Under the Mérida Initiative, the U.S. has spent about $3 billion since 2007 assisting security forces with fighting corruption and criminal organizations—like drug cartels—in Mexico.
For programs under the Initiative, there’s a risk of funds going to individuals or groups involved in contract fraud, human rights abuses, or other crimes. But the Government Accountability Office (GAO) says the State Department and the U.S. Agency for International Development (USAID) haven’t fully assessed such potential fraud risk. And although State screens Mexican security personnel for human rights violations, it has cut back on vetting other personnel, such as judges.
Completing a fraud risk assessment is a key part of GAO’s A Framework for Managing Fraud Risks in Federal Programs (Fraud Risk Framework), which agencies are required by Office of Management and Budget policy to follow. GAO says State has taken some initial steps, such as identifying potential fraud schemes that could pose risks to its Mérida programs, but has not established a time frame for completing its assessment. USAID has not yet started to conduct such an assessment, although officials said they plan to issue guidance that would direct staff to do so.
The watchdog found that State and USAID have some fraud controls for their Mérida programs, such as employee background checks and fraud hotlines. However, neither agency currently has an effective antifraud strategy—that is, one that reflects key elements of the Fraud Risk Framework and is important for communicating staff roles and responsibilities. State has issued an administrative notice, which outlines some initial steps to assess fraud risk; however, GAO says this notice does not meet the requirements of an effective antifraud strategy. USAID officials said they are in the process of developing an antifraud strategy for the entire agency. However, USAID officials were unable to demonstrate to GAO how the agency-wide strategy would include all key elements of a strategy tailored to USAID’s program under the Mérida Initiative. Further, both agencies do not have mandatory fraud awareness training, without which their Mérida programs could be vulnerable to unnecessary fraud risks.
State vetted all Mexican security personnel and selected non-security personnel holding sensitive positions, such as judges and prosecutors, scheduled to participate in Mérida programs for human rights violations and other disqualifying crimes. However, after May 2017, Embassy Mexico City substantially scaled down vetting of Mexican non-security personnel holding sensitive positions. Embassy officials stated that before scaling down the practice they did not assess and respond to the risk that non-security personnel in sensitive positions with security concerns could then participate in Mérida programs.
GAO recommends that State establish a time frame to complete a fraud risk assessment, implement an antifraud strategy, require staff to attend fraud awareness training, and assess and respond to the risk that Mexican non-security personnel in sensitive positions with security concerns are participating in programs. GAO also recommends that USAID complete a fraud risk assessment, implement an antifraud strategy, and require staff to attend fraud awareness training. State and USAID concurred with GAO’s recommendations.