Haiti: Where is the Money?

By Bill Quigley and Amber Ramanauskas

Bill Quigley teaches at Loyola University New Orleans College of Law, is the Associate Legal Director at the Center for Constitutional Rights, and volunteers with the Institute for Justice and Democracy in Haiti. Amber Ramanauskas is a lawyer and human rights researcher

Haiti, a close neighbor of the United States with a population of more than nine million people (700 plus miles from Miami), was devastated by earthquake on January 12, 2010.  Hundreds of thousands of people were killed and many more wounded.

Before the quake, Haiti was already the poorest country in the Western Hemisphere and one of the most impoverished in the world.  After?  Conservative estimates for the cost of reconstructing Haiti are nearly $14 billion.  The Inter-American Development Bank confirmed the earthquake is “likely to be the most destructive natural disaster in modern times.”^[1]

The United Nations Special Envoy to Haiti estimated in June 2011 that international donors gave Haiti  more than $1.6 billion in relief aid since the earthquake (about $155 per Haitian) and  more than $2 billion in recovery aid (about $173 per Haitian) over the last two years. Before the earthquake, international donors were giving Haiti assistance at a rate of approximately $92 per person per year (these rates count expenditures on U.N. troops).  International assistance after the earthquake was four times as large as the Haitian government’s annual budget.^[2]

But two years later, more than half a million people remain homeless in hundreds of informal camps; a majority of the tons of debris from destroyed buildings still lays where it fell; and cholera, a preventable disease, was introduced into the country and has become an epidemic, killing thousands and sickening hundreds of thousands more.^[3]  Haiti today looks like the earthquake happened two months ago, not two years.

Haitians ask the same question as the US Congress: “Where is the money?”

Where did the money go?

It turns out that almost none of the money that the general public believed was going to Haiti actually went directly to the country.  Only one percent of the money went to the Haitian government.  Likewise extremely little went to Haitian companies or Haitian non-governmental organizations (NGOs).  Haitians, by and large, were not even consulted about the relief efforts.  Most of the money that was spent went to outside governments, international aid agencies, and big, well-connected non-governmental organizations.  Some went to for-profit companies whose business is disasters.  A lot of the pledged money has never been actually put up.  And a lot of the money that was put up has not yet been spent.

Haitians, whether through their Haitian government, Haitian NGOs, or Haitian companies, have had no control over how the money in Haiti has been spent.   Despite a near total lack of control, it is likely that the failures in Haiti will be blamed on the Haitians themselves in the typical “blame the victim” fashion.  Haiti will be blamed by the international community despite poor planning, poor execution, and the siphoning of funds by international NGOs and private companies.

This article illustrates some of these problems.  For those who wish to delve into more depth, an excellent source of information on this topic is the Center for Economic and Policy Research.  It has a project called “Haiti Reconstruction Watch” that tracks developments in detail.  The Janet Reitman article in Rolling Stone provides a good overview of the situation, and Haiti grassroots watch provides on-the-ground reports.

Little Aid Went to the Haitian Government or the Haitian People

The Haitian government was bypassed in the relief effort.  Haitian contractors received few contracts.  It would appear the Haitian people were not consulted about the best way to spend the money.[4]

Examine the aid provided by the U.S.  Immediately following the earthquake, the U.S. allocated $379 million in aid and sent in 5000 troops.^[5]  The U.S. ultimately sent 22,000 military members to Haiti. ^[6] The U.S. has allocated nearly $2.93 billion to Haiti earthquake relief and reconstruction, roughly $1.642 billion for relief and $1.140 billion for reconstruction.^[7]

For example, it was quickly discovered that of the $379 million in initial US money for Haiti, most was not really going directly, or in some cases even indirectly, to Haiti.  The Associated Press (AP) documented as early as January 2010 that 33 cents of each of these US dollars for Haiti was actually given directly back to the US to reimburse ourselves for sending in our military. The U.S. almost completely bypassed the elected government of Haiti and sent less than one cent of each dollar of aid to the government.  Forty-two cents of each dollar went to private and public non-governmental organizations like Save the Children, the U.N. World Food Programme and the Pan American Health Organization.^[8]

International assistance generally followed the same pattern.  The U.N. Special Envoy for Haiti reported that of the $2.4 billion in humanitarian funding, 34 percent was given back to the donor’s own civil and military entities for disaster response; 28 percent was given to U.N. agencies and non-governmental agencies for specific U.N. projects; 26 percent was given to private contractors and other NGOs; six percent was provided as in-kind services to recipients; five percent was given to the international and national Red Cross societies; and one percent was provided to the government of Haiti.[9]  In terms of Haitian NGOs, not a single one was included in the funding for the first U.N. appeal. In the second U.N. appeal, Haitian NGOs accounted for four-tenths of one percent of the funds.^[10]

In August of 2010, the US Congressional Research Office reported that the US planned to reimburse U.S. governmental agencies for $1.5 billion in relief and disaster assistance funding for Haiti.  Of this amount, $655 million was allocated to the Department of Defense; $220 million to the Department of Health and Human Services to provide grants to individual American states to cover services for Haitian evacuees; $350.7 million to United States Agency for International Development (USAID) International Disaster Assistance (IDA); $150 million to the US Department of Agriculture for emergency food assistance; $96.5 million to the State Department Contributions to International Peacekeeping Activities; $45 Million to U.S. Coast Guard Activities; and $15 million to the Department of Homeland Security for immigration fees.^[11]

Haitian companies capable of providing relief and reconstruction services were bypassed entirely in the relief process, just as the Haitian government had been.  The Center for Economic and Policy Research analyzed each of the 1490 contracts awarded by the U.S. government  from the time following the January 2010 earthquake until April 2011 and found only 23 contracts went to Haitian companies.  Overall, the U.S. had awarded more than $194 million to contractors, $4.8 million to the 23 Haitian companies, about 2.5 percent of the total.  On the other hand, contractors from the Washington, D.C.-area received $76 million, 39.4 percent of the total.^[12]

Haitian civil society was shut out of the process as well. Not only did Haitian NGOs not receive any real percentage of the relief funds, but it was also clear from the very beginning that the international community was not really trying to listen to Haitians.  Refugees International reported in early March 2010 that locals were experiencing a difficult time gaining access to the international aid operational meetings concerning Haiti occurring inside the U.N. compound.  According to Senior Advocate Patrick Duplat and Consultant Emilie Parry, both of Refugees International, “Haitian groups are either unaware of the meetings, do not have proper photo-ID passes for entry, or do not have the staff capacity to spend long hours at the compound.” ^[13]  Others reported that these international aid coordination meetings were not even being translated into Creole, the language of the majority of the people of Haiti.^[14]

Another example of the exclusion of Haitians is the Haiti Neighborhood Return and Housing Reconstruction Framework drafted in September 2010 by the Interim Haiti Redevelopment Commission.  The framework, which was supposed to guide reconstruction, was not even published in draft form in Creole so local people could review it; did not realistically address the needs of Haitian renters (who accounted for more than half of the people displaced); and did not incorporate input from internally displaced people (the hundreds of thousands of Haitians in homeless camps) were not even consulted. ^[15]

Little of the US Haiti reconstruction money has been spent

A May 2011 United States Government Accountability Office (U.S. GAO) report on the $918 million allocated by Congress for Haiti reconstruction found that there were many plans for the money but only 20 percent or $184 million had even been obligated. Most of this money, $120 million, was transferred to the Haiti Reconstruction Fund.^[16]  Nearly two years after the quake, less than one percent of the $412 million in US funds specifically allocated for infrastructure reconstruction activities in Haiti had been spent by USAID and the U.S. State Department. Only 12 percent has even been obligated according to a November 2011 report by the U.S. GAO. ^[17]

Private NGOs and Companies Scramble for Haiti Money

From the very beginning the disaster in Haiti was looked upon as a business opportunity.

Less than a month after the quake hit, the US Ambassador Kenneth Merten sent a cable titled “THE GOLD RUSH IS ON” as part of his situation report to Washington.  In this February 1, 2010 document, made public by The Nation and Wikileaks, Ambassador Merten reported the President of Haiti met with former General Wesley Clark for a sales presentation for InnoVida Holdings LLC, a Miami-based company that builds foam core houses.^[18]

Capitalizing on the disaster, Lewis Lucke, a high ranking USAID relief coordinator, met twice in his USAID capacity with the Haitian Prime Minister immediately following the quake.  He then quit the agency and was hired for $30,000 per month by a Florida corporation, Ashbritt, and its prosperous Haitian partner to lobby for disaster contracts.  Lucke said “it became clear to us that if it was handled correctly the earthquake represented as much an opportunity as it did a calamity.”^[19] Ashbritt and its Haitian partner were soon granted a $10 million no-bid contract.^[20]  Lucke said he was instrumental in securing for Ashbritt an additional $10 million contract from the World Bank and another smaller one from CHF International, both before their relationship ended in court when Lucke sued Ashbritt and his Haitian partner for nearly $500,000 in bonuses for the contracts he had helped them land.^[21]

Other private groups in the U.S. also began lobbying for a share of the Haiti money immediately following the quake.  In January, the US military had to suspend medical evacuations of critically injured Haitians to hospitals in Florida after officials there formally asked the US to pay some of the medical costs of care.^[22]  Florida was ultimately reimbursed more than $5 million in Haiti relief funds for helping Haitians.  The Orlando Sanford Airport, which handles a million visitors a year, received $583,000 in federal funds for receiving 9500 evacuees plus volunteers and staff.  Federal relief funds reimbursed the airport for $32,000 in new carpets, $160,000 in landing and ramp fees, more than $23,000 for the CEO’s time on the scene, and $223,000 in other staff time. ^[23] Contrast this with the Miami International airport that handled more than four times as many flights (12,000 passengers) and did not request similar federal funds.

The American Red Cross reported receiving $486 million in donations for Haiti as of June 2011.  According to a two-year update published in January 2012, it either spent or signed agreements to spend two-thirds, or $330 million, on relief and recovery efforts, though specific details are unclear.^[24]  Within weeks of the earthquake, the American Red Cross, which before the disaster had 15 people in Haiti, had raised nearly $200 million for relief operations there.  Partners in Health, which pre-earthquake had 5000 people working in Haiti, raised about $40 million.^[25] The CEO of American Red Cross is paid a salary of over $500,000 per year.^[26]  As of August 2011, the American Red Cross had spent less than half the money it raised for relief and reconstruction in Haiti.^[27]  In March 2010, the Associated Press reported that “[t]ens of millions…went to U.S.-based aid groups. While much of that bought food and other necessities for Haitians, it often did so from U.S. companies — including highly subsidized rice growers whose products are undercutting local producers, driving them out of business.”^[28]

In an excellent article, Rolling Stone reported on a $1.5 million contract to the New York based consulting firm Dalberg Global Development Advisors.  According to Smucker, an anthropologist specializing in Haiti who briefed the group, Dalberg’s team “had never lived overseas, didn’t have any disaster experience or background in urban planning… never carried out any program activities on the ground,” and only one of them spoke French.  Despite this, the group was assigned the task of assessing a specific land area where the U.S. hoped to create new communities in an attempt to depopulate Port-au-Prince.  USAID reviewed Dalberg’s work and found “One of the sites they said was habitable was actually a small mountain…It had an open-minded pit on one side of it, a severe 100 foot vertical cliff, and ravines…it became clear that these people may not even have gotten out of their SUVs.”^[29]

An example of the politicization of this process can be found in the $8.6 million joint contract for the removal of debris in Port Au Prince between the USAID Office of Foreign Disaster Assistance with the private companies CHF International and Project Concern International (PCI).^[30] CHF International is a politically well-connected international development company with an annual budget of over $200 million.[31] The CEO was paid $451,813 in 2009.^[32] PCI is an international aid group with an annual budget in excess of $30 million whose CEO earned $263,219 in compensation in 2009.^[33]  CHF’s connection to politicians is its board secretary, Lauri Fitz-Pegado, a partner with the Livingston Group LLC.  The Livingston Group performs lobbying and government relations services and is headed by former Republican Speaker-designate for the 106^th Congress, Bob Livingston.^[34]  Ms. Fitz-Pegado was appointed by President Clinton to serve in the Department of Commerce, and she served as a member of the foreign policy expert advisor team on the Obama for President Campaign.^[35]  According to Rolling Stone, CHF “works out of two spacious mansions in Port-au-Prince and maintains a fleet of brand-new vehicles.^[3

Presidents George W. Bush and Bill Clinton announced a fundraising venture for Haiti on January 16, 2010.^[37]  As of December 2011, the Clinton Bush Haiti Fund had received more than $54 million in donations.^[38]  It has partnered with several Haitian and international organizations.  Though most of its work appears to be legitimate, it has donated $2 million to those constructing a $29 million luxury hotel in Petionville.^[39]

The reconstruction has been exceedingly slow. A report issued by the International Red Cross in December 2011 revealed that more than 100,000 homes had been completely destroyed and another 200,000 badly damaged.  As a result, 1.5 million people, 20 percent of the Haitian population, required shelter after the earthquake.  The international community responded by providing hundreds of thousands of tarpaulins (two tarps per family) by May 2010, three-and-a-half months after the earthquake.  Though few homes are being repaired, small, temporary shelters measuring approximately 12 feet by 16 feet are being constructed at a rate of about 7000 per month.  With more than half a million people still under tarps, permanent shelter is an ongoing need.^[40]

An April 19, 2011 audit by the USAID Office of the Inspector General (OIG) that examined USAID’s efforts to provide transitional housing found that grantees completed only 7179 transitional shelters, 22 percent of their target number, and some of those shelters were substandard.  USAID made 16 grants for shelter totaling $138.6 million, but only $37.8 million had been disbursed as of January 1, 2011.  USAID-issued grants were based on unsolicited non-competitive proposals and the largest were awarded to Catholic Relief Services, World Vision, and Cooperative Housing Foundation International.^[41]

Critics of the non-governmental organizations abound.  According to Nigel Fisher, the U.N.’s humanitarian officer in Haiti, “the NGOs still have something to respond to about their accountability, because there is a lot of cash out there. But what about the $1.5 to $2 billion that the Red Cross and NGOs got from ordinary people, and matched by governments, etc.? What’s happened to that? And that’s where it’s very difficult to trace those funds.”[42]

The International Community and Haiti

International efforts to assist Haiti have been characterized by the same themes of bypassing the Haitian government and funneling charitable giving through international public and private non-governmental organizations.

In a January 2010 meeting in Montreal, members of the international community agreed to launch a ten year rebuilding campaign for Haiti.  But they refused to commit specific amounts of money or plans until concerns about mismanagement and the ability of Haiti’s government were resolved.  Experts suggested making the U.N. the clearinghouse for the money and closely tracking it. ^[43]

At a conference in March 2010, U.N. countries pledged to donate $5.3 billion over two years and a total of $9.9 billion over three years or more.  The money was to be deposited with the World Bank and distributed by an internationally controlled fund to be co-chaired by Bill Clinton and Jean-Max Bellerive, then the Haitian Prime Minister.^[44] The Interim Haiti Reconstruction Commission (IHRC) was subsequently created by the executive order of Haitian President Preval to exist for a period of 18 months beginning on April 21, 2010.^[45]

This money effectively bypassed all the Haitian public governmental bodies. ^[46]

President Bill Clinton reported that by July 2010, only ten percent of the pledges had been given to the IHRC.^[47]

As of July 2011, the Miami Herald noted that of the $3.2 billion in projects approved by the IHRC only five had been completed for a total of $84 million.[48]

The IHRC was supposed to have an equal number of Haitian and international members for voting purposes (half Haitian representatives and half representatives of donors which pledged more than $100 million), have an audit and performance office with expedited authority to issue title to lands, give the President of Haiti authority to veto decisions within ten business days of notice, and barring presidential veto, the actions will be deemed confirmed.  Upon its demise, the power and authority of the IHRC was supposed to cease and be transferred to the government of Haiti. ^[49]

At the December 2010 board meeting, the twelve Haitian members of the IHRC complained of a lack of communication between the IHRC staff and Executive Committee and themselves.  President Clinton agreed that more communication would be forthcoming but said the Haitian board members needed to provide more support to the IHRC.^[50]

Rolling Stone quoted a senior international aid official as saying “Behind closed doors, the feeling of the Haitian government was this was just another foreign group they’d given permission to come in and take over their country.  But what could they do?  The Haitian government knew it didn’t have the capacity to tackle this reconstruction on its own.” ^[51]

One year after the earthquake, Oxfam criticized the IHRC, saying it had neither the staff nor the technical capacity to lead the reconstruction. ^[52]

Feeling that they functioned solely as rubber stamps, the Haitian members complained of being “completely disconnected from the activities of the IHRC”; given no background information on the projects they were supposed to fund; given no time to “read, nor analyze, nor understand- and much less respond intelligently- to projects submitted”; no follow-up on the previously approved millions in funds; and not knowing the names of IHRC consultants nor their respective tasks.”  As if to prove their point, the IHRC meeting held in December 2010 in the Dominican Republic, continued despite the absence of co-chair and Haitian Prime Minister Jean-Max Bellerive.^[53]

In May 2011, when only five months remained on its original mandate, the GAO deemed the IHRC “not fully operational.”  Among the reasons cited for the IHRC’s operational impediments were “delays in staffing the commission and defining the role of its Performance and Anticorruption Office–which IHRC officials cited as key to establishing the commission as a model of good governance.”  At the time of the audit, IHRC had approved projects estimated at $3 billion, only 30 percent of the total of donor pledges. The audit also found that the IHRC failed to direct funding to projects prioritized by Haitians.  For example, the Haitian government identified almost equal funds for agriculture and rubble removal, but the IHRC approved seven times more funding for agriculture projects.  While the Haitian “Action Plan” outlined a need for more than $800 million to rebuild and improve Haitian government institutions the IHRC approved only $113 million.  On the other hand, IHRC approved $680 million in road construction projects while the Haitian’s “Action Plan” estimated that they only needed $180 million. As a result of the IHRC’s disregard for priorities set by the Haitian people, the GAO audit found that the IHRC approved projects may not be “providing the assistance that is most urgently needed.”  The IHRC does not have the power to tell donors which areas to fund and has difficulty convincing donors to pledge to the areas needed like rubble removal.^[54]

As of the time of this article’s publication, the current status of the IHRC is still up in the air.  The 18 month mandate for the commission was due to end Friday October 28, 2011.  As of October 22, 2011, no request from Haitian president to extend it was received.^[55]  The IHRC website shows its last action as August 17, 2011.  Its board minutes have not been updated since December 2010.  The link for latest news is blank.  An email to its press contacts has not been responded to.  In July 2011, Martelly announced he intended to extend the mandate of the IHRC for another year.  The Miami Herald noted in July 2011 that of the $3.2 billion in projects approved by the IHRC only five had been completed for a total of $84 million.^[56]  The IHRC website now contains a notice that because its mandate expired October 21, 2011: “NOTICE: Please kindly note that the mandate of the IHRC expired on October 21, 2011. Pending a decision of the Haitian Parliament regarding the future of this institution, a team is currently dealing with day-to-day business.  The (re)submission of project proposals remains closed until further notice.  Proponents who have not yet been informed of their project’s status will shortly be contacted by the projects team”

Haiti Reconstruction Fund

The HRC is but another piece of the larger puzzle of where the money comes from, where it goes, and who knows what is going on.

The Haiti Reconstruction Fund (HRF) is yet another entity involved in the process.  As of September 30, 2011, the HRF reports pledges of $352 million in grants from donors to Haiti to be funneled through the HRF.^[57]  The HRF 2010-2011 annual report, issued after 12 months of work, states the HRF has been able to “mobilize over US$350 million for housing, debris removal and management, disaster risk reduction, regional development, budget support, job creation, agriculture, and education.  The funds have been mobilized, coordinated and allocated in support of priorities set by the Government and its recovery commission.”^[58]

The HRF is administered by the World Bank as a pipeline for specific money to Haiti that has to go through one of three organizations – the Inter-American Development Bank, the United Nations, or the World Bank.  The HRC is governed by a board made up of one representative from Haiti and representatives of the major donor countries, those that have donated at least $30 million.

It is interesting to note that the HRF Steering Committee met only once during the period from July 2011 to September 2011, and that meeting was “in conjunction with” the seventh IHRC Board meeting on July 22^nd, 2011, illustrating the overlap of those in charge of both institutions.^[59]

The HRC and the IHRC were designed to work together.

Projects are to be first approved by the IHRC and then the HRF; then the donors actually choose what projects get the money, how the funds are to be dispersed, who will spend the money and how it will be accounted for.  With the IHRC suspended, it is not clear how the HRC will operate.

The most recent report posted by the HRC indicated that of the $352 million pledged by donors, $270 million has been allocated, and $222 million has been disbursed to approved projects.^[60]

What to Do

Haitians, whether through their government, Haitian NGOs, or Haitian companies, have had almost no control over how the money donated to Haiti in the wake of the earthquake has been spent.

Despite a near total lack of control, it is likely that the failures in Haiti will be blamed on the Haitians themselves in the typical “blame the victim” fashion.  Haiti will be blamed by the international community despite poor planning, poor execution, and the siphoning off of funds by international NGOs and private companies.

The U.N. Special Envoy to Haiti suggests the generous instincts of people around the world must be channeled by international actors and institutions in a way that assists in the creation of a “robust public sector and a healthy private sector.”[61]  Rather than giving the money to intermediaries, funds should be directed as much as possible to Haitian public and private institutions.  A “Haiti First” policy can strengthen public systems, promote accountability, and create jobs and build skills among the Haitian people.^[62]  These are the people who will be solving their problems when the post-earthquake relief wave is spent.