A North Carolina-based nonprofit has received nearly $2 billion to help poor countries around the world despite a decade of government auditor reports exposing a litany of waste, fraud and incompetence by the organization.
Between 2006 and 2014, U.S. Agency for International Development inspector general auditors found that RTI International officials:
• Invented "fictional beneficiaries" and "possibly even fictional spray operators" in an anti-malaria campaign in Ghana.
• Purchased water purifiers for Guatemalan towns that couldn't afford the units' annual maintenance costs.
• Billed USAID for teacher salaries in Senegal even though local authorities were already paying them.
• Paid "inordinate attention" to details like the color of furniture for women's centers it was building in South Africa that failed to meet even local health standards once finished.
• Sent computers to a school in an area of Nicaragua without electricity.
Formerly known as the Research Triangle Institute, RTI is among USAID’s top international development contractors, winning more than $1.8 billion in contracts between 2003 and 2012. The firm reported revenues of $736 million in its 2012 IRS filing, $207 million of which came from USAID alone.
The company’s generous charity work in North Carolina is highly regarded. Donation recipients range from a massive United Way organization serving 490,000 people, to the local Urban Ministries of Durham that offer food, clothing and shelter.
But overseas, the IG reports tell a far different story. Of the 26 performance audits filed between 2006 and 2014 by the IG, all but two were critical of the company’s work.
The IG reports exhaustively documented how the firm left a trail of misused funds, unfinished projects and unmet promises in 24 of the world's most impoverished countries.
“This isn’t just an isolated instance here or there,” noted Scott Amey, general counsel of the non-partisan Project on Government Oversight, which tracks federal contracting. “There is a repeated pattern of behavior that’s lasted for over a decade.”
RTI was incorporated in 1958 as a humanitarian nonprofit committed, according to its website, to “improving the human condition.”
As a nonprofit, RTI pays no federal income taxes, and it is also permitted to raise money through tax-exempt bonds. In 2007 and 2010, Durham County, N.C., raised $46 million in bonds for RTI.
IG auditors have long accused RTI of filing faulty progress reports, misusing tax dollars and failing to implement projects according to contract specifications.
Meanwhile, RTI pays its nonprofit leaders with salaries more commonly associated with the corporate sector.
A send-off salary for former president Victoria Haynes in 2011, for example, amounted to a staggering $2.1 million, according to its 2012 IRS filing.
Three top RTI executives pulled down between $550,000 and $605,000 that same year. And 32 other RTI employees received compensation of at least $300,000.
Leaders of other top USAID contractors that perform similar work earn far less. The CEO of Mercy Corps, for example, earns $386,000, while Partnership for Supply Chain Management pays its CEO $433,000.
USAID is one of RTI’s biggest moneymakers, serving as its largest source of revenue from 2009 through 2011, according to the nonprofit's annual reports. The nonprofit stopped listing revenues by source beginning with its 2012 annual report.
While the company may have prospered with its USAID contracts, its field performance ranged from spotty to poor. Over and over, IG audits said RTI officials regularly practiced poor record keeping.
According to 23 separate IG reports issued between July 2006 and September 2014, for example, RTI struggled to back up data from projects in El Salvador, Indonesia, Morocco, Zambia, Haiti, Iraq and other countries.
In Haiti and Indonesia, the IG reported that RTI employees appeared to have manipulated data to produce more favorable results.
RTI staff in Indonesia reported verbal anecdotes as actual project achievements without any supporting data in response to “internal pressure to maximize the results reported,” a Nov. 3, 2013 IG report said.
Later, the nonprofit misrepresented its reach among Haitian students by claiming the number of students on the best-attended day of a two-week training course as the number of graduates, according to an August 2014 IG audit.
Eight IG reports issued between November 2007 and November 2012 criticized RTI’s pesticide-spraying role in the President’s Malaria Initiative, a high-profile U.S. effort to fight the destructive disease in Africa.
Many of the audits found the company could not prove how much spraying it had completed. RTI officials falsified data results outright on at least one occasion.
A Sept. 22, 2011, IG report said RTI officials fabricated spraying reports in Ghana by inventing “fictional beneficiaries” and even “possibly fictional spray operators.”
Thousands of records were missing when auditors attempted to review data from RTI’s spraying contract in Mozambique, while USAID “could not reach any conclusions on the spraying results” in Benin because the data was “inconsistent, unreliable, and extremely difficult to verify,” according to a pair of 2011 IG reports.
Six audits issued between March 2008 and September 2014 criticized RTI’s use of federal funds in Pakistan, Guatemala, Senegal, South Africa, Vietnam and other countries.
Other IG reports pointed to excessive spending by RTI's in-country staff. The nonprofit once spent $23,000 set aside for fighting HIV on a single lunch at a luxury South African hotel, according to a Jan. 4, 2011, audit report.
A March 28, 2008, report found RTI billed USAID for millions in costs for a Pakistani education project after the program had ended.
RTI later billed USAID for teacher salaries in Senegal even though the local government was already paying them, according to a July 9, 2014, IG audit.
Some of the efforts entrusted to RTI were never fully implemented, while others were executed so poorly that USAID could not determine whether they were successful.
Eight IG reports issued between March 2008 and August 2014 found many RTI projects were inadequately designed or crudely implemented, such as those in Guatemala and Nicaragua.
In South Africa, RTI staff devoted “inordinate attention to minor details such as the color of furniture” while incurring major construction delays in the renovation and construction of women’s health treatment centers, IG auditors found.
The government later discovered some of the RTI treatment centers didn’t even meet minimum local health standards.
In a Guatemala project, RTI purchased and distributed hundreds of expensive water purifiers that could only function for one year. The towns could not afford to replace them, according to a Nov. 26, 2013, IG audit.
RTI sent computers to a school that had no electricity in Nicaragua, a Nov. 19, 2008, report found.
When reviewing RTI’s Haitian education program, auditors discovered the company failed to implement a community reading program.
The IG audit listed the fact that “RTI did not distribute the first-grade curriculum and materials until ... 2 months past the deadline,” among the firm’s shortcomings in Haiti.
Yet the entire objective of the $13 million contract was to “test” the reading program for effectiveness.
Amey of POGO said such a “troubled past” should trigger extra scrutiny when USAID considers handing additional funds to companies like RTI.
“It’s kind of disheartening when the contractor that’s controlling that money [is] accused of misappropriating funds by spending it on lavish parties,” he said.
USAID itself has come under fire for poorly supervising contractors like RTI. The agency suffers from a “shortage of contracting staff able to design and administer awards effectively and efficiently,” according to an October 2014 IG report devoted to the agency’s management problems.
USAID’s Matthew Herrick defended his agency, saying two recent reforms made the agency more accountable. Herrick added that USAID officials did not see any misuse of funds.
From their view, the IG and USAID “have identified less than .02 percent in questionable costs related to this implementing partner,” Herrick said.
RTI spokesman Lisa Bistreich-Wolfe told the Washington Examiner that the nonprofit works “to ensure quality program development and implementation. Audits are an important and welcome part of that process and, if missteps are found, we take swift and comprehensive measures to improve performance.”
Michael Rubin, an adviser to the Secretary of Defense on International Security Affairs for Iran and Iraq from 2002 to 2004, told the Examiner that USAID officials too often judge success by how much money they throw at problems.
“I see the problem more to be that USAID's chief metric is money allocated or spent rather than results achieved,” Rubin said. “It seems increasingly that USAID is the cancer and RTI is just a symptom.”
Examiner intern Monica Perez also contributed to this report.