United States. Congress. House. Committee on Inter.

USAID whistleblower, Mr. Paul Neifert, motions related to compelling the testimony of USAID Assistant Administrator for Management, Mr. Larry Byrne, and administration response to USAID whistleblower, Mr. Paul Neifert : hearing and business meeting before the Committee on International Relations, Ho online

. (page 1 of 12)
Online LibraryUnited States. Congress. House. Committee on InterUSAID whistleblower, Mr. Paul Neifert, motions related to compelling the testimony of USAID Assistant Administrator for Management, Mr. Larry Byrne, and administration response to USAID whistleblower, Mr. Paul Neifert : hearing and business meeting before the Committee on International Relations, Ho → online text (page 1 of 12)
Font size
QR-code for this ebook


^^ USAID WHISTIEBLOWER, MR. PAUL NEIFERT,

f MOTIONS REUTED TO COMPELUNG THE

^1 • In § /[ (^ • TISTIMONY OF USAID

/ ASSISTANT ADMINISTRATOR FOR
Lost- MANAGEMENT, MR. LARRY BYRNE,

AND ADMINISTRATION RESPONSE TO USAID
WHISTLEBLOWER, MR. PAUL NEIFERT



HEARING AND BUSINESS
MEETING

BEFORE THE

COMMITTEE ON

INTERNATIONAL RELATIONS

HOUSE OP REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

SECOND SESSION



MAY 21, JUNE 6, AND JUNE 18, 1996



Printed for the uae of the Committee on International Relations








ir\



C



/



X ' Or.

- If A



U.S. GOVERNMENT PRINTING OFFICE ^^

37-633 CC WASHINGTON : 1997 ■> ' '^^j^

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-054192-1 \,



USAID WHISTLEBLOWER, MR. PAUL NEIFERT,
MOTIONS REUTID TO COMPELUNG THE
Ih'SAl- TESTIMONY OF USAID

/ ASSISTANT ADMINISTRATOR FOR

\S-f- MANAGEMENT, MR. LARRY BYRNE,
AND ADMINISTOATION RESPONSE TO USAID
WHISTLEBLOWER, MR. PAUL NEIFERT



HEARING AND BUSINESS
MEETING

BEFORE THE

COMMITTEE ON

INTERNATIONAL RELATIONS

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
SECOND SESSION



MAY 21, JUNE 6, AND JUNE 18, 1996



Printed for the use of the Committee on International Relations







U.S. GOVERNMENT PRINTING OFFICE
37-€33 CC WASHINGTON : 1997









For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-054192-1



COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. OILMAN, New York, Chairman



WILLIAM F. GOODLING, Pennsylvania

JAMES A. LEACH, Iowa

TOBY ROTH, Wisconsin

HENRY J. HYDE, Illinois

DOUG BEREUTER, Nebraska

CHRISTOPHER H. SMITH, New Jersey

DAN BURTON, Indiana

JAN MEYERS, Kansas

ELTON GALLEGLY. California

ILEANA ROS-LEHTINEN, Florida

CASS BALLENGER. North Carolina

DANA ROHRABACHER, California

DONALD A. MANZULLO, Illinois

EDWARD R. ROYCE, California

PETER T. KING, New York

JAY KIM, California

SAM BROWNBACK, Kansas

DAVID FUNDERBURK, North Carolina

STEVEN J. CHABOT, Ohio

MARSHALL "MARK" SANFORD, South

Carolina
MATT SALMON, Arizona
AMO HOUGHTON, New York
TOM CAMPBELL, California



LEE H. HAMILTON, Indiana

SAM GEJDENSON, Connecticut

TOM LANTOS, California

ROBERT G. TORRICELLI, New Jersey

HOWARD L. BERMAN, California

GARY L. ACKERMAN, New York

HARRY JOHNSTON, Florida

ENI F.H. FALEOMAVAEGA, American

Samoa
MATTHEW G. MARTINEZ, California
DONALD M. PAYNE, New Jersey
ROBERT E. ANDREWS, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
CYNTHIA A. McKINNEY, Georgia
ALCEE L. HASTINGS, Florida
ALBERT RUSSELL WYNN, Maryland
JAMES P. MORAN, Virginia
VICTOR O. FRAZER, Vir^n Islands (Ind.)
CHARLIE ROSE, North Carolina
PAT DANNER, Missouri
EARL HILLIARD, Alabama



Richard J. Garon, Chief of Staff

Michael H. Van Dusen, Democratic Chief of Staff

HiLLEL Weinberg, Senior Professional Staff Member and Counsel

Mark Kirk, Counsel

Parker H. Brent, Staff Associate



(II)



CONTENTS



WITNESSES

Page

May 21, 1996:

Mr. Paul J. Neifert 7

June 6, 1996:

A motion authorizing the issuance of a subpoena relating to an oflicial of
the Agency for International Development 33

June 18, 1996:

Mr. Larry Byrne, Assistant Administrator for Management, Agency for Inter-
national Development 37

APPENDIX



May 21, 1996:

Prepared statement of Mr. Paul J. Neifert 67

Prepared statement of Congressman Jay Kim 75

Letter dated July 14, 1995, from Michael Sherwin, Deputy Assistant Adminis-
trator for Management, Agency for International Development, to Leslie
Dean, Director, Agency for International Development Pretoria, submitted
by Chairman Oilman 77

June 18, 1996:

Prepared statement of Mr. Larry Byrne 82

Letter dated June 4, 1996, from J. Brian Atwood, Administrator, Agency

for International Development, to Chairman Gilmsm 92

Additional material submitted by Mr. Larry Bvme 93

Responses to additional questions submitted by the Agency for Intemationeil

Development 105

(III)



USAID WHISTLEBLOWER, MR. PAUL J.
NEIFERT



TUESDAY, MAY 21, 1996

House of Representatives,
Committee on International Relations,

Washington, DC.

The committee met, pursuant to notice, at 10 a.m. in room 2172,
Raybum House Office Building, Hon. Benjamin A. Oilman, chair-
man of the committee, presiding.

Chairman Oilman. Tne committee will come to order.

Today our committee meets to take testimony from Mr. Paul
Neifert, a whistleblower with the Agency for National Develop-
ment. Mr. Neifert is a former Peace Corps volunteer who joined
USAID in 1984 and served in the Ivory Coast and in Guinea
Bissau before being posted to South Africa in 1991.

Paul Neifert is, and I quote, a "Luso-American" — that is, the son
of American £md Brazilian parents who drew on his international
heritage to serve USAID ana the Peace Corps.

While stationed in South Africa, Mr. Neifert raised concerns
about the contracting and grant-making procedures and the quality
of projects that had been funded by USAID.

For example, Mr. Neifert questioned a $300,000 grant to the Soft
Sheen International Foundation to build a school for hairdressers
in Johannesburg that was later closed.

Mr. Neifert will also talk about a visit in 1994 by USAID Admin-
istrator Atwood to Finetown, South Africa, as my colleagues can
see in the photo. The administrator laid a brick and cut a ribbon
at a "Potemkin" school that USAID had already rejected for fund-
ing. The school was never built.

After Mr, Neifert raised questions about waste, fraud and abuse
in USAID's South African Mission, his tour was curtailed.

While Mr. Hamilton and Senator Patrick Leahy initiated inves-
tigations on Mr. Neifert's behalf, he was given a make-work assign-
ment in USAID's Washington headquarters. He was investigated
by the Agency's 10 (Inspector Oeneral).

Mr. Neifert complained about his treatment and sought protec-
tion as a whistleblower with the U.S. Office of the Special Counsel.
USAID responded by oflFering Mr. Neifert a cash settlement and
other perquisites in return for his departure from the foreign serv-
ice and his silence regarding the settlement.

At our April 25th USAID hearing, Administrator Atwood was
asked about this secret agreement to end Mr. Neifert's career that
included an undisclosed cash settlement paid for with appropriated
taxpayer funds. Mr. Atwood answered, and I quote,

(1)



"When we reach agreements, any government agency, with an in-
dividual, the government agency and the individual, for the protec-
tion of the individual, does not disclose the terms of that agree-
ment."

Despite the fact that Federal funds were used to buy Neifert's si-
lence, Mr. Atwood refused to disclose this use of funds appropriated
under the Foreign Assistance Act. Mr. Atwood is in the process of
laying off 200 USAID employees because of budgetary cuts. It
would appear that several of those employees are losing their jobs
so that USAID can make this secret payoff to Mr. Neifert.

On May 2nd, the committee invited Mr. Neifert to testify about
this situation. He replied on May 3rd that he would be willing to
do so, but that under the terms of his agreement, he could appear
before the committee only under subpoena or court order. Our com-
mittee thereafter subpoenaed Mr. Neifert to testify regarding his
taxpayer-funded settlement, practices of waste and mismanage-
ment at the USAID mission in South Africa.

Our committee authorized a subpoena for Mr. Neifert without
hearing any objection. In fact, the subpoena was approved on a
voice vote and was served on him yesterday.

Late last week I received a letter from Mr. Hamilton asking for
delay in the hearing in order to subpoena a witness from USAID,
and I responded that, in the opinion of the Chair, since the only
item subject to subpoena was the settlement agreement that
USAID had sought to keep secret from the Congress, USAID could
appear without any subpoena.

I would also note that all of the allegations of waste, fraud and
abuse are public.

There have been over 20 articles on the charges against USAID's
South African management and a two-volume IG's report.

I invited Mr. Hamilton to propose a USAID witness to respond
to the body of Mr. Neifert's charges. I believe that the time for that
may now have passed. I will, at Mr. Hamilton's request, schedule
a business meeting of our committee to subpoena the USAID wit-
ness of his choice for any follow-up hearing that he may desire.

Given the difficulties we experienced previously in seeking au-
thorization for subpoenas, I will endeavor to work with Mr. Hamil-
ton and his staff to help ensure that the appropriate quorum is
present.

Before hearing from our witness, and before I make a further re-
mark, I would Rke to say that I am pleased to see that Mr. Bob
Boyer of USAID is in attendance. I understand he was recently
hospitalized, and we are happy to see him back in the saddle again.
Welcome.

Before hearing from any other witness, I ask our ranking minor-
ity member, Mr. Hamilton, if he has an opening statement.

Mr. Hamilton. Thank you very much, Mr. Chairman. I do want
to say a word or two about the process surrounding the hearing.
I want to say at the outset that I know very little about the sub-
stantive differences between Mr. Neifert and USAID, and I will re-
serve judgment on the merits of those problems, but I do think the
process we are following is a bit unusual.

Mr. Neifert reached, as I understaind it, a legal settlement with
USAID that you have referred to, Mr. Chairman, in your state-



ment; and the agreement specifies that neither party will speak
publicly about it. I understand that there is an exemption, or an
exception, for a subpoena in the agreement and that the committee
has now issued the subpoena for Mr. Neifert's testimony here
today.

Regardless of the legalities, finding a way for him to testify by
the issuance of a subpoena to him, but not to USAID, strikes me,
first of all, as being unusual, and second, a little unbalanced. And
I think we must understand that today we are just going to hear
one side of the story. It may be the correct side, it may not be; I
don't really know.

So I asked, as the Chairman indicated, to delay the hearing until
arrangements could be made for both Mr. Neifert and a representa-
tive of USAID to testify today. To my mind, that seemed the fair
way to proceed, and a rational way to proceed, as well, if we were
interested in trying to find out the facts of the matter. I see a bene-
fit in hearing both sides tell their side of the story at the same time
in the same place.

I do appreciate very much the Chairman's comment a moment
ago in which he said ne would be willing to have USAID testify —
I guess if it is necessary — under a subpoena. I would certainly hope
that USAID would take advantage of that opportunity to tell their
side of the story. I would like them to do it today; maybe that is
not possible because of the legal situations we confront, but I would
urge testimony at a later date and as soon as possible.

I have looked at the facts of the case enough to know that it is
rather complex, but I am concerned that we are approaching it
today by what I think is not the best process. It might even be a
faulty process, because we are hearing one side only.

I asked myself the question, is it really the best procedure to
hear one side now andf the other side later, perhaps much later,
perhaps not at all, and I don't think so. It would clearly be better,
I think, to have both sides before the committee at the same time,
allow each side to make their points and respond to those points
of the other side.

Let me finally observe that so far as I am informed, the problems
in the South African mission have been acknowledged, and either
have been corrected or are in the process of being corrected. I hope
that is the case. That is what I have been told. USAID has re-
sponded to some of the current concerns raised by the critics, and
they have made a lot of changes in their operations. In that sense,
then, I hope the system is wonting.

I do think that if you look back over American policy toward
South Africa over a period of time, it has, in the main, been suc-
cessful; and that the United States played a very important role in
helping that election come off with a mmimum of violence, and that
the housing program has hit the mark.

So we look forward to focusing on assisting the new South Afri-
can Government to move past apartheid and into a new era; and
I thank you, Mr. Chairman, for your letting me comment.

Chairman Oilman. Thank you, Mr. Hamilton.

Mr. Hamilton, again, I will be pleased to schedule a business
meeting of the committee to subpoena a USAID witness to follow,
if it is necessary to subpoena a USAID witness to balance Mr.



Neifert's testimony. Again, I would like to note that a USAID wit-
ness would have had the opportunity to appear today as we indi-
cated to you previously without the necessity for a subpoena, and
that invitation is still open as of today.

Mr. Payne. Mr. Chairman, I have a point of order.

Chairman Oilman. Yes. The gentleman is recognized.

Mr. Payne. Could you clarify the purpose of this subpoena and
this hearing? The only reason I ask it, I guess, is because this is
really the first hearing of the full committee this year where a sub-
ject of Africa has been raised. Of course, this is about a specific in-
dividual, but it just seems to me to almost be a disgrace that we
have situations in Liberia where people are being forced out of
countries and are starving to death; we have criminal behavior by
leaders in Nigeria; we have Burundi ready to explode and the only
thing that this committee, imder your leadership as relates to Afri-
ca, has found the wisdom or the justice to have a hearing about is
about an individual and whether he was discriminated against or
not.

But it is the same thing. I just left a hearing on church burnings
where there have been 60 in this year already, and finally we have
a hearing on it. But the hearings of that Justice Committee, Judici-
ary Committee, have been on Ruby Ridge. We had over 10 days of
hearings, 100 witnesses on Waco, whether any people's rights were
violated; Ruby Ridge with Randy Weaver to see whether the white
supremacists had their rights violated.

So if we take any area of this 104th Congress, it seems that
there is a thread that runs through, regardless of how important
everything else is, it is a person in a country of 600 million people
who just said he thought he was treated badly. I think it is a waste
of taxpayers' money, and I am very disappointed at this kind of
charade.

Chairman Oilman. Mr. Payne, as you know, this hearing con-
cerns the use of foreign assistance funds to buy a whistleblower's
silence, and as you know, the full committee does have jurisdiction
over foreign aid; and members on this side question the use of the
USAID funds in this situation, and that is what we are talking
about, waste.

I would like to note that with regard to Liberia and Nigeria and
some of the other problems, our Subcommittee on Africa held a
hearing on Nigeria in December, the subcommittee is holding a
hearing on human rights in Africa tomorrow, and the Subcommit-
tee on Africa held a hearing on Liberia 2 weeks ago. So we are not
neglecting those problems by any means. But the waste of foreign
assistance funds is a proper province of this full committee, and
that is what we are exploring today.

Mr. Payne. Mr. Chairman, this full committee has taken up
other things other than what a subcommittee's jurisdiction was,
and I am just simply saying that there is definitely — with millions
of people at risk, that we are taking the time. This is the third
hearing of this nature already, talking about wasting taxpayers'
money; it is nothing new. They had it in the Senate, I sat over
there and heard the whole thing then. It is just like the same old
thing, warmed over again, and it is just a thread that continually



runs through; and I think it is wrong to do politics through a hear-
ing of a committee.

Chairman Oilman. Well, this certainly is not intended to be any
political investigation, but an investigation to determine whether
there is an abuse of the utilization of USAID funds.

Mr. Neifert

Mr. Hastings. Mr. Chairman, I have a point of order.

Chairman Oilman. Yes, I am sorry.

Judge Hastings.

Mr. Hastings. Mr. Chairman, first, were you going to ask if any
other members of the committee had any opening statement, and
mav I be permitted to

Chairman Oilman. You certainly would.

Mr. Kim. Mr. Chairman, I would like to make an opening state-
ment, please.

Mr. Hastings. Well, in light of that, could we hear Mr. Kim and
then myself?

Chairman Oilman. Mr. Kim.

Mr. Kim. Thank you, Mr. Chairman.

Mr. Chairman, I would like to ask unanimous consent to submit
my written statement for the record in the interests of time.

Mr. Chairman, I would like to thank you again for your personal
effort to seek out the truth about the USAID mission in South Afri-
ca. Your leadership has made it possible for us to be here today to
hear testimony from a dedicated and courageous American, Mr.
Paul Neifert. I am proud to let my fellow Americans know that Mr.
Neifert is one of my constituents from Upland, California. I look
forward to hearing rrom Mr. Neifert and an opportimity to explain
the truth — the truth, as he has done to me.

Again, I thank you, Mr. Neifert. I appreciate you coming today.
It takes a lot of courage.

Chairman Oilman. Thank you, Mr. Kim. Your fiill statement will
be submitted for the record.

[The prepared statement of Mr. Kim appears in the appendix.]

Chairman Oilman. Mr. Hastings.

Mr. Hastings. Thank you, Mr. Chairman.

Mr. ChairmEin, I want to associate myself with the remarks of
the ranking member regarding the process, and also associate my-
self with the remarks of Mr. Payne. In spite of the Chairman's as-
sertions, Mr. Payne and I serve on the Subcommittee on Africa,
and I wish to urge that many of the issues that he raised have not
been addressed in any of their particulars during the course of this
session. Mr. Payne and I have attended every meeting of the Sub-
committee on Africa.

In that light, Mr. Chairman, what Mr. Hamilton said is really
important, and we dive into this at great risk and peril. I offer to
you, only by way of background, 34 years of legal experience and
only 3 years in the U.S. Congress. But when we are invading con-
tractual provisions, we should tread very, very carefully and not
hurry with our process, because it establishes a precedent that may
very well cause considerable problems, not only with reference to
any allegations made by this individual, but others.

For example, you responded, Mr. Chairman, to Mr. Hamilton by
saying that perhaps in a business meeting a USAID representative



would be made available for a hearing. Well, I preread Mr.
Neifert's testimony, and Mr. Neifert makes allegations, not just
about an agency; he identifies individuals by name — John Hicks,
Keith Brown, Leslie Dean, Bill Ford, Donald Keene — and it is pa-
tently unfair if, at some point, we are not going to hear from all
of the individuals who had some particular responsibility.

Mr. Chairman, I don't want to belabor this, but I do wish to
make a request of the Chair now that I was hopeful of being able
to make later. I would like to request from USAID and make a part
of the record of this hearing any documentation — be it in the form
of letters, memoranda, E-mails, cables — ^which may shed light on or
present USAID management's position on why Mr. Neifert's re-
quest for a second tour in Africa was denied.

If there are documents that record counseling sessions with Mr.
Neifert or reports of documents from the United States Embassy or
Mission Director to USAID Central Personnel, the IG, or other of-
fices within USAID dealing with Mr. Neifert's conduct, I request
that these be provided to the committee. ^

Finally, Mr. Chairman, a week ago— a little more — we heard
from the IG regarding many of the allegations that have been
raised, and this is kind of like after the fact, but almost all of the
allegations that the gentleman is prepared to put forward, based
on his written testimony, have pretty much been put to rest.

Thank you, Mr. Chairman.

Chairman Gilman. Thank you, Mr. Hastings.

I think the gentleman has made a constructive suggestion, and
we will make a request of the documents that the gentleman would
like. I would like to ask the gentleman if he would put in writing
specifically which documents he would like to make available to the
committee.

Mr. Hastings. That is the problem, Mr. Chairman. I will, as best
I can. I don't know what others know.

Yes, sir, Mr. Chairman, I will put it in writing.

Chairman GiLMAN. If tne minority staff will provide us with that
memorandum, we will be pleased to pursue it.

Mr. Neifert, I understand that your last day with USAID will be
tomorrow. On behalf of the Congress, I want to thank you for your
service, both in the Peace Corps and USAID, that you rendered to
your Nation. In summarizing your service in the settlement agree-
ment, I note that USAID Assistant Administrator for Management,
Lawrence Byrne wrote, and I quote,

"In each overseas assignment, Mr. Neifert distinguished himself
through uncompromising integrity, rare courage, and creative en-
ergy, upholding the finest ideals of the American Foreign Service.
Mr. Neifert received numerous awards for his meritorious perform-
ance, including two career promotions. Mr. Neifert leaves the For-
eign Service in good standing and we regret his departure."

Mr. Neifert, we would welcome your narration of what occurred
for the committee.

Mr. Hamilton. Mr. Chairman, may I make a point, and I don't
mean in any way to reflect on Mr. Neifert here. But I notice the
Chairman from time to time has been swearing in witnesses, and



^The abovementioned documents are available through the committee.



I just wonder under what circumstances you swear in witnesses
and under what circumstances you do not.

Chairman Oilman. Well, if tne gentleman would like to make a
request, I will be pleased to have tne witness give sworn testimony
before us.

Mr. Hamilton. It doesn't matter to me a great deal. I think it
is a good thing to be consistent in the policy. What struck me re-
cently

Chairman Oilman. Mr. Neifert, would you please stand and raise
your right hand.

[Witness sworn.]

Mr. Hamilton, Is it the Chairman's policy now to swear in all
witnesses?

Chairman Oilman. We will swear in witnesses when we deem it
appropriate for any essential testimony before our committee.

Mr. Neifert, you may proceed.

STATEMENT OF PAUL J. NEIFERT, USAID WfflSTLEBLOWER

Mr. Neifert. Thsink you, Mr. Chairman and members of the
committee. In late 1992, without realizing it at the time, I became
a whistleblower at the South Africa mission of the Agency for
International Development. By close of business tomorrow, at the
insistence of senior agency officials, I will end my last full working
day as a USAID employee.

Because of my dissent to USAID practices in South Africa, which
I believed were illegal and opposed to American interests, my as-
signment to that country was terminated, and I was transferred
back to Washington in June 1994. Since that time, USAID avoided
any serious response to the problems exposed by my allegations, re-
taliated by assigning me to a paper-pushing job in Washington, and
referred me at least twice to the lO's Office on trumped-up charges.

In order to protect myself, I secured legal counsel and sought
whistleblower protection at the Office of the Special Counsel. It
was only after embarrassing media exposure and the intervention
of concerned Members of Congress, such as you, Mr. Oilman, that
USAID managers began any serious efforts toward resolving this
matter.

On April 23rd, 1996, USAID signed an agreement that paid me
compensatory damages and legal fees, but which required I resign
from the Foreign Service and remain silent about the settlement
terms. A few brief examples serve to highlight the reasons for my
dissent against USAID mismanagement.

Despite an intensive contract design effort involving the partici-
pation of respected South African business leaders and consultants,
USAID managers abruptly canceled a $15 to $20 million contract
solicitation under the Black Private Enterprise Development pro-


1 3 4 5 6 7 8 9 10 11 12

Online LibraryUnited States. Congress. House. Committee on InterUSAID whistleblower, Mr. Paul Neifert, motions related to compelling the testimony of USAID Assistant Administrator for Management, Mr. Larry Byrne, and administration response to USAID whistleblower, Mr. Paul Neifert : hearing and business meeting before the Committee on International Relations, Ho → online text (page 1 of 12)