Episode 40: 92 Million Lives Saved: The Inside Story of USAID

Show Notes

For over 60 years, USAID was the single largest contributor to public health in the world, operating in more than 130 countries and saving an estimated 92 million lives. In January 2025, it was essentially shut down. This episode takes you inside the agency to understand what it actually did, how it worked, and whether the allegations of fraud and waste that led to its closure hold up under scrutiny.

In this episode, Dr. Ravi Kumar sits down with Keith Hourihan, a longtime friend and former fellow Peace Corps volunteer who went on to spend nearly 20 years conducting fraud investigations and program audits across 45 to 50 countries for major USAID implementing organizations. Keith provides a rare insider perspective on how foreign aid programs actually operated, the controls in place to catch fraud, and the real-world impact of the agency’s termination.

In this episode, you will discover:

• How USAID began in 1961 as a Cold War tool for soft power, using humanitarian support and foreign assistance as a mechanism to build influence and foster global stability rather than relying on military force
• The “Signature Market” phenomenon in Abuja, Nigeria, where roadside stands sell forged documents, fake diplomas, and fabricated signatures, illustrating the creative fraud challenges auditors face in the field
• The 2025 shutdown timeline and termination of 83% of programs, beginning with an executive order freezing all foreign assistance in January, followed by mass terminations by March, with remaining staff handling the aftermath
• PEPFAR’s extraordinary legacy, including 7.8 million HIV-positive births prevented and 20 million people placed on antiretroviral treatment worldwide, a program now significantly hampered by the loss of its primary implementing agency
• How roughly 40% of foreign assistance funding circles back to the U.S. economy through American contractors, manufacturers, salaries, and procurement requirements that mandate U.S.-made vehicles and pharmaceuticals
• The reality of auditing and fraud investigation in war zones like Iraq and Afghanistan, where verifying vendor legitimacy sometimes meant sending local staff into dangerous provinces because international auditors could not safely travel there
• USAID’s $23 billion annual budget vs. the Pentagon’s $93.4 billion in a single month, putting into perspective that the entire foreign aid apparatus constituted less than 1% of the U.S. budget while delivering 42% of foreign assistance worldwide
• Expert projections of 14 million preventable deaths by 2030 as a consequence of terminated programs, particularly in areas like HIV treatment, maternal health, and childhood mortality prevention
• The reality of fraud: mostly small-dollar items caught by internal controls, such as fake taxi receipts and inflated hotel claims, with implementing organizations voluntarily repaying funds and reporting issues to the inspector general
• The domino effect of other nations cutting aid after the U.S. withdrawal, as countries across the Western world scaled back their own foreign assistance budgets, compounding the impact of the American pullback

Key Takeaways

• USAID operated in 130+ countries and saved an estimated 92 million lives over its history, including one to two million children under the age of five
• The fraud that existed was typically a tiny fraction of the budget and was often caught by internal controls, with implementing organizations paying back funds out of pocket when issues were discovered
• Roughly 40% of foreign aid spending circled back to the U.S. economy through American contractors, manufacturers, and procurement requirements
• PEPFAR put 20 million people on HIV treatment and prevented 7.8 million HIV-positive births, making it one of the most successful public health initiatives in history
• The 2025 shutdown triggered a domino effect where other donor nations also scaled back their foreign assistance, compounding the global impact
• The Pentagon spent $93.4 billion in a single month, more than four times USAID’s entire annual budget of $23 billion
• Experts project 14 million preventable deaths by 2030 as a result of terminated programs across public health, food security, and maternal care
• Internal audit teams averaged 75 to 80 reported cases per year, with roughly 45% having credibility and most being small-dollar items like fake taxi receipts or inflated per diem claims

Transcript

[00:00:00 –> 00:04:06] Dr. Ravi Kumar: Welcome to the doctor Kumar discovery. I’m doctor Ravi Kumar. Today’s episode is a little different. We’re gonna be talking about USAID, also called USAID or the United States Agency for International Development. Now you might be asking, why is doctor Kumar talking about a government aid organization? Well, it’s because USAID was the single largest contributor to public health in the world. It operated in over a 130 countries, and it was the engine behind PEPFAR, the program that put more than twenty million people on HIV treatment. It helped prevent over a billion cases of malaria, and it’s estimated that USAID programs have saved over ninety two million lives over its history. And now as of January 2025, it was essentially shut down. The reason I wanted to talk about this is threefold. One, I think it’s important that we understand what USAID was, what it did for our country, and what it did for the world. Two, what were the reasons it was shut down? And three, were the reasons legitimate? Because if we have that information, we can make appropriate judgments about whether the things that happen in our world and to our world are justified. Now I wanna be upfront with you. I do have a bias on this one, and I went into this interview thinking I was gonna hold it back. But after reviewing the footage, my bias was undeniable. So I’ll be honest with you right now. I think USAID was an extraordinarily effective use of US dollars, not just for the health of the world, but for building goodwill towards Americans for creating stability in volatile regions and for strengthening our alliances. Overall, it was a fantastic expenditure, but it was something you had to have a long term vision for to fully appreciate and understand. Now that’s not the view that everyone has, and that’s okay. What I wanna do in this episode, though, is to give you the information. What was USAID? How did it actually work? And was it truly the wasteful, corrupt program it was labeled as when it was shut down? So today, I’ll bring on a good old friend of mine, Keith Horahan. Keith and I were Peace Corps volunteers together about twenty five years ago. And since then, Keith has spent nearly twenty years working in international development as a lead in internal audit, compliance, and investigations. He’s conducted fraud investigations and program audits in 45 to 50 countries throughout the world. What that means is that he had an insider’s view into how these programs really worked. He was the person looking for the fraud, waste, and abuse. He saw what went right and what went wrong. And by talking to him, we’re gonna get a sneak peek into an organization that provide the single largest investment in global health aid the world has ever seen. Now Keith has asked me to make it very clear that he is speaking independently today. His ideas are his own words. He does not represent any organization in this podcast episode. So I think this is gonna be a really valuable inside look at a program that was a bipartisan American legacy for over sixty years and no longer exists. Let’s get into it. My name is doctor Ravi Kumar. I’m a neurosurgeon in search of the causes of human illness and the solutions that help us heal and thrive. I want you to join me on a journey of discovery as I turn over every stone in search of the roots of disease and the mysteries of our resilience. The human body is a mysterious and miraculous machine with an amazing ability to self heal. Let us question everything and discover our true potentials. Welcome to the doctor Kumar discovery. What is USAID for someone who doesn’t know much about it, and what did it do in the world?

[00:04:06 –> 00:06:17] Keith Hourihan: It’s been the world’s largest foreign aid agency. Uh, this was started in 1961, I believe. Um, and the idea was it was a counter to Soviet influence around the world. Uh, this was entering into the Cold War. The idea was to use humanitarian support and foreign assistance as a mechanism for soft power, uh, an idea to kind of coerce rather than co opt, you know, rather than force to get influence through work that we were doing and fostering global stability through through goodwill, basically, I think was the basic principle. And this was done in a lot of different areas. There’s there’s public health elements, um, pandemic prevention, maternal health, food security, nutrition, access to medicine, um, also economic development, uh, depending on the on the situation. Promoting democracy was a big was a big area that they had been working on. This has been going on for quite some time. I will say that it’s had historically bipartisan support. So this is not a democratic thing or republican thing. Uh, this was something that everyone supported. Each administration had their own priorities, but 2024, um, it was about $23,000,000,000 a year in the budget, which is a large sum, but it has constituted less than 1% of The US budget or a little little over half of a percent. In the time of USAID during its existence, they’re estimating about ninety two million lives were saved through through its initiatives, and one to two million children less than five years old. It was a very significant Yeah. Impact. Um, now regardless of the argument of, uh, should Americans be supporting other countries, what we should be doing, and the vantage point that it’s coming from, at the end of the day, services were provided, medicines were provided, um, deaths were prevented, childhood mortality has gone down in in these places as a result of this work. Many of the countries were working. There was just no other available access. So this was less than 1% of The US budget, but it was about 42% of foreign assistance worldwide.

[00:06:17 –> 00:07:37] Dr. Ravi Kumar: Multiple things you said that are very interesting, but two things that stuck with me is the fact that USAID has been a bipartisan organization almost since its creation and only recently has become a partisan, uh, topic, basically, uh, an organization that is not favored by both political parties, essentially. And two, it played a significant role in soft power around the world, which is a term that not many people hear, honestly. We we hear about power, but what is soft power? What is hard power? Well, soft power is the ability to co opt, basically, induce cooperation among countries to help make the the world a safer, better place to live, not just for the people in that country, but for US citizens as well. So I think it’s very interesting that all of a sudden, this relatively small investment that makes a massive philanthropic and humanitarian contribution to the world and made The US theoretically a safer place to live in a and safer for Americans to go out in the world, all of a sudden that program is not appreciated. What happened? I mean, were there significant things that came up that put USAID in the hot seat?

[00:07:37 –> 00:10:02] Keith Hourihan: So in terms of the bipartisan support, it has been by there has been a lot of bipartisan support historically. When I say historically, I’m saying going back to the beginning. Both both sides have been very supportive over the years. Again, it doesn’t mean they don’t have different priorities in what USAID does or how that money is invested. That, um, that changes. That’s different between administrations. But support as an entity, the idea of foreign assistance was was pretty consistent. Now that has changed somewhat. And and, again, this is not pointing to one political side versus another. But moving forward, there was a strong push to make sure that the priorities of the government, which were which were broadly interpreted, do not relate to anything we’re doing in foreign assistance. So whether that be diversity, equity, and inclusion, and, you know, for example. Right? If something could be interpreted as supporting that, they didn’t want that going into foreign assistance or reproductive health or other areas which which have some controversy or some different differing opinions between administrations. So that played into it. And as we said in the beginning, you’re an average person you’re gonna talk to who might be having a hard time. Maybe they’re struggling financially. We we have problems in The US too. And when people hear, we’re giving money to this country. Why are we not helping here with our own taxpayer money? That’s okay. That’s a, you know, that’s a it’s a valid concern that that could come from somebody. And so I think when politically that could have a, um, a big support when when when people come out against USAID using that as kind of the vantage point. And and I think that’s where it it had some traction and, you you know, and from some elements, it had some support. And we talk about soft power, again, I do think this is a really important concept. And but if we just bring this down to kind of basic principle. Right? If you have a neighbor that when you’re on vacation and your family’s by themselves comes and shovels your driveway in the winter or or helps helps out your family in some way when you need it, right, you might have an incentive to help them in the future versus somebody who says, if you don’t help me, I’m gonna sue you or I’m gonna beat you up. Right? It’s the same it’s the basic concept. And what I can say, also having had the the fortune of having been to as many countries as I have and, uh, gotten to know as many of the pulse of those environments and how people kind of feel, it really did make a big impact, uh, in terms of the view of The United States and the America in fostering cooperation.

[00:10:02 –> 00:10:28] Dr. Ravi Kumar: You know, another thing, uh, you mentioned is that, you know, when USAID identifies a need and sets aside money for it, it actually does it through these implementing organizations, which are like contractors, essentially. And these implementing organizations are usually American or, uh, right, is that correct? They’re usually American organizations or international organizations that hire Americans?

[00:10:28 –> 00:11:22] Keith Hourihan: Historically, yes. It has historically been a lot of US based organizations. And I think the estimates were somewhere around, like, 40% of the the funding that we were giving in foreign assistance was actually circling back to The US economy. And and that was happening because going because going through these organizations, right, your, um, these requirements for certain types of equipment has to be procured by American manufacturers, for example. The the salaries of the American staff involved, the profit for the company, the organization that’s that’s coming back. So a a big chunk of this was actually being circled back to us for through that mechanism. For example, you know, for the regulations for a long time has always said, you know, if we were buying vehicles in a country and we often have to buy quite a few, it would have to be an American made vehicle, for example. Or, um, you know, if we’re procuring different pharmaceuticals that’s gonna be coming from a US pharmaceutical manufacturer.

[00:11:22 –> 00:11:49] Dr. Ravi Kumar: I think most people don’t realize that USAID wasn’t just giving money to some tribal leader or government official and saying, hey. Do something good with this. Go treat HIV or hunger. We’re actually there’s these stringent guidelines in place that are usually only qualified to be serviced by these implementing organizations, which are largely American based international organizations?

[00:11:49 –> 00:12:50] Keith Hourihan: The requirements are very, very strict. And, um, and at having worked for some of the largest implementing partners or recipients of USAID money, I can tell you the the the scrutiny was very high and the that the requirements are were very complicated. And as I said, one shouldn’t underestimate how difficult this is in some of these operating environments. Like, so for example, let’s say, you know, I spent a lot of time in Afghanistan and Iraq at one point in my career during war when there was conflict going on and trying to deliver aid programs. It’s very difficult to do monitoring of our subaward partners around the country, the local organizations, to verify the good spot that the recipient, uh, got the beneficiary received the equipment they’re supposed to get, where you have, um, restrictions in travel because of safety. You have bombs going off. And so these implementing partners took on huge, huge liability because if something goes wrong, it’s your fault and you pay the money back out of pocket, which we did very, very often.

[00:12:50 –> 00:14:03] Dr. Ravi Kumar: That’s something I wanna talk about later. I mean, because that that is these implementing partners kind of backstopped fraud bosses, and we’ll we’ll come back to that. Hey, guys. If you’re enjoying this podcast or it’s helping you, please help me get it out to the rest of the world. All you need to do is rate and review it on Apple Podcasts. Share it with a friend, post it on Facebook, and that’s basically it. The algorithm rewards engagement. Every review, every mention puts this show in front of someone who’s looking for clear, no nonsense health information, the type of information that I’m putting in these podcasts. So thanks so much, and let’s get back to it. Let’s go to January 2025 because, uh, that’s when USAID was essentially shut down. And these are this is an organization that is funded through appropriations from Congress, you know, paid for by our tax dollars. What what happened? Why did that happen? Because the the reasons we hear is there’s tons of fraud, waste, and abuse. The CIA was infiltrating the organization, and we were just giving our money to, uh, foreign countries. Was any of that true? And, like, what were the politics around this? Why did it happen?

[00:14:03 –> 00:17:30] Keith Hourihan: So in January 2025, there was an executive order which put a freeze on on all foreign assistance. And to put this in perspective, most of the four the USAID programs, whether it’s through an implementing partner, whomever, usually, they’re they were safe most of them were five year programs. So at this point, what I what I mean by freeze is programs that were anticipated to go on for another one year, two years, three years, four years, depending on where you were in the cycle, everything was frozen. So this means that you had we had employees with contracts for at least the next year. We had you know, everything was up and running, and you had to stop, and you weren’t gonna get paid until there’s an evaluation of all the programs. But after some time, once we got to March, a decision was made. About 83% of the programs were terminated. Right? So they were they were canceled and, um, and no longer in effect. And for the next period of time, for the next year or so, um, USAID existed, but, really, it was most of the staff were let go or furloughed, and it was basically the remaining staff were handling the aftermath of the terminations of the awards is basically what was happening. And so 2026, it it’s basically it’s basically done. Also around that time, the Department of Government Efficiency, DOGE, and and that team came into USAID. And there’s a lot of, uh, media talking about fraud, waste, and abuse, corruption, criminal organization, these things of this nature. I don’t know the basis for that, uh, on on where those conclusions were drawn from, to be honest. I mean, I can speak from my experience in implementing those programs, and I I have a very different opinion, uh, about how those funds were used or at least what I’ve seen. Of course, I’ve I’ve only been exposed to whatever portion that I have been. But I did see a lot in the media, things that were being referenced were were cherry picked items, to be honest with you. Right? They were some of it was against, uh, the principles of the administration or, uh, or had that impression. And the constituents or the supporters there thought, why are we spending $50,000,000 on x? You know, that’s doesn’t make any sense. And often, it was kinda taken out of context because it was focused on some piece rather than the whole program, or in some cases, I’ve seen it was actually not true. It it was a misrepresentation or it was a anticipated award that never got implemented. And then also something to take into account, which we’ll talk about whenever you whenever we get to it. But but a lot of the issues that get reported were actually identified in by the implementing organization doing it, who raised the issue, refunded the money, and alerted USAID and the inspector general to the issue. The press on that won’t say that. It will say x amount of fraud this from this organization, and this amount was recovered, which is true. But it also means that the controls worked from the entity that was actually implementing the program. So I have no idea the foundation for these conclusions from from Doge or the reasons behind, you know, the administration and why they what made these decisions, but but but I think it was twofold. They didn’t feel the priorities were there. Many of the supporters in America just didn’t just thought, I don’t want my tax year money going towards these types of things, even if they were kind of perhaps cherry picked. And then also kind of an an exaggeration of the the fraud piece. So where is this money now?

[00:17:30 –> 00:17:46] Dr. Ravi Kumar: I mean, because congress appropriated it. You know, taxpayers can vote for someone and say, I don’t want this money to go to these programs. But, I mean, Congress controls the purse strings. Right? And they already appropriated the money. So where is that money now? If the USAID’s not running, where is that money going?

[00:17:46 –> 00:18:03] Keith Hourihan: USAID’s mandate has been rolled into department of state, um, and they have been developing their own set of parameters for how that’s to be issued with with the with the separate set of guidelines. The the programs implemented there are far fewer and and much more than what USAID used to be.

[00:18:03 –> 00:18:39] Dr. Ravi Kumar: And there’s another program too that was implemented by USAID, but is not part of USAID. That’s PEPFAR, which George Bush started to basically battle and eradicate HIV. And and it’s it’s been extraordinarily successful. It’s prevented, like, seven point eight million HIV births. It’s preventing sex workers from contracting the disease. It’s keeping people with manageable disease who already have it. It was it was an extraordinary effort by The US, but it was implemented mostly by USAID. So what’s happened to that program?

[00:18:39 –> 00:19:47] Keith Hourihan: So PEPFAR, there’s there’s been some back and forth here because there was some concern from the administration that it was supporting family planning could be abortion related. And and this led to some, you know, some back and forth in congress about that. And the there’s about twenty million people globally that that, uh, have are HIV positive, which are relying on on PEPFAR support. So that means people getting antiretrovirals, uh, including children born with born with HIV around the world. Uh, I personally have seen places where clinics have been shut down, and though that supply chain was reliant on this. And I’m not saying that’s a good thing to have been reliant on, you know, US support for this, and, ideally, it would have been other other solutions. But this is reality. Um, hepar was filling this need in a lot of different places where there wasn’t an alternative or or there hasn’t been one developed. So it has had a big impact. Hepar has been wildly successful in preventing HIV, uh, and and treating those who have it. There were cuts, and there were adjustments to other PEPFAR programs were canceled.

[00:19:47 –> 00:20:13] Dr. Ravi Kumar: So, yeah, so it’s been it’s been hampered for sure because of the lack of implementation through a USAID. Mhmm. What about the contributions from our the other first world world nations in the world? I mean, because US, obviously, you said was, I think, 42% of foreign aid in the world. The other 60% was coming from other countries then. So what happened to their aid? Did they step up and and fill the void?

[00:20:13 –> 00:20:55] Keith Hourihan: No. Unfortunately, it ended up being a bit of a domino effect where, uh, when when The US was was withholding back its funding for this, so did other countries. Um, so we’re finding this with, uh, a lot of the other kind of Western countries that were some of the large donors. They they scaled back those budgets pretty significantly following this. And and there’s also kind of a large populist movement around the world, uh, in many countries, and and many feeling like we wanna have that money invested in, you know, internally instead. And that was the decision of the the voters, which has put a lot of reliance on on some of these, like, large foundations. You know? So you have, like, the Gates Foundation, and you have some of these some of these large ones, which have provided a lot of support over the years.

[00:20:55 –> 00:22:01] Dr. Ravi Kumar: Yeah. I wonder what the psychology behind that is. You know? You think if you see this need and there’s benefit internationally and there’s benefit nationally to these funds, you think other countries would step up and and be like, okay. US is not gonna give the money. We’re gonna do it, and we’re gonna rein in the benefits and the moral, uh, value from it. But it didn’t happen. There and I think you’re right about this populist movement where we want to isolate from the rest of the world, keep money in our own country, utilize it. I fundamentally disagree with being isolationist, but that is a valid argument if you’re using the money efficiently at home, which is anyone everyone knows bipartisan knowledge that that’s not happening. So I I think that’s very interesting. So we know that USAID was shut down in January 2025, and now it’s essentially gone. You spent your last the last twenty years of your career auditing these programs for, um, for an implementing organization. Tell me what that looked like. What were you doing? What were you seeing?

[00:22:01 –> 00:23:55] Keith Hourihan: So, yeah, I worked for a number of these organization. It wasn’t only USAID. I mean, we we had you know, I was also auditing programs from The UK, from, you know, a variety of other donors too, but but most of it was USAID programs. This was taken incredibly seriously from every level of the organization for for a simple reason. If you were reliant on donors, right, reputation is everything. Having a headline of a of a major fraud could sink you in a moment, and this happened. So there’s an organization, um, not one I didn’t work for this particular one, but there’s an organization called, uh, AED, you know, years ago, and there was a procurement fraud. You know, this is all public, so anyone can kind of look this up. I don’t remember all the specific details, but it was like a, you know, maybe a $90,000 financial impact, something like this. This is one of the largest implementers in the world, you know, Half $1,000,000,000 revenue annually, something like that. Right? And it got suspended and ultimately went out of business and then absorbed by another organization for for this, you know, one issue because it was handled inappropriately. Right? I mean, the repercussions are real, and and this is one of the biggest. Right? So the the other peer organizations were ones where I worked, you know, that lesson was not forgotten, you know, seeing that. And I think the basic principle, and I’ve I’ve said this in my trainings a million times that I deliver to to staff and others, is if you’re in your own community and you’re gonna donate to a local charity to help out the less fortunate, if you see a headline of a local organization that’s been stealing money, you’re not gonna give your funds to them, and it’s the same principle for the US government or any other donor. So these organizations took it very seriously, and I can only I can speak for this, and I had very extensive teams, very highly qualified teams, and and very high level support. So this this really was a a focus of the organizations where I worked.

[00:23:55 –> 00:25:17] Dr. Ravi Kumar: Hey, everybody. I want you to imagine something. Someone somewhere discovered that cutting out a certain food lowered their blood pressure, or a simple daily practice eliminated their headaches, or drinking coffee two hours later help them sleep through the night. These discoveries exist, but that knowledge is like a grain of sand on a beach halfway around the world for the rest of us. And that’s the problem I’m trying to solve with an app I’m building called sharemytrial.com. This is a platform where people share health solutions that work for them, and then the community validates what works on a broader scale. Right now, I’m looking for beta testers. So if you’re interested, go to sharemytrial.com and sign up. Help me turn that grain of sand into a pearl in your palm. You’re an internal checkpoint for these agencies which are implementing programs for USAID, and they have you in place because they don’t want to be implementing programs that are plagued by fraud. And so they wanna catch it first, and that’s what you’re there for. You’re like their internal watchdog. And if you find something, you report it. Yeah. And the idea is that you guys recover the funds so that the USAID AID program is not paying for fraud. Is that correct?

[00:25:17 –> 00:27:20] Keith Hourihan: Yes. So first of all, this function that I would do so so it’s internal audit is one piece, compliance, right, and then in internal investigation, right, and kind of risk management. So there’s these kind of buckets. So we’re independent and objective could because we report directly to the board. And this is done by design so that there could be an issue with the CEO, the CFO, or whatever. We still have to have the ability to investigate any of those things and be independent outside of and we’re so we’re kind of outside of the management chain. So the way it would work is if I saw a red flag in an audit, right, that I researched and I found a problem, or I got a I or I got a tip through our hotline that was, uh, saying alleging fraud, and I investigated and I, you know, found an issue. So my responsibility at that point is we we would look into the matter, and we have qualified people to do this. Right? We’ve got CPAs and certified fraud examiners and internal certified internal auditors and, you know, every whatever the case may be. We have the right personnel to to address it. We identify the issue, and then let’s say we found a case of fraud. Let’s say I found somebody getting a kickback, you know, hiring a vendor and they for whatever amount. We would find out we would get the evidence that we gather. We would notify the person at that mission responsible for that program. Tell them, listen. We have a concern. This is what came up. And I would go to the office of instructor general, and I would say, this is what we found. This is the approach we’re taking. You know, don’t let them know the investigative approach, and these are the corrective actions to date. So sometimes, it was still ongoing investigation. Sometimes, it’s something we could complete fairly quickly. It depends on the scenario. But we notify them, and then whatever the financial impact was, we would take our if you’re a nonprofit, that would be called unrestricted funds, meaning, basically, out of pocket. We would pay that money back to the government at that time as soon as we found out what that money was because, listen, the fraud was on our watch. You know? Uh, it’s not the talk to terrorists’ responsibility. We pay it back, and then we would coordinate with, um, the inspector general’s office until they were comfortable to close the case. I I was averaging 75, 80 cases a year.

[00:27:20 –> 00:27:23] Dr. Ravi Kumar: You found 75 to 80 cases of fraud every year?

[00:27:23 –> 00:28:17] Keith Hourihan: Reports. Reports. Right? So about about forty five forty, 45% of those had litigated had some credibility to them. Right? And of that, you have to keep this in mind. Some of this is a fake taxi receipt, right, for $60. Some of some of these were, you know, very, very small potato items, but the lot is we had to report everything regardless of dollar value. So if I had a $60 fake taxi receipt that, uh, that came to my attention that we approved, we would have to take action. We would credit that to the government, and I would send a whole report about that $60 receipts, the inspector general, and make sure you know, we had to. Uh, that’s a that was a requirement. So it’s to that level, um, of of scrutiny. And then, of course, every now and then, there are a couple big cases that we encountered where, um, people exploited a control point or there’s some sort of collusion that we identified that something happened.

[00:28:17 –> 00:28:25] Dr. Ravi Kumar: So tell us a a story, maybe of some good examples of fraud cases that you found while auditing these programs.

[00:28:25 –> 00:41:35] Keith Hourihan: One of my first ever investigations. I was, uh, I was working for an organization, and we the inspector general’s office, I believe, did a audit. And they said, we have this red flag, and we believe you have fraud in Afghan in, I’m sorry, Iraq. And and we’re like, oh my god. And so I said, can you please send me the documentation? You know? What is it you’re looking at? And what they sent, they said, alright. You bought these tractors. There’s three quotations here. Same template, same handwriting. Right? Different vendors. This is this is manufactured. This was steered, and you need to pay us back, you know, $1,500,000 or whatever it was. Right? And tractives. So alright. I get what you’re saying. Right? So I flew to Baghdad, like, twenty four hours later. Went through, you know, the the security guys, the SAS soldiers picked me up in the armored car, and, like, I got my flight jacket and my helmet, and, you know, I’m like, you know, this is my first job in here thinking, like, this is not what I thought being an auditor was gonna be like, you know. We we get into the, you know, the the green zone where where we had the, uh, the office, have these documents, and we had to figure this out. So these vendors were in the Anbar province back many years ago. But so there was a lot of it was not a safe area. I couldn’t travel there. But we had to go validate these vendors. Are these quotes real? What happened? And so we ended up getting some of our Iraqi stuff that we’re able to to get in and out. So they get out there. You know? They they take a picture. We find the vendors, and, you know, they come back, whatever. But we almost didn’t send them. And if we didn’t send them, we would have had to repay that money. We sent them out. They came back, and we said, alright. Well, here are the vendors. But it turns out that there’s only one print shop in Fallujah, right, in that area. And so all the templates were the same, and all the vendors were illiterate. And so our guy wrote down what they told them for the prices. Right? And that’s the reason, but they all validated that these were the costs. It was independently validated. You know, we shared this with the inspector general. They looked into it, and he said, okay. We’re fine. But if we were unable to travel there, that would have been out of pocket. Right? So this is giving you a context of, like, you know, um, how difficult it is to meet standards in certain environments. When we’re paying a lot of people participating in trainings and things like this, and we pay the money, you know, like, for an allowance to get there to the training, most many people can’t write. It’s thumbprints. And, uh, you know, and then and I’ve had auditors come to me from the external and say, these thumbprints look similar. You know? That it’s it’s the same person. I’m like, you know, okay. You know? Like, it gets to that little detail. So the common things were procurement is a big area. Right? Because you’re always buying things. There’s and how can you manipulate this to favor one person versus another? Right? You can manipulate the solicitation that is exclusive to one person. You can, you know, influence the vendor selection. You can give information to a vendor that others don’t have. You know? You could have the same person give three quotations to give the appearance of multiple companies bidding. Right? You can substitute the goods at the end, and all of that happens. Right? So having those controls and separation of duties and segregation of duties is critical. Right? So one of the first cases, um, this was one of those cases that I got an allegation that that said the, um, these procurement officers or managers, uh, they’re getting kickbacks. They’re corrupt. And the and the source was anonymous, and I kept I always try to reach out, because if I know who it is, it’s much easier for me to figure out what’s happening and the more detail you get. I got nothing else. They just stopped responding. But I was like, alright. Well, let me let me go out there, do do a review here. Right? And check this out. So I go with the team, we kinda go there, and we we start looking at some samples. You know? We’re just we had I had nothing to go on. I didn’t have a vendor name, anything. I just started looking into what they were doing. And one of the first things I see is, um, we were purchasing I think it was irrigation equipment, uh, for, I believe, this program was for HIV affected families. So it’s mostly single mothers with kids, and it was giving some irrigation systems for, like, a community garden for some, you know, different foods and vegetables or something. And so it was basically, like, buckets, hoses, things like this. And I noticed a couple things. When the boss so the director is approving something, you’re gonna give them alright. These are all the quotations we got to show we got the best price, and then this is who we recommend for the the the vendor or the committee recommends, and these are the invoice and etcetera. So it’s a whole packet that will come to them to approve it. I noticed that the packets were huge. They’re like this thick. And I’m like, what you know, this is not that complicated of a purchase. Why is it so so much? And so I noticed that the the technical specifications that were copied, like, four or five times, the same documents over and over again, so it’s like this thick. And and I and then I noticed that all the approvals I just I saw this when I was looking at the general ledger, you know, filtering transactions. I I realized that all the approvals were done on Fridays. So I was like, okay. That’s interesting. Now why is that? Right? So multiple copies to make it look like a big thick document. And, really, it was an effort to get a rubber stamp from the country director. You could walk into the office on a Friday afternoon. We need this out by Monday, or we’re gonna be behind in the program. Oh, crap. You know, we got this big of a pile. Sign it without diving too far in. And then I look at this, and I said, alright. This is also kinda funny. You know? All the vendors are, say, maybe the quote is $10,000, except for this one who’s $3,000. Why is this one so cheap? And then the specifications, we need a 10 centimeter diameter bucket. You know? So I went to the technical folks, and I said, does it need to be 10 centimeters? They go, no. I said, why is it 10 centimeters? I don’t know. They never asked us. Procurement guys did it. Turns out that their buddy had a mold to make buckets. Right? And to make a mold for the other organizations would have been much more expensive. And so they did that to pocket the difference and get the kickback. Right? Those same guys we find out I went I went out to the grantee sites. They bought water pumps. They bought a certain model, and instead of having it delivered to to the office to compare against the invoice and the order, it was delivered directly to the grantee. And I’m like, well, that’s not right. I went out there, sure enough, different model. Like, they pocket the difference. They bought chickens and chicken feed. It it it’s a hard morally to comprehend that you’re doing this to the most, like, vulnerable people, but this but it happened. You know, they would alternate the chickens, male and female, because it was cheaper, you know, for for eggs going to these families, and and they would, uh, you know, basically dirt for feed and substitute it in just the pocket, whatever they could. So we found all of these different things once we kind of dove in, um, and found kind of the the vulnerabilities and control points where it happened. So, I mean, of course, um, these guys did get end up getting prosecuted, thankfully. And, uh, and we did find, I believe, kind of the extent of that problem, but but that but that was like an example. Uh, another thing, you said to think about what is this money going to. So there’s a lot of training. Right? A lot of this is small dollar value. Like, so for example, uh, you know, I if I’m gonna go out to a rural area and do a seminar on, um, sanitation, people will come. Generally, you’re gonna give you’re gonna pay some money for them to have for their transportation. You’re gonna pay for their lunch or give them a per diem type of thing. And people will show up, and sometimes, you know, you you get a list and it could be ghost participants. You know? Somebody will make up names to pocket the money, right, uh, that weren’t actually there. Uh, or it could be payroll fraud. You could have, you know, potential for ghost employees. That that’s less frequent, but it’s possible. Right? Or in many countries, a standard is if you came to work for me, right, and, uh, this has happened I’ve seen this in many countries, actually, where you and I agree to a salary you’re gonna you’re going to accept. But then but we agree, I’m gonna wire you the money for a higher amount, but and you’re gonna pay me back the the difference in cash. So you’re agreeing to a lesser salary, but I’m able to bill you for a higher rate, and I’m gonna pocket that. And it’s very hard to find out about because you will lose your job or you think you might lose your job if you raise an issue, and you have agreed to a lower rate. And from an audit perspective, I can see your time sheet, your contract, and that full amount gets to you. Right? But you’re generally gonna be giving that money back to that guy in cash. So that’s very so it’s very hard to find these things. I’ve seen a case, uh, this is one of the more interesting ones, actually. Uh, this is in Afghanistan. So we had these armored cars that would take us around. Right? They’re very expensive. They’re like, to buy one is probably quarter million dollars. Right? They’re they’re Toyota Highlanders with, uh, armored glass and, uh, Teflon in the doors and whatnot to to shuffle people around, you know, in in Kabul at the time. And, uh, one of the drivers one day just takes off with the car, doesn’t come back. And, uh, so everybody freaks out because this is a security concern. Somebody, you know, Taliban or whoever could they could take that. They could, you know, potentially attack US servicemen. Who knows what, you know, what what could happen? And, uh, and that particular one didn’t have a tracker on it. I don’t remember the the background as to why not or what happened. Now this vehicle was leased. Right? So it it wasn’t purchased. And so all the other cars then all the trackers were on. And, again, another car disappears. Another driver, gone. Right? You know, what the hell’s going on here? And this time, it was tracked, and it was tracked to the parking lot of the company it was being leased from. So immediately, we thought, oh, alright. He he’s basically stealing his own car to try to get insurance money and then potentially sell it later. This was the theory. But the the owner of this business comes in and says, no. No. No. I didn’t do it. I’m being framed by my competitor. And, you know, I think the initial reaction was, oh, right. Yeah. Okay. Um, the inspector general got involved. They looked into this. But in the end of the day, it was actually proven that this is actually what happened. The competitor paid off drivers to steal the car and plant it on his competition’s lot because there’s really only two guys that were doing all the leasing in Kabul, and this guy wanted the full monopoly. So, I mean, you get crazy stuff that you encounter. You know? This, I never forgot. This is in Nigeria. And I I went and, uh, there was a document for authorizing some sort of payment that we had questions about, and the the director at the time said, I didn’t it looks like my signature, but this isn’t my signature. I said, you sure? Yes. Yes. And, um, he said, they must have gone to the signature market. I’m like, excuse me? I’m like, the signature market? He goes, yeah. Yeah. This is in Abuja, Nigeria. And so I said, can you take me there? And he goes, yeah. Yeah. So we hopped in the car, and I drove out. There’s a side of a road in a place in Abuja. It’s little stands. You can you can get a diploma, a PhD. You can get a document signed, you know, like, next next whatever you want. Literally stands on the side of the road. I’ve never seen anything like this in my life, and it kinda blew my mind. I’m like, oh my god. You know? You know, like the, as a joke, I I made a fake letter, you know, giving myself a raise signed by my boss, you know, as a joke. But so there’s things like that. Even on a small level, like, I I went I was doing a fraud training one morning, and this was in Nairobi. And I was staying at the at a hotel, a nice hotel. It was, um, right near some embassies and things, and I was I was coming in a gift shop. And I was I was gonna buy toothpaste or something in the morning, and I noticed, like, right next to the register are blank hotel receipts. Like, you can buy them because it’s so common people staying there that, um, you want a receipt you stayed at a hotel. Because many many organizations will say, I’m not gonna give you an allowance for where you’re gonna stay. I’m gonna give you what you actually pay. So people, if you’re from the country, will often stay with relatives’ friends, just go to the hotel. And so they’re like, what does the organization care? You know? I’m gonna you know? And they’ll get a blank receipt and then submit it. So I bought a whole pack of it, and I actually used them at the training to give them out to people. But but, again, that small thing is fraud. Right? It’s misrepresentation and it’s intentional misrepresentation and all of that, but it’s a common thing. And and I guess it kinda gets back to, you know, in some of these environments too. Like, just the basic principles of this idea and how you find fraud and what you’re looking for is it’s like a triangle. Right? You need opportunity. You need rationale and justification. Right? The only thing we can control is opportunity. I can’t control how you think about it. But but to in the mind of of many people, let let’s say you’re a driver in a country. Right? You’re not making a big salary, and you have to go out all the time. But, you know, I would rather sleep in my car and say I slept in that hotel and take those extra money home for my family. I get that rationale. Right? You know, these aren’t all evil people, but it’s still fraud. Right? That’s still something I have to report and address and deal with. Right? So maybe the company could do something different and say, I’ll give you x amount of dollars. I don’t care where you stay. But, you know, this is the thing. So most of the time, people kinda making self justifications for smaller ticket things, but you get bad players. There’s no question. And and the thing is is, like, whenever I find something, 99% of the time, it’s not the first time it happened. And I have to go back and to understand the breadth of it. Because usually, you know, you might start small. You don’t get caught. It gets a little bit bigger. You don’t get caught. And then people get greedy, um, or you do get caught. But, generally, there’s more to it, and, um, and that’s been the challenge. So so it happens. Yes.

[00:41:35 –> 00:41:47] Dr. Ravi Kumar: If you were to say, what is the, like, percent do you have a number that you can put on? What percentage of USAID money has been involved in fraud or lost to fraud?

[00:41:47 –> 00:42:33] Keith Hourihan: Very little. Very little. I mean, I I I can’t give you an exact figure, but tiny, tiny fraction. I mean, uh, you know, relative to to what is being spent, um, like, very, very small fraction. I mean, I’m sure the statistics you could look at recovered money from OIG and compare that to the budget. Right? Uh, which would give you an indication, which is gonna be a very, very small fraction. But what I can tell you is that most of the time Yeah. I’m finding very small amounts. We report it all. We pay it back at all. Every now and then, I’ve had a couple cases that, you know, are in the tens of thousands, sometimes the hundreds of thousands, and in one case, you know, more. But the but it’s very, very rare. Now I’m talking about twenty years and aggregate billions of dollars worth of programs that I’ve audited personally or, you know, investigated cases under and, you know, and and what have you. Very, very small portion.

[00:42:33 –> 00:42:48] Dr. Ravi Kumar: Tell us an example of a program that was super successful that you were like, man, I am glad that the American government and USAID is funding this. Because you’ve got these examples of fraud, there had to been some, like, real successes out there.

[00:42:48 –> 00:45:01] Keith Hourihan: The programs I’ve seen, there’s so many that were outstanding. Really incredible. I mean, just education programs. I mean, so places like Afghanistan, you know, at least when I was there, it was probably worse now. But at the time, it was three percent of women could read and eleven percent of men. Right? Education programs and, you know, giving opportunities for women and girls to to get education and grow. Right? Um, Equatorial Guinea, I remember going to it. It’s got the highest per capita income and lowest literacy in Africa. Right? Because it’s offshore oil, but kind of a dictatorship kinda going on. There’s a lot of projects that were so impactful. I mean, the public health stuff was huge. It’s huge. And there wasn’t an alternative. And just seeing people in rural countries, and and I’ve seen in Eastern Southern Africa, for example, like, where can live full lives in rural areas who are HIV born with HIV. You know? They can go to school, have have fruitful lives, and and kind of carry on food food security programs and giving entrepreneurial opportunities to women who in certain places and cultures, um, are child brides generally. Right? And giving educational avenues and and, you know, and opportunities to earn income for their families. Again, food, nutrition, all of these things were were huge. And and, again, not to go back to the soft power thing, but there you know, you may have seen there’s a USA ID label, right, from the American people. And you see this on bags of rice, on cartons of medicine, and, uh, medical equipment. I mean, a program I’ve seen recently, you know, there’d be mobile units to give women gynecological exams. You know, it looked like a little mini horse trailer with, uh, all the equipment inside and, you know, and midwives, you know, to help prevent, um, maternal death. There’s been so many programs that, I mean, I I can’t even begin. And the vast majority, I think, were wildly successful, I mean, in terms of, uh, their desired impact. Uh, I’m not saying this is perfect. I’m not saying this solution is just charity, and and and this is, uh, the responsibility of The US to get you know? I’m not saying any of that. But but I will say that what was spent, uh, went to good use for Yeah. For the people of those countries. And and I do think that it gave a a positive reputation and influence of The US at that time, you know, for those places.

[00:45:01 –> 00:46:13] Dr. Ravi Kumar: I mean, just the sheer alleviation of human suffering is in in my mind is makes it all worth it, but there’s so many side benefits. And you just have to have a long view of the world to understand how that pays back The United States in the long run. It makes the world a safer, more secure place. It brings goodwill towards American people around the world. It’s basically like the opposite of war. You know? War is hard power. Right? You’re forcing, coercing people into your will through the threat of death and destruction, whereas USAID is soft power. It’s co opting people to help see a common goal through goodwill. And I think it’s extraordinarily effective. Both you and I were Peace Corps volunteers. It is a real thing in human psychology, in world affairs, in public health. It it really does make a a big difference. So tell me, what is the future now? I mean, now that we’ve lost USAID, which was, you know, started by Kennedy and has been bipartisan for, what’s now, sixty years, uh, what happens now?

[00:46:13 –> 00:48:09] Keith Hourihan: Well, that’s a million dollar question. Right? Um, I mean, USAID and what it was or foreign assistance as it was, um, currently is kind of rolled into the the state department. I mean, I think there’s a, you know, a different set of priorities to make sure it’s aligned with, um, the administration’s goals for for The US. I I think it’s gonna come with more perhaps a little bit more transactional, um, you know, what we’re would receive, and then we will provide x so long as it’s aligned with the various priorities currently. I don’t know what it’s gonna look like in that regard. But what what is happening is that organizations are looking for alternatives, and they’re trying to figure out, alright. Well, how how would these gaps be filled? And, uh, I think the question remains out there. There are other you know, other countries are still giving donor funded money that’s still out there. Um, there’s still foundations out there, uh, giving grants for different types of programs. At the end of the day, uh, of course, the idea is the self reliance of countries. Right? And, uh, the idea is to to manage these things in a sustainable way where it’s not charity, but but basically empowerment. Right? And USAID was having that direction strategically for some years and trying to localize where it’s not the international organizations, the local ones who could do what those American organizations were doing. Right? That that shift was was happening. And then also kind of the USAID strategy was changing to kind of promote more self sustainability. But but now there’s less money out there from, you know, being received by the United Nations, World Health Organization, but some other governments are are are are kind of holding back. At the moment, I think there’s an overreliance on a much more limited pool. And so, hopefully, the innovation will come, and and we’ll think about new ways to do this. Maybe, you know, again, we have so much technology evolving the world, and these these technology and tools and knowledge can be helped towards innovation in this space and foreign assistance in in in development to get to give everyone a fair shot in the world.

[00:48:09 –> 00:48:23] Dr. Ravi Kumar: Well, very cool. That was an awesome conversation. I really appreciate everything you brought, uh, to the show today. If people wanna learn more about, uh, you know, USAID and international aid, what’s a good resource for them to go to?

[00:48:23 –> 00:49:28] Keith Hourihan: There’s a lot of well, this is the thing. There’s a lot of public information out there, um, you know, about USAID, what its programs were. You can you can look by country. You know, you all the inspector general reports are public. I would just ask people to be a little bit critical on headlines, you know, and and to kinda take things in a broader context. You know? If anyone wanted to reach out to me, I can happy to respond through email or or LinkedIn. You know, you can provide that information, Ravi. A lot of this information is out there. Just to keep things in context would be just my advice to your listeners, and, you know, and it’s it’s not as simple as things have been portrayed. And, uh, and a lot of good has been done. And, you know, and my fear, these programs that have been terminated, you know, I I hope some of these projections don’t come true, but they they think that terminating the programs that were terminated will you know, by 2030 will result in fourteen million preventable deaths. That’s a lot of people. You know? That’s that’s a lot of people. You know? Um, but I hope there’s some sort of replacement in innovation and that people do prioritize this. And, um, um, you know, it it it does help America, and I I agree with I definitely agree with the world.

[00:49:28 –> 00:49:30] Dr. Ravi Kumar: Well, thanks for coming on the show. Cheers.

[00:49:30 –> 00:49:32] Keith Hourihan: You bet. Nice to see you, Ravi. Bye. Alright.

[00:49:32 –> 00:50:00] Dr. Ravi Kumar: So I hope you enjoyed that as much as I did. I thought that was a fascinating look inside the inner workings of USAID. What it did, how it impacted the world, what types of fraud, waste, and abuse were actually present, how they were identified and mitigated, and how efficient and effective this organization was as a whole. One thing I wanna leave you with that we didn’t get into during the interview is that I think it’s worth comparing USAID to other areas of government spending because there’s this assumption that USAID was uniquely wasteful, and I don’t think the data supports that. Case in point, the Department of Defense just spent $93,400,000,000 in a single month. That was September 2025. That’s more than USAID’s entire annual budget four times over. It was a use it or lose it spending spree at the end of a fiscal year. In the last five working days alone, the Pentagon burned through 50,000,000,000 on contracts and grants. That’s more than the entire annual defense budget of Israel. Now I’m not saying that the Department of Defense doesn’t serve a vital purpose. Of course, it does. But if we’re gonna have a conversation about waste, fraud, and abuse as a justification for eliminating a program, then we need to apply that standard consistently. USAID’s total annual budget was about 23,000,000,000, roughly point 6% of the federal budget, and it was shut down for being wasteful. The Pentagon spent four times that amount in thirty days on things like lobster tails and office furniture. I bring this up because I think it’s important to compare outcomes, meaning, what did one set of dollars produce versus another? If you do that, then you might have a more balanced view of what’s justified and what’s not. So I hope I gave you the information you need to make a more informed judgment about USAID and the impact it had on this world. I may not have changed your mind with this information, and that’s totally fine, But I hope the information helps you keep a clear mind about this whole situation. So until next time, stay healthy, stay curious, and stay skeptical. Cheers.