State Department: Issues Affecting Funding of Iraqi National Congress Support Foundation
Published: 2004-04-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As part of the efforts by the United States to oust Saddam Hussein, a critical element of U.S. policy included funding the Iraqi National Congress as the lead Iraqi opposition coalition. In 1999, the Iraqi National Congress Support Foundation (INCSF) was established to provide an organizational structure for Department of State funding. From March 2000 until September 2003, the Department of State funded several INCSF programs, including television broadcasting. INCSF's broadcasting goals included broadcasts into Iraq focusing on providing the Iraqi people unbiased news and information and updating them on efforts to bring democracy to Iraq. GAO was asked to review (1) the history of the Department of State's funding of INCSF broadcasting activities and (2) the key issues affecting State's funding decisions.
section_title: What GAO Found
paragraphs: State's funding of INCSF programs totaled nearly $33 million for the period March 2000 through September 2003. This money was made available through 23 cooperative agreements and amendments that provided shortterm funding at irregular intervals. The funds were provided for several purposes, including establishing new satellite television capability (Liberty TV), newspaper publication, and information collection programs. About $10 million was earmarked for Liberty TV broadcasting activities, which included hiring staff, establishing studio operations, and actual broadcasting. There were several periods during which State did not have an agreement to fund INCSF's program, causing State to later fund INCSF activities retroactively. State's funding approach affected INCSF's ability to conduct television broadcast operations. Liberty TV broadcasted from August 2001 to May 2002, when funding shortages caused by funding and policy disputes between State and INCSF resulted in termination of broadcasting. Attempts to restart Liberty TV failed due to a combination of factors, including continued disagreements between INCSF and State over funding requirements for the broadcasts, the rapidly changing conditions associated with the war in Iraq, and INCSF's relocation of operations to Iraq in May 2003. INCSF repeatedly complained to State that the short-term nature of the funding agreements made it difficult to run an effective television broadcasting operation. State cited three reasons why it was unable to reach long-term funding agreements with INCSF: (1) State was concerned about INCSF's accountability for funds and operational costs, based largely on results of audits of INCSF, and remained concerned even after INCSF took steps to improve its accountability during late 2001 and 2002; (2) INCSF resisted U.S. government policy prohibiting INCSF operations inside Iraq; and (3) State questioned both the usefulness of INCSF's information collection program and whether it was appropriate for State to fund it. (In May 2002 State decided to drop its funding for the information collection program, effective August 2002.) Against this background and the sporadic funding arrangements that characterized the program, the process of proposal and counterproposal continued without producing agreements that could lead to restarting Liberty TV. Through their inability to work together to restart Liberty TV, State and INCSF missed a chance to reach the Iraqi people at critical times prior to and during the March 2003 war in Iraq.

section_title: Letter
paragraphs: As part of long-standing efforts by the United States to oust Saddam  Hussein, the Iraq Liberation Act of 1998 noted that regime change in Iraq  should be the policy of the United States.  Consistent with that act and  other legislation, a critical element of U.S. policy included funding the Iraqi  National Congress as the lead Iraqi opposition coalition.  In 1999, the Iraqi  National Congress Support Foundation (INCSF) was established to provide  an organizational structure for Department of State funding.  From March  2000 until September 2003, the State Department provided funds to the  INCSF for several programs, including planning for the renewal of Radio  Hurriah broadcasts and establishing new satellite television capability  (Liberty TV), newspaper publication, and public information and  information collection programs.  INCSF’s broadcasting goals included  direct radio and television broadcasts into Iraq focusing on providing the  Iraqi people unbiased news and information and updating them on efforts  to bring democracy to the country.
In response to your questions about the amounts and timing of Department  of State funding for INCSF broadcasting activities, this report (1) describes  the history of the Department of State’s funding of INCSF broadcasting  activities and (2) examines the key issues affecting State’s funding  decisions for the broadcasting programs.  To perform our work, we  reviewed State’s cooperative agreement documents with the INCSF and  met with State officials in the Bureau of Near Eastern Affairs and the  Bureau of Administration.  We also examined audit files in State’s Office of  the Inspector General (OIG) and met with OIG officials.  In addition, we  met with a consultant hired by INCSF to help improve the foundation’s  accounting and financial management systems and who frequently acted as  a representative on behalf of INCSF in discussions with State, and we  obtained information from INCSF’s former controller and from its Liberty  TV manager.  To assess the reliability of the data used in this report, we  reviewed relevant documents and obtained necessary information from  State and INCSF personnel.  We conducted our review from September  2003 to April 2004 in accordance with generally accepted government  auditing standards.  (See p. 16 for the details of our scope and  methodology.)
subsections: section_title: Background
paragraphs: The Iraq Liberation Act of 1998 authorized U.S. assistance to support a  transition to democracy in Iraq in key areas, including radio and television  broadcasting.  In 1999 President Clinton designated the Iraqi National  Congress (INC) as eligible to receive assistance under the act.  INC was  formed in the early 1990s when the two main Kurdish militias—the  Kurdistan Democratic Party and the Patriotic Union of Kurdistan— participated in a June 1992 meeting of dozens of opposition groups in  Vienna.  INC subsequently developed into a broad-based coalition of  political organizations opposed to Saddam Hussein.  In 1999, INCSF was  established as a foundation to provide support to INC and to provide an  organizational structure for State’s funding of INC. A seven-member board  of directors (the INC Leadership Council) governed INCSF.  INCSF was  headquartered in London, England, until the end of the war, when its  operations were relocated to Baghdad.  During its cooperative agreements  with State, INCSF also maintained field offices in Washington, D.C.;  Damascus, Syria; and Tehran, Iran.  In April and May 2003, INCSF began the  process of relocating its offices to Baghdad.
From the beginning of its relationship with State, INCSF’s plans for  broadcasting into Iraq represented one of its major initiatives, along with  plans for resuming publication of a newspaper INC had established in 1992,  participating in Department of Defense training programs, and establishing  humanitarian and information collection programs.  INCSF envisioned  radio as a key medium for the dissemination of information to the Iraqi  people.  It planned to reestablish Radio Hurriah and have a signal  receivable in Iraq by early 2001.  To expand the area of coverage, INCSF  also planned to purchase a high-power transmitter in Iraq.  Radio  broadcasting was to focus on news, current affairs, and programs  dedicated to democracy and human rights.  Based on its prior television  experience (from August 1993 to August 1996, INC operated a television  production and transmission facility in Iraqi Kurdistan), INCSF’s plans for  Liberty TV included setting up a studio in London and using satellite  equipment to broadcast directly to Iraq.  Planned programming included  news, current affairs, and programs censored by the regime in Baghdad.
section_title: State’s Funding Was Generally Provided on a Short-term Basis
paragraphs: Beginning in March 2000, State entered into a series of cooperative  agreements with INCSF that included funding totaling nearly $33 million as  of September 2003, but most of this funding came under agreements and  amendments provided at irregular intervals, involved some retroactive  funding, and were short-term and thus affected INCSF’s ability to  broadcast.  Table 1 describes State’s cooperative agreements with INCSF in  further detail.
Agreement 1 laid the groundwork for initial planning, and Agreement 2  described what INCSF hoped to achieve in the broadcasting area.  These  goals included (1) setting up a satellite television facility in London to  broadcast directly into Iraq and (2) planning and preparing to resume  broadcasting of Radio Hurriah from inside Iraq and via satellite and the  Internet.  From March 2000 through May 2002, State provided about $17  million to INCSF through the first two cooperative agreements and  amendments and Agreement 3 (the 2-month “bridge grant” for April and  May 2002). Of this $17 million, only limited funding was for Radio Hurriah,  largely because an acceptable location for a transmitter could not be found.   About $5 million was earmarked for Liberty TV broadcasting activities,  which included hiring staff and establishing studio operations.  Liberty TV  broadcasting actually began in August 2001.  However, upon becoming  operational, Liberty TV encountered technical problems that forced it to  broadcast from the United States based on a signal transfer from London.   Liberty TV had goals of original broadcasting for 24 hours a day, but at the  peak of its operations it only had original broadcasts of 4 hours.  It went off  the air on May 1, 2002, because of funding disputes between State and  INCSF which, according to an INCSF representative, left the INCSF  seriously short of funds to pay its bills.  After the bridge grant expired on  May 31, 2002, State and INCSF did not conclude a new agreement until  November 2002. Funding in that new cooperative agreement (Agreement  4) and its amendments included about $4.67 million for (1) restarting  Liberty TV and (2) “pre-award” costs incurred by INCSF for the period not  under the agreement, including salaries for Liberty TV staff retained by  INCSF.
subsections: section_title: Parties Made Serious Attempts to Reach Long- term Accord but Were Unable to Do So
paragraphs: In the course of the relationship between the two parties, State several  times offered INCSF longer-term agreements that INCSF would not accept.   For example, for the period March 2000 through February 2001, State and  INCSF had concluded the first two cooperative agreements totaling about  $4.27 million.  In April 2001, as an alternative to short-term amendments to  Agreement 2, INCSF requested a new 5-month agreement totaling $29  million that included funding for 24-hours-a-day satellite television  broadcasting, installation of a small transmitter in Iraq, and 24-hours-a-day  radio broadcasting from inside Iraq.   State rejected the proposal.  Similarly,  in September 2001, INCSF requested $23 million over 5 months.  According  to the proposal, Liberty TV operations would be expanded to 24 hours a  day, and radio operations would be initiated via a transmitter inside Iraq.   State rejected INCSF’s proposal but in late September 2001 made a  counteroffer of $8 million for a 5-month cooperative agreement.  State  renewed the same offer in early November 2001.  While emphasizing that it  was not prepared to fund INCSF activities inside Iraq, State did offer to  fund a series of activities, including publication of the newspaper, satellite  TV broadcasting, information collection analysis, and startup of radio  broadcasting using a transmitter based in Iran.   INCSF declined State’s  offer.
section_title: Inability to Reach Long-term Agreements Centered on Concerns over Financial Management, Operations in Iraq, and Information Collection
paragraphs: Three main concerns affected State’s funding decisions for INCSF and  thwarted the parties’ ability to negotiate and conclude long-term funding  agreements:  concerns over INCSF’s financial management and  accountability based largely on the results of audits of INCSF; the desire of  INCSF to operate inside Iraq, which was inconsistent with U.S. policy; and  State’s increasing concerns about the appropriateness and merits of  funding INCSF’s information collection program.   State officials  acknowledged that the use of frequent short-term amendments to the  cooperative agreements, plus the substantial period of time that an  agreement was not in force in 2002, significantly complicated management  of the program and made it difficult for INCSF to accomplish its objectives.  However, State officials said that these arrangements were necessary in  view of the financial management, policy, and operational issues that arose  during the program.  INCSF repeatedly claimed that the short-term nature  of State’s funding led to financial problems in the organization and  disrupted Liberty TV’s ability to pay its bills.
subsections: section_title: Financial Management and Accountability Concerns
paragraphs: In the very early stages of State’s agreements with INCSF, State received  strong indications that INCSF had inadequate controls over cash transfers.    For example, in 2000, a CPA firm reviewed INCSF’s controls as part of  Agreement 1.  The review identified concerns about INCSF’s travel  reimbursement procedures, use of non-U.S. flag-carriers, and its cash  payment practices.  Also that year, State notified INCSF that it needed to  rectify certain compliance issues before it could draw down funds.  These  issues included INCSF’s lack of proper documentation to support  expenditures and the questionable use of cash payments.  In early 2001,  another CPA audit examined INCSF’s operations as part of State’s  agreements and identified significant noncompliance and control issues  affecting implementation of Agreement 2.  According to a State document,  the auditor “appear to confirm what we  suspected—that the  INCSF is not complying with the myriad of regulations that grantees are  required to comply with.”
subsections: section_title: Audit by State’s Inspector General
paragraphs: Concern grew in State that there were serious mishandling of money issues  that needed to be examined in INCSF to avoid a potentially embarrassing  situation for the administration and for State.  In early 2001, some  allegations about fraud within INCSF also circulated within State.  State’s  concerns about accountability and the potential for misuse of funds led to  an audit of INCSF by State’s Office of the Inspector General (OIG) in mid- 2001.  The OIG audit covered the initial $4.3 million in awards to INCSF  under Agreements 1 and 2.  The OIG found serious financial management  and internal control weaknesses, particularly in the cash management  aspects of INCSF’s information collection program. The OIG also found  that INCSF had an inadequate accounting and financial management  structure, insufficient accounting staff, and inadequate banking procedures  and that State had not created a total budget for the second cooperative  agreement incorporating the funding that had been awarded to the INCSF  up to that point.  The OIG questioned approximately $2.2 million in INCSF  costs.  As a result, the OIG recommended that State withhold, or at least  restrict, future funding to INCSF until it implemented adequate and  transparent financial controls.  The OIG also recommended that INCSF  acquire expert financial management assistance to set up a standardized  accounting system, hire a financial officer, establish cash management  procedures, develop written accounting policies and procedures, and  incorporate into its agreements with State a budget that accurately  reflected approved costs.  Although several accounting and internal control  weaknesses were identified, OIG officials said that they found no evidence  concerning the prior accusations of fraud.  An INCSF representative  acknowledged that it had financial management and accountability  weaknesses in the early stages of the agreements.  However, the  representative believed that INCSF made significant improvements in late  2001 and early 2002 to correct the weaknesses and to respond to the OIG  audit.
OIG officials said that their audits of INCSF were done in accordance with  generally accepted government audit standards and that their work was  similar to other grant and cooperative agreement audits they had  conducted.
section_title: Concerns about Operations in Iraq and Information Collection
paragraphs: From the beginning of its relationship with INCSF, State had policy  concerns that ultimately affected funding decisions and plans for several  programs, including Radio Hurriah and Liberty TV.  At the beginning of the  cooperative agreements with INCSF, State officials said that the U.S.  government had adopted a general policy of prohibiting INCSF operations  inside Iraq.   State officials said that the presence of U.S.-funded INCSF  staff within Iraq could open the door to potentially disastrous diplomatic  situations if INCSF operatives were caught and/or killed by Iraqi troops.   INCSF resisted this policy.  From INCSF’s perspective, working inside Iraq  was vital for the success of many of its programs.  To begin radio  broadcasting inside Iraq, INCSF wanted to purchase and install a suitable  transmission tower within the country.  The INCSF also wanted the existing  information program to collect data on the Hussein government’s military,  political, and economic activities for input into its newspaper, Al Mutamar,  and for Liberty TV broadcasts.  In addition, INCSF believed that elements  of that data could be used in its diplomatic activities to reinforce views of  the international community that the Hussein government represented a  danger to its neighbors.  Further, INCSF saw the program as an effort to  gather information on the government’s alleged weapons of mass  destruction programs and its ties with international terrorist groups.  However, State maintained its position, refusing to fund radio activities  inside Iraq and limiting its funding of information collection to areas  outside and bordering Iraq.   In commenting on a draft of this report, State  noted that, as the grantor, it had entire discretion to determine whether a  grant to the INCSF would further and be consistent with U.S. government  policies, and to condition any such grant to ensure that it would.  State  further believed that as a grantee, INCSF was an instrument of U.S.  government policy, and, as such, was not in a position to disagree with  State on how State’s funds could be used.
In addition to concerns about operating inside Iraq, State’s OIG had  questioned the nature of INCSF’s information program and its lack of  controls over cash transactions, particularly those that were used as part of  activities in the field.  In State’s view, the potential for fraud in an officially  State-sponsored program posed a risk that State was not prepared to take.   Finally, State officials doubted the value of the information obtained  through the program, a claim that the INCSF vigorously disputed.
section_title: Continued Efforts to Reach Long-term Agreements
paragraphs: As these financial management and policy issues were emerging, State and  INCSF continued their efforts to conclude new long-term agreements, with  little success.  For example, in fall 2001, State offered INCSF an $8 million  agreement for 5 months that would provide television and radio funding  but did not fund operations in Iraq.   INCSF did not accept State’s proposal,  largely because it held firm to the position that not letting INCSF operate  inside Iraq would result in the disintegration of the organization.   In  February 2002, INCSF proposed another long-term agreement totaling  $37.5 million covering March through December 2002.  As part of that  proposal, INCSF believed that several elements of INCSF’s mission needed  to be addressed by both parties, including the lack of a complete INCSF  communications strategy without a radio program and the need for a  higher-quality television operation.  In addition, INCSF believed it was  imperative that its information collection program be expanded to ensure  timely and reliable intelligence on developments inside Iraq and provide  critical information on Saddam’s alleged weapons of mass destruction  program and involvement in international terrorism.  State determined  around mid-March that the proposal was incomplete and, because INCSF  indicated that it needed funds quickly, recommended that the overall  proposal be considered in stages, with the first priority to get current  operations in order, including Liberty TV.
In late March 2002, State said it stood ready again to discuss a cooperative  agreement for 9 months (April through December 2002), with an initial  period funded at $3.6 million for 3 months to provide funding continuity  until full accord on the elements of the agreement could be achieved.   Concerning INCSF’s continuing proposals for starting up radio operations,  State said that INCSF’s proposals were no longer a priority because (1) the  Kurdish Democratic Party and the Patriotic Union of Kurdistan opposed  the plans and (2) both of those groups operated radio stations in Iraq, and  the United States funded its own Radio Free Iraq.  INCSF believed that  State’s response to its proposal called into question State’s commitment to  a new relationship and its general commitment to the INCSF.  Of significant  concern to INCSF were State’s demands for a short-term (3-month) funding  period, as well as its continuing lack of support for a radio station.
section_title: Negotiating Stalemate in May 2002
paragraphs: In lieu of a long-term agreement, State notified INCSF that it planned to  award Agreement 3, referred to as the “bridge grant,” for 2 months (April  through May 2002).  State viewed its proposal as an austerity budget that  would enable INCSF to get its house in order, including Liberty TV, and  notified INCSF that what State considered as cost overruns under the prior  grant would be handled with one or more “mop-up” amendments. As  discussed below, INCSF regarded its unpaid bills as resulting from a failure  on State’s part to meet its funding obligations.   State’s initial proposal for  the bridge grant caused great concern in INCSF for several reasons.  First,  it called for “heightened federal stewardship,” including on-site State  participation in INCSF’s budget management and approval of all costs.   INCSF believed that such conditions were unjustified and unacceptable,  stating that it had already taken a number of steps to improve financial  management consistent with the OIG recommendations.  According to  INCSF, it had hired internal accounting staff and a management consultant  and implemented new and consolidated accounting systems.  It also said  that new procedures for documenting cash transactions were being  installed.  According to OIG officials, in a follow-up audit in mid-2002, OIG  found that INCSF had taken several steps to implement recommendations  for improved financial management and controls but had not fully  implemented them.  According to OIG officials, limited funding by State  contributed to INCSF’s difficulties in improving its financial systems.   INCSF said that such funding made it difficult for INCSF to pay for  implementation of a new accounting system and contributed to delays in  making reforms of the foundation’s accounting systems.
Discussions between the two parties concerning the bridge grant further  illuminated the financial issues faced in the program.   Specifically, at the  end of April 2002, INCSF complained to State that it had been operating for  a month without a funding agreement and had incurred a $2 million  shortfall.   According to INCSF, that shortfall occurred because State had  erroneously estimated INCSF’s monthly core operating costs at $850,000 to  $900,000 during implementation of Agreement 2, whereas INCSF believed it  was operating under a previously approved budget with estimated costs of  $1.24 million.  Implications for Liberty TV were particularly serious.   Because of its financial shortcomings, INCSF had received notice that its  service provider would terminate service for Liberty TV on April 30  because INCSF had not paid its bills. On May 1, 2002, Liberty TV stopped  its broadcasting operations.
State subsequently modified its proposal and signed the bridge grant  agreement on May 17, awarding $2.4 million for the period April to May  2002 but deleting requirements for its on-site participation in budget  management and approval of costs.  Although the grant budget included  funding for Liberty TV, broadcasting did not resume.
section_title: No Agreement from June to November 2002
paragraphs: INCSF operated without an agreement from June until November 2002,  largely due to an impasse between the two parties over the information  collection program.  At a meeting of top INCSF and State officials in late  May 2002, State officials said that the department would no longer fund the  information collection program.  However, State offered INCSF a new 7- month cooperative agreement totaling $8 million for the period June 10  through the end of 2002 that included about $4.2 million for Liberty TV and  represented a substantial increase over the $400,000 per month funding  levels previously supported. According to an INCSF representative,  INCSF reacted negatively to the proposal for three reasons.  First, INCSF  negotiators received the proposal in the early morning of May 29, 2002, the  day set for U.S./INCSF negotiations and 2 days before the bridge agreement  was due to expire.  Second, the proposal left INCSF with no funding for  operations for the 10 days between the end of the bridge grant on May 31,  2002, and the effective date of the proposed new agreement on June 10,  2002.  Third, and most important, INCSF was not willing to accept an  agreement without funding for the information collection program.
INCSF documents indicated that INCSF was in serious financial difficulty  by October 2002, with staff being evicted and landlords threatening legal  action. Several freelance employees of Liberty TV were released, but  Liberty TV core staff were retained in the belief that State remained  committed to Liberty TV broadcasting.  In an attempt to successfully  conclude a new agreement, INCSF sent a draft budget proposal to State  that would cover costs from June through December 2002 and envisioned  renewed Liberty TV broadcasting as soon as November 2002.   State noted,  however, that INCSF’s proposed budget differed in significant ways from  State’s proposals and that modifications were needed for it to serve as a  basis for a new agreement.  State and INCSF were able to successfully  conclude a new agreement in November 2002, in part because the  Department of Defense agreed to take over funding of the information  collection program.  The new agreement included about $2 million in  funding for Liberty TV costs incurred from June through the end of January  2003.  However, Liberty TV did not become operational, primarily due to  disagreements between State and INCSF over the amount of the funding  provided and the time period of State’s commitment.  Specifically:  INCSF expressed concern that the new agreement did not include an  additional $1 million it requested for long-term investment costs for  television operations. State attributed this decision to its unwillingness  to fund long-term capital costs and the uncertainty of congressional  approval of additional funding for INCSF beyond January 2003.  State  indicated that one possible option for INCSF might include reducing  costs of other budgeted items to cover television costs for one  additional month but noted that option did not provide the type of  commitment that INCSF was seeking.
According to INCSF documents and an INCSF representative, the  continued negotiations and lack of agreement over costs and  commitment time periods for funding Liberty TV delayed resumption of  broadcasting.  INCSF told State in November 2002 that it was not  prepared to begin Liberty TV broadcasts only to go off the air in 3  months.  According to an INCSF representative, Liberty TV technically  could have renewed limited broadcasting at this time because INCSF  had retained many of the professional television staff on its payroll.   However, INCSF’s representative said it was not willing to run an  operation that, if taken off the air once again due to a shortage of  funding, would further damage INCSF’s credibility.
section_title: Agreement Extension Did Not Result in Broadcasts Before and During War
paragraphs: INCSF continued planning for options to restart Liberty TV.  INCSF  proposed that Liberty TV rent fully operational facilities on a short-term  basis rather than invest in its own facilities.  Quotes for rental facilities  were obtained, and one organization was tentatively selected.  In February  2003, State extended the agreement to July 2003, and $7 million was also  added to INCSF’s funding, including about $2.67 million for television  operations.  INCSF notified State that it had signed two letters of intent  with contractors that it hoped would get Liberty TV on the air: one for  television and newspaper premises and another for television satellite  capability.   An INCSF official believed that Liberty TV could be operational  2 to 3 days after signing the satellite contract.  According to an INCSF  representative, these contracts were never signed because the drawdown  of funds on the new February amendment was not received until March 12,  just a few days before the war began.
INCSF at this point developed yet another strategy: to open offices and  install a television and radio station in northern Iraq for a 4-month period  commencing upon the issuance of an Iraqi Sanctions Regulations License.  According to an INCSF representative, this plan also fell through as the war  began, and INCSF decided to move its operations to Baghdad.  In early  April 2003, State began working with INCSF to support its transition to  Iraq, including the redirection of funding already committed to INCSF  programs.  According to State, those programs should include radio and  television broadcasting at a time when it was critically important that Iraqis  opposed to Saddam’s regime take control of the airwaves.  State funding of  INCSF continued through September 2003 and funds were available for  television operations. According to an INCSF representative, INCSF  decided in May 2003 that it did not have a dependable offer from the  Department of State to resume Liberty TV broadcasts.  Echoing a similar  decision in November 2002, INCSF wanted to avoid a second shutdown of  Liberty TV due to a gap in State funding.  INCSF instead decided to  concentrate its energies on establishing offices and hiring support  personnel in Baghdad.
section_title: Agency Comments and Our Evaluation
paragraphs: The Department of State and INCSF provided written comments on a draft  of this report (see apps. I and II).  State said that our draft report provided a  generally accurate account of the complex and difficult relationship that  existed between the Department of State and INCSF.  State said its actions  with respect to INCSF were responsible and fully in accordance with U.S.  law and administration policy.  State also said it believed our observation  that State and INCSF, through their inability to work together to restart  Liberty TV, missed a chance to reach the Iraqi people at critical times prior  to and during the war in Iraq lay outside the scope of our review.  We  disagree and believe that it is important to lay out the potential  consequences of not successfully restarting Liberty TV, particularly in view  of the significance that both State and INCSF attributed to television  broadcasting into Iraq.  State also provided some technical comments and  suggested wording changes, which we have incorporated into the report as  appropriate.
INCSF agreed that due to the inability of State and INCSF to work together  to restart Liberty TV, important opportunities to broadcast to the Iraqi  people were lost.  INCSF also provided technical comments on some of the  points raised in our draft report concerning financial management,  negotiation with State, and Liberty TV funding.  We incorporated those  comments into our report as appropriate.
section_title: Scope and Methodology
paragraphs: To document the history of State’s funding for INCSF programs and the  issues affecting its funding decisions, we reviewed State’s cooperative  agreement files.  We also reviewed documentation gathered by the OIG as  part of its audits.  We also obtained files and other documentation from  INCSF’s consultant.  The documentation we reviewed included proposed  and finalized cooperative agreements and amendments, letters of  correspondence between State and INCSF, and e-mail traffic.  We met with  officials of State’s Bureau of Near Eastern Affairs and Bureau of  Administration and also officials in State’s OIG who were responsible for  audits of INCSF.  In addition, we met with the consultant hired by INCSF to  help improve the foundation’s accounting and financial management  systems, and we obtained information from INCSF’s former controller and  its manager of Liberty TV operations.  The funding and related program  data in this report were contained in State’s cooperative agreement files,  OIG audit files, and documentation provided by INCSF’s consultant and its  former controller and Liberty TV manager.  Based on our examination of  those data and discussions with State and INCSF’s consultant, we  concluded that the documents we were able to obtain were sufficiently  reliable for purposes of this engagement.
We conducted our review from September 2003 to April 2004 in accordance  with generally accepted government auditing standards.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this letter.  At that time, we will send copies to the Secretary of  State and interested congressional committees.  We will also make copies  available to others upon request.  In addition, the report will be available at  no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-4128.  Janey Cohen, Richard Boudreau, John Brummet, and  Lynn Moore made key contributions to this report.
section_title: Comments from the Department of State
section_title: Comments from the Iraqi National Congress Support Foundation
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