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NGO Response: CNFA Reaffirms Commitment to Transparency

Editor’s note: We emailed every organization mentioned in Till Bruckner’s recent blog post, The accidental NGO and USAID Transparency Test to ask for their comment. CNFA sent us a response (also posted on their website) this afternoon, which we are reproducing here in full:

Transparency and accountability are core values of CNFA. Our programs are designed to be cost-effective – producing maximum output for the least cost. CNFA is fully accountable to our clients, compliant with our donors’ policies and procedures, and responsible to our beneficiaries. Our program management practices are broadly inclusive and transparent, involving all relevant stakeholders, donors, partners and policymakers. This is all a matter of “practicing what we preach.” CNFA’s most important goal, implemented through our programs, is to encourage local partner institutions to adopt transparent business practices, for the purpose of promoting private investment and commercial finance.

Recently it has been suggested that CNFA’s choice not to release financial proposal data falls short of this commitment to transparency. In reality, the competitive process used by USAID and most other donors to award contracts is designed to foster innovation, lower costs, improve efficiency, and generate better long-term results. CNFA firmly believes that our unique approach to economic development has been demonstrated to improve rural incomes by promoting entrepreneurship as well as empowering the private sector to lead to economic growth and expanding commercial agriculture and agribusiness. So, given the highly competitive environment for donor-funded grants and contracts, CNFA is naturally reluctant to provide its proprietary information, including its cost approach, publicly to everyone, including its competitors. This does not mean that CNFA hides this information from its donors or does not comply with all reporting requirements imposed by them.

The program in question, the Georgia Agricultural Risk Reduction Program (GARRP), was part of the US Government’s $1 billion pledge to aid Georgia’s recovery following the 2008 war with Russia. Of the $19.5 million total program cost, $16.5 million, or 85%, went directly into the hands of Georgian farmers and businesses for the purchase of agricultural inputs and services. In turn, GARRP helped nearly 40,000 conflict-affected families stay on their farms and produce crops worth over $70 million at harvest, speeding the recovery of their livelihoods and their return to economic independence.

CNFA has always been and remains committed to delivering the best value to the U.S. taxpayer, to all its donors and to the beneficiaries of the programs we implement around the world. We believe that our results, our success in competitive donor awards and our publicly available financial records speak for themselves.

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7 Comments

  1. JSC7 wrote:

    “So, given the highly competitive environment for donor-funded grants and contracts, CNFA is naturally reluctant to provide its proprietary information, including its cost approach, publicly to everyone, including its competitors.”

    If CNFA’s goal, as they say on their website, is to provide economic opportunities to entrepreneurs in developing countries, then shouldn’t they be happy to provide their proprietary information to competitors, given that it might lead to, on a marco level, more effective accomplishment of their goals? What’s more important to CNFA, maximizing social welfare or their continued, successful existence as an organization?

    The only argument I can see in the other direction is that grant-giving and real effectiveness aren’t aligned, in the sense that if CNFA made its operation open for all to see, some impostor could use that info to write a better grant proposal, get the money, and not actually know how to use it effectively. That could be true, but in that case we could never tell the real doers from the impostors anyway, so for all we know CNFA could have just come up with a great grant proposal pitch with no actual good work being done on the back end.

    In other words, if aid efficiency can be measured, then CNFA should share all of its information, because this will maximize social welfare, which is ostensibly CNFA’s goal. And if aid efficiency can’t be measured, then for all we know we’re giving all our money to crooks anyway, so we should stop giving money.

    Posted August 20, 2010 at 9:56 pm | Permalink
  2. Marc Maxson wrote:

    If there’s a single multi-national non-governmental organization out there with an “innovative” cost-approach worthy of the label “prioprietary,” they wouldn’t be dependent on ODA for funding. They would be profitable on their own merit.

    Fundacion Paraguay comes to mind. They inherited a bankrupt agro school and turned it around by forcing every class to produce enough product to cover costs. I bet you they’d gladly reveal their proprietary magic if asked.

    Posted August 21, 2010 at 1:00 am | Permalink
  3. Nicolas wrote:

    I’m with JSC7 on this one. Some of the negative repsonses to Till’s post seem to claim that competition would be hampered by a full disclosure of information by NGOs vying for funding. How does that work? The line seems to be: we can’t tell you how much we spend on certain things, like salaries, because then someone else might pay lower salaries and take our contract away. Euhm, isn’t that the essence of competition? If someone else can deliver the same outputs/outcomes/whatever at a lower price, shouldn’t we rejoice in the fact that we now get more bang for the buck, and that, with the same amount of funding, more people can now be helped. If NGOs care about their “beneficiaries” in poor countries, they should make all their information available and they should be happy that this prompts others to bring down their costs, leading to greater efficiency.

    Posted August 21, 2010 at 8:18 am | Permalink
  4. Shakeb Afsah wrote:

    So what’s the difference between a private firm in the development business and an NGO in the development business?

    Posted August 21, 2010 at 12:45 pm | Permalink
  5. Max wrote:

    Sounds like they want to have their cake and eat it : i.e. we want to get donor money to engage in private sector development, but because we are an NGO we don’t believe we’re subject to the rules that would ultimately promote the most effective development of the private sector.

    Posted August 21, 2010 at 11:53 pm | Permalink
  6. Margarita Sarishvili wrote:

    Many more worms in Georgia below the surface among this sorted lot of NGOs, high time to go fishing – and clean up this mess.

    I don’t know about any current or last evaluations for CNFA but know for sure that their Georgian Agriculture project under the MCC Compact was cut and pasted from Moldova. Moldova was a cock-up from the get-go and the manager was promoted/fired to Washington.

    I and a close friend in USAID, working in USAID-OIG, who visited Georgia, as part of a fact-fining trip, were at least able to clear up the Agricultural Development Activity (ADA) Component of the MCC project in Georgia by getting the Georgian country director fired, (technically he resigned), and his sins were not only related to how applications were distributed to friends and to those that were politically well-connected. He fell from grace and later was arrested for not sharing his reaping with others in high places and sat in jail for a period.

    I also know that the baseline study for the ADA evaluation for the MCC Compact was awarded to an survey research organization connection with the Republican Institute, and closely aligned with the then Prime Minister, and the field work started even before the tender applications were received for review, and the name of that organization is IPR, and is well-known for hire-gun research. Basically the tender was awarded before the proposals for the baseline study was even received.

    One could perceive CNFA as the “bad guy” in winning this project, as they are too connected with too many unsuccessful projects and closely political agendas. Moldova is one example, and you will hardly ever find a negative USAID evaluation – only hear it from those who were working in Moldova at the time in rural development projects that had a bird-eye view. This is development and it is a tightly knit clan.

    CNFA’s design was for the Agricultural Component of MCC was flawed from the get-go, as it was not based on Georgian conditions; it was just cut and pasted from Moldova – and the project had the potential to be misused for political purposes, which proved true, and could actually put small farmers out of business, had it been more successful, as it was based more on an expert production model and not sustainable development.

    Do anyone know if an evaluation of CNFA’s work has been conducted under this project? If so, who conducted it, and can a copy be obtained? If we can get a copy, we can discuss what has not been done well, assuming they say something has not been done well (by CNFA). That would be useful.

    Here is some background research if anyone would be interested in a bit of digging:

    Dear Jens Luneburg:

    I am writing this message in follow up to the recent tender announcement for ADA related services (RFP: Consulting Services for Survey).
    We submitted a bid on a previous tender and are under the impression that procurement rules were not followed and Tbilisi being a small town we are well aware of problems connected with CNFA and ADA and how this contributed to the resignation of the country director Lasha Shanidze because of allegations of waste, perhaps mismanagement (if not more).

    I and other professional colleagues are most disappointed over how MCG has not lived up to its promised expectations of transparency and accountability. I have made repeated efforts but to no avail to obtain rudimentary feedback from MCC and the only received a battery of subterfuge, lies, and unfulfilled promises in response.

    I am attaching the chain of correspondence and please try to put yourselves in our position under the same sets of circumstances. The correspondence clearly shows what has transpired and it obvious that the last project had already started when MCG staff was leading me to believe that decision had not being made!!

    I am confident that you and your staff will be able to discuss these concerns with us and others who will be attending the pre-proposal conference that is scheduled at 3.00 p.m. local time on October 12, 2007 at your office.

    I spoke to one with insight into ADA under MCC project – concerning the forced resignation of Lasha Shanidze – the Georgian Director. This is the inside story as discussed within MCC Georgia – and all has been provided to the Georgian Prime Minister as of yesterday, and this is what she said is the story as discussed within MCG. In order to reduce the PR and blow back – to save face – it was decided that he would resign.

    Those working at CNFA – who were in Moldova – using the same development model – they know where the bodies are buried. This has all been shared with USAID, OIG – criminal investigations, [Washington DC].

    I think you will find much more to the story, and here is part of the story that will help you get to the bottom of just how serious was the fraud. It would be better described it as large scale corruption and a feeding frenzy (and using the MCC as a cover for other activities).

    Here are the two foreign citizens involved with the waste in MCC – and please get official translation from you Embassy and it will be necessary should you want to followup criminally. Naturally there are bigger fish to fry in this affair and you are being provided this information as a public service.

    mxolod Sida moxmarebisaTvis

    samizne kompaniis dasaxeleba saaqcio sazogadoeba dogani, romelic mdebareobs qalq marneulSi. kompania awarmoebs, Tevzis, Sinauri cxovelebis da pirutyvis sakvebs. kompaniais mflobelebi arian:
    1. oktai ozTurki – dabadebuli 25 seqtembers 1959 wels. cxovrobs saqarTveloSi da aris Cveni dakvirvebis mTavari obieqti. igi flobs TurqeTis respublikaSi igive profilis bizness.
    2. koen hertske – germaneli. Cveni informaciiT permanentulad ar imyofeba saqarTveloSi. dabadebuli 9 ianvars, 1957 wels. koen hertske aris mniSvnelobiT meore, Cveni dakvirvebis obieqti. sruliad mosalodnelia rom masze informacia ar arsebobdes, magram nebismieri informacia misi reputaciis Sesaxeb Zalian sasargeblo iqneba, Woric donezec ki.
    SesaZleblobis farglebSi sasurvelia Semdegi informacia:
    organizciis saqmianobis Sesaxeb
    warsulSi kanondarRvevebis Sesaxeb
    finansuri wyaroebi
    adgilobriv da eqveybnis masStabis politikosebTan urTierTobebi
    maT daqvemdebarebaSi arsebuli ucxouri kompaniebi
    adgiobrivi partniorebi
    magaliTebu/SemTxvevebi ukanono saqmianobasa da biznesis warmoebaSi
    sxva adamianebi romlebic CarTulni arian am biznesSi da “kriSaven”
    maTi reputacia, regionSi maT gaaCniaT cudi reputacia, mizezebi da magaliTebi

    Best regards,

    Margarita Sarishvili

    Date: Wed, 12 Sep 2007 13:52:51 -0400
    From: David Mapley
    Subject: World Bank and ACT, Credit No 3702-GE
    To: mmallo@worldbank.org
    CC: dtheis@worldbank.org, sfolson@worldbank.org, bstevens@worldbank.org

    Millenium Challenge Georgia Foundation chief resigns
    Executive director of the Foundation Millennium Challenge – Georgia, Lasha Shanidze has resigned. Mr. Shanidze told journalists today that he made the decision independently because he was going to business sector. Minister of Economic Development, Giorgi Arveladze names no specific reasons of the resignation. He says it is tied only with the renovating foundation’s activities. ‘The foundation was very successful in Georgia, they have been doing everything excellently so far and they will do so in the future as well,’ the minister said. The director of the foundation is to be appointed by the president of Georgia.

    Dear Ms. Mallo,

    I gather the disease is spreading…. The General Director of ACT, Tinatin Rukhadze, has apparently made known about the bid-rigging scams for the poverty & demographic research projects, and the Health Minister has been pushed out and now the head of MC Georgia.

    ACT’s web-site has been taken down (www.act.ge), temporarily, and I expect Mr. Gelovani at MC is likely to resign soon “for the pursuit of private business” as well… He may even join his good friends at ACT

    As I mentioned last week, I own the largest English-language newspaper in Georgia, as well as being a partner in Silverman & Associates, an investigative firm based in the Caucasus. Intrigued as to why ACT is not on the “World bank Listing of Ineligible Firms”.

    Perhaps you would like my colleagues in Georgia to put together a complete dossier?

    regards,

    David

    MP and three other companies, one from Belgium (perhaps TNS or something like that), they are working with Abt in Azerbaijan with some reproductive health projects – the European company is doing a proposal with Tbilisi Business Service.

    IPM
    BCG Research
    Tbilisi Business Service

    Here is emails of the competition.

    This is a letter which I get 17:31 today
    Interesting questions
    as you see there are only 4 recipients
    Nana Morbedadze nana@ipm.ge IPM
    r.nadiradze r.nadiradze@bcg.ge BCG Research
    NinoV NinoV@TBSC.ge Tbilisi Business Service
    Center Ltd.

    —– Original Message —–
    From: “Jens Luneburg”

    Posted August 31, 2010 at 12:04 pm | Permalink
  7. Margarita Sarishvili wrote:

    I don’t know about any current or last evaluations for CNFA but know for sure that their Georgian project under the MCC was cut and pasted from Moldova. Moldova was a cock-up and the manager was promoted/fired to Washington. I and a close friend in USAID, working in OIG, and we were able to clear up the Agricultural Development Activity Component of the MCC project in Georgia by getting the Georgian country director fired, (technically he resigned), and his sins were not only related to how applications were distributed to friends and to those that were politically well-connected.
    I also know that the baseline study for the ADA evaluation for the MCC Compact was awarded to an organization connection with the Republican Institute, and closely aligned with the then Prime Minister, and the field work started even before the tender applications were received for consideration, and the name of that organization is IPR, and is well-known for hire-gun research.

    One could perceive CNFA as the bad guy in winning this project, as they are too connected with too many unsuccessful projects and closely political agendas. Moldova is one example, and you will never find a bad USAID evaluation – only hear it from those who were working in Moldova at the time.

    CNFA’s design was for the Agricultural Component of MCC was flawed from the get-go, as it was not based on Georgian conditions; it was just cut and pasted from Moldova – and the project had the potential to be misused for political purposes, which proved true, and could actually put small farmers out of business, had it been more successful.

    Do anyone know if an evaluation of CNFA’s work has been conducted under this project? If so, who has done I, and can a copy be obtained? If we can get a copy, we can discuss what has not been done well, assuming they say something has not been done well (by CNFA). That would be useful.

    Posted August 31, 2010 at 12:05 pm | Permalink

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