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. Last Updated: 07/27/2016

Congress Slams Aid Program Safeguards

Two years after the United States agreed to help bail Russia out of a poor harvest with $1.1 billion worth of food aid, a U.S. Congress watchdog group is accusing the government of shoddily monitoring its distribution.

Less than one-fourth of the targeted regions received the amount of food aid allotted them, the General Accounting Office, Congress? investigative arm, said in a report released Tuesday.

And even though 95 percent of the wheat, corn, soybeans, rice, poultry and pork included in the aid package had arrived by June 2000, the Russian government had only collected $292 million (10.6 billion rubles) of the $309 million (11.2 billion rubles) due, the report said.

The General Accounting Office blamed the U.S. Foreign Agricultural Service for failing to systematically track payments and receive information regularly on the status of regional payments and delinquencies until May 2000.

The agricultural service was charged with monitoring the distribution and proceeds from the sales.

The Foreign Agriculture Service disputed the report Tuesday, saying that there was no evidence of fraud or the diversion of aid from its intended purpose.

The United States decided to provide 3.6 million metric tons of aid in 1998 after Russia gathered only about 65 percent of the 75 million tons of grains it needs annually. The crisis in August of that year emptied store shelves by crippling local food companies and cutting off imports.

The decision was made in November 1998, and the first shipments arrived in March 1999.

Under U.S. terms for the aid, 90 percent of it was to be sold and most of the proceeds ? 18 billion rubles ? was to be handed over to the Pension Fund.

The package sent to Russia was one of the largest food aid programs to a single nation in U.S. history, the General Accounting Office said in its report.

The General Accounting Office also said it had found that price-fixing schemes had been used to sell some of the aid. Investigators said they had found five such cases, and in four of them the aid was sold for below market prices.

Officials at the Chelyabinsk Food Corp., which distributed U.S. food aid in their region, have said that they had problems distributing aid because the prices fixed on meat sent to Chelyabinsk were too high.

"Prices on meat in our region were 21 rubles a kilo, and we were told to take it for 26 rubles per kilo and provide our own transportation," Chelyabinsk Food head Ivan Fyoklin said last year. "We said we don?t want it, but it arrived and we did not know what to do with it. We offered it to different organizations and finally simply put in the refrigerator for more difficult times."