairman, regarding your request for my assistance, I stand ready to present
a resolution to the Board of Directors of the Inter-American Foundation to insist
that all current and former organizations that have received, directly or indirectly,
funds from the Inter-American Foundation be vetted by the Central Intelligence
I fully share your outrage that the Inter-American Foundation had supported or-
ganizations in South America that kidnapped Americans and held them at gunpoint

in the jungle. In addition, I was equally appalled to learn that the Inter-American
Foundation had supported an organization in Cordoba, Argentina, which organized
civil disturbances, blockaded highways, and occupied the city's cathedral.
In light of these disturbing and wholly inappropriate activities, I concur with you,
Mr. Chairman, that organizations currently or formerly supported by the Inter-
American Foundation should be vetted through theCentral Intelligence Agency to
ensure that the outrageous activities you cite in your letter are never repeated. If
the Inter-American Foundation is unwilling to conduct a review of its grant portfolio
by competent intelligence Professionals of the Government of the United States,
then I questions whether it should continue to receive the American taxpayers' re-
I regret that you have failed to receive a timely response to your sensible proposal
and will do everything possible to correct this situation.
Mary joins me in sending you our very best wishes for continued good health.
Letter from Frank Yturria to Maria Otero
Brownsville, Texas, 78520.
October 12, 1999.
Ms. Maria Otero,
Executive Vice President, ACCION INTERNATIONAL,
733 15th Street, NW, Suite 700,
Washington, D. C. 20005.
DEAR MARIA: On my return from Europe this past weekend I found a letter from
Senator Jesse Helms dated September 23, 1999. I enclose a copy of his letter which
is self-explanatory.
For the Board to take a position opposed to the Chairman of the Foreign Relations
Committee would simply assure the end of the Inter-American Foundation as it
presently exists.
Foundation staffs lack of supervision and accountability of grants has resulted in
funding of organizations engaged in terrorist activities. The Board of Directors can-
not, and must not, appear to wash this under the table and continue business as
The Board has now come to a point where we have no alternative but to agree
with the Chairman's call for a complete investigation by the C.I.A. of all organiza-
tions currently being funded directly or indirectly by the Foundation. I believe such
a review is absolutely necessary. I have been asking for this type of accountability
for the past nine years and it is long overdue.
As you might recall, Vice Chairman Neil Often also called for a comprehensive
review of grantees by the intelligence community to ensure that incidents such as
those that occurred in Ecuador and Argentina are not repeated. I have to believe
that you and the other members of the Board would like to know more about the
organizations that the Foundation supports and whether anti-American activities
are being supported with U.S. taxpayer funds.
For these reasons, I would like the Board to be polled immediately on this matter
for I know that any further delay in responding to Senator Helm's request will sure-
ly result in the demise of the Foundation.
I hope to hear from you on this matter very soon.
cc: The Honorable Jesse Helms
Board of Directors


C.-Letter of December 2, 1999 from Chairman Helms to President Clinton
December 2, 1999
The President,
The White House,
Washington, D.C. 20500.
DEAR MR. PRESIDENT: The across the board spending cut agreed upon before the
adjournment of Congress will cost the Agency for International Development ap-
proximately $28.5 million. I strongly recommend using the flexibility provided under
the Development Assistance account of Title II of H.R. 4322 to find the $28.5 million
savings within A.I.D.'s budget.
Specifically, I recommend that you withhold $5 million for theInter-American
Foundation and use it to pay part of the $28.5 million reduction. You can do this
by taking advantage of the language stating that, "up to $5,000,000 may be made
available for and apportioned directly to the Inter-American Foundation ..."
The Foundation currently has $7.2 million in prior-year unspent appropriations
plus nearly $15 million in off-budget resources for FY 2000. The Foundation's FY ,
2000 budget request was $22.3 million. So, even if the Foundation is not provided
another dime, it already has as much money in the bank as it requested for FY
In addition, I suggest that the Office of Personnel Management review staffing
positions and grade levels at the Foundation. This is important since most, if not
all, of the $5 million proposed to be transferred to the Foundation would be used
for salaries. I find this troublesome since the Foundation's administrative expenses
are 25 percent of its operating budget (compared to 6.95 percent for A.I.D. for FY
I am certain you will agree, upon investigation, that the Foundation's payroll is
bloated and that most of its employees are overpaid for the work they are asked
to perform.
I have every confidence that, after studying O.P.M.'s report, you will agree that
the money the Inter-American Foundation lavishes on itself is totally out of propor-
tion to what it spends on programs to help poor people.
cc: The Honorable Brady Anderson