[Senate Prints 106-35]
[From the U.S. Government Publishing Office]


106th Congress                                                  S. Prt.
 2d Session                 COMMITTEE PRINT                     106-35
_______________________________________________________________________

                                     

 
       INTER-AMERICAN FOUNDATION PROJECTS IN ARGENTINA AND HAITI

                               __________

                             A STAFF REPORT

                                 TO THE

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                                     


                         CHUCK HAGEL, Nebraska
                        GORDON H. SMITH, Oregon
                          ROD GRAMS, Minnesota
                         SAM BROWNBACK, Kansas
                         CRAIG THOMAS, Wyoming
                        JOHN ASHCROFT, Missouri
                         BILL FRIST, Tennessee
                    LINCOLN D. CHAFEE, Rhode Island

JOSEPH R. BIDEN, Jr., Delaware
PAUL S. SARBANES, Maryland
CHRISTOPHER J. DODD, Connecticut
JOHN F. KERRY, Massachusetts
RUSSELL D. FEINGOLD, Wisconsin
PAUL D. WELLSTONE, Minnesota
BARBARA BOXER, California
ROBERT G. TORRICELLI, New Jersey

Stephen E. Biegun, Staff Director
Edwin K. Hall, Minority Staff Director




                         LETTER OF TRANSMITTAL

                              ----------                              

                                                  January 13, 2000.
The Honorable Jesse Helms
Chairman,
Committee on Foreign Relations

The Honorable Joseph Biden
Ranking Minority Member,
Committee on Foreign Relations

    Dear Senator Helms and Senator Biden:

    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 activities of the Foundation. Foreign 
Relations Committee staff increased 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 Cathedral during a violent street demonstration and 
held people inside the church hostage while it made demands on 
the local government. Another grant in Honduras was to a group 
that lead demonstrations forcing the government to uphold a law 
it intended to rescind that discriminates against American 
citizens.
    The Foundation implemented procedures with the State 
Department 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 Central Intelligence Agency to review its 
current list of grantees to ensure that no other terrorists, 
criminals, or anti-American subversives 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 Congressional 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 
overseas to visit Inter-American Foundation projects, inasmuch 
as few, if any, such visits have taken place for many years. 
From December 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 
information 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 
provides my general impressions. Also included are key findings 
and recommendations, including my recommendation that Congress 
seriously consider abolishing the Inter-American Foundation as 
recommended in the fiscal year 2000 Foreign Operations 
Appropriations bill.
            Sincerely,
                                        G. Garrett Grigsby,
                                     Deputy Staff Director.


                            C O N T E N T S

                              ----------                              
                                                                   Page

Letter of Transmittal............................................   iii
Key Findings and Recommendations.................................     1

Argentina

Map 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 Minetti.......................................     7
    Instituto para la Cultura, la Innovacion y el Desarrollo 
      (INCIDE)...................................................     9
    Union de Organizaciones de Base por los Derechos Sociales 
      (UOBDS)....................................................     9

Haiti

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

                                Appendix

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 
  Foundation.....................................................    22
C. Letter of December 2, 1999 from Chairman Helms to President 
  Clinton........................................................    33



                      KEY FINDINGS AND RECOMMENDATIONS



   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 
        improve the quality of life of the poorest people of 
        the Western Hemisphere in a direct and cost effective 
        manner. The Foundation distinguishes itself from the 
        Agency for International Development (AID) by stating 
        that it works directly with the poor on projects that 
        beneficiaries design themselves. The Foundation 
        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 Argentina 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 intermediary 
        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 ascertain the purpose of 
        a project or how it could reasonably lead to tangible 
        and direct quality of life improvements for poor 
        people. It appeared that poor people themselves rarely 
        designed and participated in the formulation of project 
        proposals.
   The Inter-American Foundation funds a number of 
        organizations that can operate successfully without 
        U.S. taxpayer support. A number of the projects visited 
        in Argentina receive substantial 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 substantial funding from the Inter-American 
        Foundation and should not be described as grassroots 
        organizations. Many organizations supported by the 
        Foundation are not sustainable because they lack 
        genuine grassroots appeal and because they lack an 
        income generation component or adequate and predictable 
        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 resources 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-American Foundation as recommended in the fiscal 
        year 2000 Foreign Operations Appropriations bill. One 
        of the reasons Congress 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 disappeared. Furthermore, the concept of 
        working with non-governmental 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 eligible 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 foreign 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-American Foundation ``is not a player'' 
        in the U.S. Government's economic 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 
        international 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 legislation).

                               Argentina



                     Map of Argentina (Source: CIA)

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 
Foundation'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 municipalities 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 municipal 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 Foundation 
funds will cover salaries, training, publications, 
administrative 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 improved 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 intangible benefit (although that was never made clear 
during the meeting), 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 understand 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 
    Production)
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 
educational 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 migration of young people from rural to urban 
centers.
    According to Inter-American Foundation project notification 
documents, 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 understood.
    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 FACEPT's 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 support family farms since, 
according to FACEPT's representative, Argentine 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 experts. 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 
individuals in rural areas, which is its goal, it does not 
appear that the assistance necessarily supports poor people. It 
is, therefore, difficult 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 official 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-
American Foundation. CEDES is the Argentine affiliate of Johns 
Hopkins University International Comparative Research project 
on the Third Sector (non-government organizations). CEDES is 
the recipient 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) survey and analyze fundraising techniques of 
Argentine non-government organizations; and (3) identify 
factors leading to greater transparency in the philanthropic 
practices of corporations and foundations. Specifically, the 
Foundation covers the costs of salaries, travel, per diem, 
dissemination of its studies, and some administrative expenses.
    CEDES cited as results of its Inter-American Foundation 
supported 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 community in Latin America on development projects. 
While CEDES' findings 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 understand why the 
Foundation would choose to support such a project whose purpose 
is so different from the Foundation's generally understood 
mandate to help poor people at the grassroots level.
                                ------                                

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 
disseminate the results of the assessments of its predecessor 
and provide 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 assessments, and travel.
    As with the North/South Civil Association, it was difficult 
to ascertain exactly what FUNAS does, how the project directly 
or indirectly benefits poor people, or what its accomplishments 
are. Simply put, FUNAS seems to undertake studies, conduct 
seminars, and issue reports for the benefit of local municipal 
officials and interested non-government organizations.
    It does not appear that FUNAS works with grassroots 
organizations as these are generally defined and understood. As 
described by FUNAS representatives, their organization's 
activities only impact the lives of poor people (if at all) 
indirectly and incidentally.
                                ------                                

Fundacion ARCOR (FUNARCOR)
(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 Argentine 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 
problems. 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 collaborate to promote greater social 
responsibility within the Argentine corporate community by 
producing publications and conducting seminars.
    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 working 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 
people, 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 conducts programs and provides 
grant support in the areas of education and social development.
    The Inter-American Foundation and the Juan Minetti 
Foundation have entered into a partnership to promote social 
responsibility 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 development 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 Foundation 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 dollar. The magazine is well 
known throughout the region and has won critical acclaim. The 
children are supposed to sell the magazine 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 targets 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 classroom.
    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 
emphasis 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 company was recently purchased by a 
Swiss firm that provides generous 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.
                                ------                                

Instituto 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 
grassroots 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. 
Specifically, the Foundation will finance salaries, training, 
technical assistance, and dissemination of information on 
project activities.
    The project activities described that use Inter-American 
Foundation funds focused on training for poor farmers so that 
they can more successfully produce and market their products. 
INCIDE concentrates on the poorest region of Argentina where 
crops are difficult to grow and little or no infrastructure 
exists to enable farmers to transport their products to market. 
INCIDE representatives appeared to be dedicated to working 
strictly with the poor on solutions 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 solution of problems. They expressed confidence 
that their training program 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 (UOBDS)
(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 
demonstrations 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 Foundation.
    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 
President 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 instance and how this grant was 
in any way in the interests of the United States.
    (A meeting was also requested with another former Inter-
American 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 income from shops that would occupy 
its first floor. But after an extensive 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 Habitat.)

                                 Haiti



                       Map of Haiti (Source: CIA)

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 Christian 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 development project investment, construction, 
education, and training, 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 operations.
    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 
representatives appear to be professional and motivated. Their 
program objectives are understandable and there is no doubt 
that the main beneficiaries of the project are poor Haitians 
who are learning the skills necessary to improve their quality 
of life. Of all the grassroots organizations visited, PWOFOD 
seemed to understand the need to diversify 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 additional 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-
Prince.
    According to Inter-American Foundation briefing documents, 
the mission of the Beehive Foundation is to promote and make 
accessible 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 development activities.
    Ms. Balutansky expressed great frustration with the current 
political and economic situation in Haiti and with the lack of 
understanding about economic and social development among 
Haitian business leaders. The Beehive Foundation established a 
board of directors comprised of prominent Haitian businessmen 
who appeared to support the concept of development. However, 
after working 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 Foundation, using Inter-American Foundation funding, is 
starting a program 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 development 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 expectation.
    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 
unquestionable, there is little to show for the Inter-American 
Foundation contribution thus far. Ms. Balutansky acknowledged 
this fact, but stated the view that Haiti is in such a 
miserable condition--economically, politically, 
environmentally, and in nearly every other respect--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 currently Director of the Intermediate Technology Group 
of Haiti.
    HAVA, which was an umbrella organization of Haitian non-
government organizations, carried out a variety of projects for 
the Inter-American Foundation, including the provision of legal 
services for poor Haitians, the operation of a credit fund, and 
the management 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 
supported 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 Foundation 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 Europe.
    CAH is an Inter-American Foundation graduate whose 
operations 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 grassroots 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 bicycles 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 
provide 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 affiliate cooperatives for the bicycles 
that they sell. It appears that at least three people were 
employed assembling bicycles at this location.
    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, although Mr. Bazelais insisted that individuals 
also make purchases (Haiti's gross domestic product per capita 
is $330, according to the World Bank).
    Given the small profit ASTRAL makes on each sale, and the 
difficulty in obtaining payment for bicycles it does sell, 
there are serious questions as to whether ASTRAL can remain in 
business absent 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 
communion 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 constitutes grassroots development activities 
was astonishingly broad.
    Inter-American Foundation funding will pay for project 
training, publication, and administrative costs. More 
importantly, Foundation funds will match SPC funds on a 2:1 
basis with regard to contributions made to its Capital Access 
Fund. The Inter-American Foundation also intends to match 
savings by members in an Investment 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 considered ``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 funding 
from outside sources such as the Inter-American Foundation.
                                ------                                

Fondasyon Enstitisyon-yo pou Devlopman ki Soti nan Baz-la (FIDEB)
(Foundation of Institutions for Development and Education at the 
    Grassroots)
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 grassroots organization itself as well as from 
the local authorities. Typical 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 results is not this organization's 
strong point. There also appears to be a lack of emphasis on a 
self-help component to the projects supported. 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 P P E N D I X

                              ----------                              



               A.--Inter-American Foundation Legislation

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)

               PART IV--THE INTER-AMERICAN FOUNDATION ACT

  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 Foundation (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 activities 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 individual 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, private and governmental, appropriate to the 
        requirements of the individual sovereign nations of this 
        hemisphere.
In pursuing these purposes, the Foundation shall place primary emphasis 
on the enlargement of educational opportunities at all levels, the 
production of food and the development of agriculture, and the 
improvement of environmental conditions relating 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 international 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 activities 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 America.
  (e) The Foundation, as a Corporation.--
          (1) shall have perpetual succession unless sooner dissolved 
        by an Act of Congress;
          (2) may adopt, alter, and use a corporate seal, which shall 
        be judicially noticed;
          (3) may make and perform contracts and other agreements with 
        any individual, corporation, or other body of persons however 
        designated whether within or without the United States of 
        America, and with any government or governmental 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 exceed $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 dispose 
        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, devise, 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, 
        domestic 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 carrying 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 appointed 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 predecessor 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 
eligible for reappointment. All individuals appointed to the Board 
shall possess an understanding 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 accordance 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 majority 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.
  (l)(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 authorized 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 subsection.
  (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 purposes 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 interested.
  (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 countries.
  (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 detail.
  (q) The Foundation shall maintain its principal office in the 
metropolitan Washington, 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 taxation 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 purposes of this 
section under the preceding sentence are authorized to remain available 
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 International 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 Corporation 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 subsection 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 described 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.

                               __________

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)

               ABOLITION OF THE INTER-AMERICAN FOUNDATION

SEC. 586. (A) DEFINITIONS--IN THIS SECTION:

          (1) Director.--The term ``Director'' means the Director of 
        the Office of Management and Budget.
          (2) Foundation.--The term ``Foundation'' means the Inter-
        American Foundation.
          (3) Function.--The term ``function'' means any duty, 
        obligation, power, authority, 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.
  (c) Termination of Functions.--
          (1) Except as provided in subsection (d)(2), there are 
        terminated upon the abolition 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. 6290f) 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 appropriations of the 
        Foundation shall be deposited in the miscellaneous receipts 
        account of the Treasury of the United States.
  (d) Responsibilities of the Director of the Office of Management and 
Budget.--
          (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, Export 
                Financing, and Related Programs Appropriations Act, 
                2000, except that the authority of this subparagraph 
                does not include the renewal or extension of any such 
                contract or agreement; and
                  (B) taking such other actions as may be necessary to 
                wind-up any outstanding 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 
        responsibilities 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 appropriations, 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 responsibilities described in paragraph (1) have been 
        fully discharged, the Director 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 writing regarding all matters relating to the 
abolition and termination of the Foundation. The report shall be 
submitted not later than 90 days after the termination of the 
Foundation.
  (f) Transfer and Allocation of Appropriations.--Except as otherwise 
provided 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, authorizations, 
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 purposes of carrying out the 
responsibilities described in subsection (d)(1).
  (g) Savings Provisions.--
          (1) Continuing legal force and effect.--All orders, 
        determinations, rules, regulations, permits, agreements, 
        grants, contracts, certificates, licenses, registrations, 
        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, terminated, superseded, set aside, or revoked 
                in accordance with law by the President, the Director, 
                or other authorized official, a court of competent 
                jurisdiction, or by operation of law.
          (2) No effect on judicial or administrative proceedings.--
        Except as otherwise 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 judgments 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.
          (4) Continuation of proceeding with substitution of 
        parties.--If, before 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 party.
          (5) Reviewability of orders and actions under transferred 
        functions.--Orders and actions of the Director in the exercise 
        of functions terminated 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.
  (h) Conforming Amendments.--
          (1) African development foundation.--Section 502 of the 
        International Security 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 Assistance Act of 1973 is amended--
                  (A) in subsection (a)--
                          (i) by striking ``provide for'' and all that 
                        follows through ``(2) utilization'' 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 Assistance 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 International 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 Foundation

    june 15, 1998 letter from chairman helms to maria otero, former 
                   chairman of the board of directors
                                                     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 spectacle of the Inter-American Foundation's 
actually providing cash grants--underwritten 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 Committee 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 appreciate 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.
        Sincerely,
                                       Jesse Helms.
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

                                 ______
                                 

  June 29, 1998 Reply of Maria Otero, Former Chairman of the Board of 
Directors of the Inter-American Foundation to June 15, 1998 Letter From 
                    Chairman Helms, With Enclosures

                                         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 
Amazonica (COICA), the Confederacion de Nacionalidades Indigenas de la 
Amazonia Ecuatoriana (CONFENAIE), and the Organizacion 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 management of the Inter-American Foundation undertook immediate and 
prudent measures 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 
concerning 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 incidents 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 Embassies of the 
United States throughout Latin America and the Caribbean. In addition, 
the President of the Inter-American Foundation recently wrote to each 
United States Ambassador in Latin America and the Caribbean to furnish 
detailed and current information on the grant portfolio and activities 
of the Inter-American Foundation.
    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 recommendations 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.
            Sincerely,
                                       Maria Otero,
                                             Chair.
Enclosure

cc: The Honorable Madeleine Albright
     The Honorable Mitch McConnell
     The Honorable Sonny Callahan
     Board of Directors of the Inter-American Foundation
Enclosure 1
 resolution of the board of directors of the inter-american foundation
                              june 8, 1998
    WHEREAS the Inter-American Foundation, an agency of the United 
States Government, is committed to the promotion of peaceful, 
equitable, and self-help development efforts within a civil society 
framework;
    WHEREAS the Inter-American Foundation opposes any threatening 
tactics, intimidation, 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 Amazonica (COICA), and violence 
by the Confederacion de Nacionalidades Indigenas de la Amazonia 
Ecuatoriana (CONFENAIE), and the Organizacion 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 OPIP;
    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 supports 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 support 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
               statement by the inter-american foundation
    On June 27, 1996, the Coordinadora de Organizaciones Indigenas de 
la Cuenca Amazonica (COICA), which at that time was a grantee of the 
Inter-American Foundation, 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 physical safety 
        should they choose to ignore this resolution.

    In February 1997, the Confederacion de Nacionalidades Indigenas de 
la Amazonia Ecuatoriana (CONFENIAE), which at that time was a grantee 
of the Inter-American Foundation, and which is a member of COICA , 
participated in the armed kidnapping 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 threatening 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 statements.
    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 December 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 Foundation is committed to the promotion of peaceful, 
equitable, and self-help development efforts within a civil society 
framework. Accordingly, the Inter-American Foundation opposes any 
threatening tactics, intimidation, or threats of violence as a 
legitimate means for any organization to achieve its institutional 
objectives.

                                 ______
                                 

  april 20, 1999 letter from chairman helms, senator chuck hagel, and 
senator paul coverdell to maria otero, former chairman of the board of 
                               directors
                                                    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 staff's 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 terrorists kidnappers who received Inter-American 
Foundation funds were trained in Cuba.)
    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 require the Foundation to have the U.S. 
Ambassador or his designee review and approve 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.
            Sincerely,
                                       Jesse Helms,
                                    Paul Coverdell,
                                       Chuck Hagel.
Enclosure

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

                      Kidnapping Threat Deters Few

                             by tom carter
                          the washington times
            americans turn to fbi for help freeing hostages
    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 regions 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 both.
    ``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 negotiators, 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 responsible 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 
soon.''
    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 operate in the country. Mr. Noesner said this has never 
been a problem.
    ``We bring in experts in negotiation and resources, secure radios 
and other equipment, and we work with the local law enforcement,'' he 
said. ``There may be dozens of other kidnappings they are working on. 
They are glad to have us.''
    Somewhat trickier is step two, which is securing an invitation from 
the State Department. The FBI can move only after the local U.S. 
Embassy ``invites'' the FBI in.
    Generally, this is pro forma, but there have been cases in which 
embassy personnel 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 better.''
Diplomats' other priorities
    But others note the State Department's primary responsibility is 
U.S. foreign relations, not the release of an American crime victim.
    If there is a turf issue, and the ambassador forbids FBI 
involvement, as has happened 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 families 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 publicized.
    ``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 prisoners,'' 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 said.
    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 reply of maria otero, former chairman of the board of 
  directors of the inter-american foundation to april 20, 1999 letter 
                          from chairman helms
                                 Inter-American Foundation,
                                                    April 23, 1999.
The Honorable Jesse Helms,
Chairman, Senate Foreign Relations Committee,
SD-450 Dirksen Senate Office Building,
Washington, DC 20515.
    Dear Mr. Chairman: 
    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 Directors 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 
resolution 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 Foundation operates with detailed 
information on currently supported grantee organizations in their 
respective country of assignment. In addition, Inter-American 
Foundation 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 provides 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-American 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 consultation 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 implemented 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 colleagues for the offer to work closely 
with the Board of Directors of the Inter-American Foundation to address 
this concern.
            Sincerely,
                                       Maria Otero,
                                             Chair.

cc: Board of Directors

                                 ______
                                 

    july 14, 1999 letter from chairman helms to maria otero, former 
                   chairman of the 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) 
kidnaped Americans and (2) advocated violence as a means to achieve 
their objectives.
    I have recently learned that the program officer in charge of these 
grants approached 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 
Cordoba's Catholic Cathedral building as its site to protest the 
policies of the democratically 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 Counsel 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 Foundation. On June 22, Senator McCain included in the State 
Department authorization 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 management. All of this occurred before it 
was disclosed that the Foundation had supported yet another terrorist 
organization in another country.
    Despite the significant and highly commendable efforts by the 
Foundation's President and General Counsel to reform practices of the 
Foundation, it is becoming disturbingly apparent that the Foundation's 
problems are endemic and may be impervious 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 indirectly, from the Foundation, and that 
all proposed grantees, be vetted by the Central Intelligence Agency to 
insure that terrorist, communist or subversive organizations 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, communist or subversive 
organizations, and if so, why.
    It is very important that you keep me fully apprised of the board's 
efforts to reform the grant review and approval process.
            Sincerely,
                                       Jesse Helms.

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

                                 ______
                                 

  july 30, 1999 reply of maria otero, former chairman of the board of 
directors of the inter-american foundation to july 14, 1999 letter from 
                             chairman helms
                                                     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 gravely concerned about past Inter-American Foundation 
support for organizations in Ecuador 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. embassies 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 engaged 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 continue to discuss with you the many recent important 
enhancements that have been implemented to better administer the 
grantmaking program of the Inter-American Foundation.
    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 implications 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.
            Sincerely,
                                       Maria Otero,
                                             Chair.

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 32, 1999 letter from chairman helms to frank yturria, member 
       of the 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 Foundation:
    On July 14, after learning that the Foundation had financed another 
terrorist organization--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 Relations 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 threatened as a result of the CIA's being asked to 
disclose whether any terrorists, communists 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' money.
    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 kidnapping of Americans in 
Ecuador and the terrorist activities of a Foundation grantee 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 genuinely 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.
            Sincerely,
                                       Jesse Helms.

                                 ______
                                 

    october 12, 1999 reply of frank yturria, member of the board of 
directors of the inter-american foundationto september 14, 1999 letter 
                  from chairman helms, with enclosure.
                                  Frank D. Yturria,
                         3201 Central Boulevard, Suite 200,
                                         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 Agency.
    I fully share your outrage that the Inter-American Foundation had 
supported organizations 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' resources.
    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.
            Sincerely,
                                  Frank D. Yturria.
Enclosure:
Letter from Frank Yturria to Maria Otero
                                  Frank D. Yturria,
                         3201 Central Boulevard, Suite 200,
                                         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 staff's lack of supervision and accountability of grants 
has resulted in funding of organizations engaged in terrorist 
activities. The Board of Directors cannot, and must not, appear to wash 
this under the table and continue business as usual.
    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 organizations 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 Offen 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 surely result in the demise of the 
Foundation.
    I hope to hear from you on this matter very soon.
            Sincerely,
                                  Frank D. Yturria.
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 approximately $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 2000.
    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 1999).
    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 proportion to what it spends on programs to 
help poor people.
            Sincerely,
                                       Jesse Helms.
cc: The Honorable Brady Anderson

                               

      
