Reprinted from Consortium News
The U.S. government is missing -- or withholding -- audit documents about the finances and possible accounting irregularities at a $150 million U.S.-taxpayer-financed investment fund when it was run by Ukraine's Finance Minister Natalie Jaresko, who has become the face of "reform" for the U.S.-backed regime in Kiev and who now oversees billions of dollars in Western financial aid.
Before taking Ukrainian citizenship and becoming Finance Minister in December 2014, Jaresko was a former U.S. diplomat who served as chief executive officer of the Western NIS Enterprise Fund (WNISEF), which was created by Congress in the 1990s with $150 million and placed under the U.S. Agency for International Development (USAID) to help jumpstart an investment economy in Ukraine.
Though the relevant records were identified by June, USAID dragged its feet on releasing the 34 pages to me until Aug. 28 when the agency claimed nothing was being withheld, saying "all 34 pages are releasable in their entirety."
However, when I examined the documents, it became clear that a number of pages were missing from the financial records, including a total of three years of "expense analysis" -- in three-, six- and nine-month gaps -- since 2007. Perhaps even more significant was a missing paragraph that apparently would have addressed an accounting irregularity found by KPMG auditors.
KPMG's "Independent Auditors' Report" for 2013 and 2014 states that "except as discussed in the third paragraph below, we conducted our audits in accordance with auditing standards generally accepted in the United States of America" -- accountant-speak that suggests that "the third paragraph below" would reveal some WNISEF activity that did not comply with generally accepted accounting principles (or GAAP).
But three paragraphs below was only white space and there was no next page in what USAID released.
Based on the one page that was released for 2013-14, this most recent audit also lacked the approval language used in previous audits, in which KPMG wrote: "In our opinion, the consolidated financial statements " present fairly, in all material respects, the consolidated financial position of Western NIS Enterprise Fund and subsidiaries." That language was not in the 2013-14 analysis, as released by USAID.
The KPMG report for 2013-14 does note that "The [audit] procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. ... An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements."
That page then ends, "We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion." But the opinion is not there.
After I brought these discrepancies to the attention of USAID on Aug. 31, I was told on Sept. 15 that "we are in the process of locating documents to address your concern. We expect a response from the bureau and/or mission by Monday, September 28, 2015."
After the Sept. 28 deadline passed, I contacted USAID again and was told on Oct. 2 that officials were "still working with the respective mission to obtain the missing documents."
Yet, whether USAID's failure to include the missing documents was just a bureaucratic foul-up or a willful attempt to shield Jaresko from criticism, the curious gaps add to the impression that the management of WNISEF fell short of the highest standards for efficiency and ethics.
A previous effort by Jaresko's ex-husband Ihor Figlus to blow the whistle on what he considered improper business practices related to WNISEF was met by disinterest inside USAID, according to Figlus, and then led to Jaresko suing him in a Delaware court in 2012, using a confidentiality clause to silence Figlus and getting a court order to redact references to the abuses he was trying to expose.
Feeding at the Taxpayer Trough