Washington Babylon — September 3, 2009, 9:41 am

Foreign Aid Making American CEOs Very Rich

From USA Today:

Four chief executives whose government-funded non-profit corporations are paid to deliver U.S. foreign assistance earned more than half a million dollars in 2007, a USA TODAY review of public tax records shows. Although President Obama and Congress placed a $500,000 cap on salaries at companies getting taxpayer bailouts, there is no such restriction on those that subsist on federal grants — even those delivering aid to some of the world’s poorest regions…

“It conflicts with most people’s notion of what a non-profit organization is about when they’re paying themselves salaries that are several times higher than what a U.S. Cabinet secretary would earn,” said Sen. Patrick Leahy, D-Vt., who chairs the subcommittee that funds foreign aid.

The U.S. Agency for International Development relies on a cadre of for-profit companies and tax-exempt groups to deliver foreign assistance programs, which Obama says has gone awry. “Western consultants and administrative costs end up gobbling huge percentages of our aid overall,” Obama said to the news website allAfrica.com in July.

Salaries at for-profit USAID contractors are not disclosed, but non-profit agencies must report their CEO pay on public tax returns posted at Guidestar.org. USA TODAY examined total CEO compensation of the 10 largest recipients of foreign aid grants and contracts that also derive at least 70% of their revenue from U.S. taxpayers. Each one receives a 501(c)3 charitable exemption from federal taxes. The 10 firms received approximately $4.2 billion in foreign aid grants and contracts over the past three years, government records show. An understaffed USAID has become “a check-writing agency,” Leahy said.

“Large swaths of foreign aid are now dominated by this handful of corporate consultants, many of them enjoying the tax benefits of non-profit status,” Leahy said. “A lot of them do very good work, but they also charge a lot in overhead and salaries. The process has become too cozy, shutting out many smaller non-profits that have much to offer.”

I have a piece in the current issue of the magazine that looks specifically at the scam of American “aid” to Afghanistan, which has failed to rebuild the country but has managed to increase the world’s supply of heroin.

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