Overview:
Russia - the largest country on earth - emerged from a decade of post-Soviet economic and political turmoil to seek to reassert itself as a world power. Income from vast natural resources, above all oil and gas, helped Russia overcome the economic collapse of 1998, but the oil price slump of 2014 ended the long run of prosperity. The state-run gas monopoly Gazprom still supplies a large share of Europe's needs. Vladimir Putin - Russia's dominant political figure since 2000 - has enhanced his control over state institutions and the media - a process supplemented more recently by an emphasis on fierce nationalism and hostility to the West. Since his re-election against only token opposition, Russia's authorities have further tightened control over the media, thereby muffling an embryonic opposition movement. He has also and adopted a stridently nationalist course and appealed to memories of Soviet-era power to shore up domestic support. The president presents himself as a strong leader who took Russia out of the economic, social and political crisis of the 1990s, and defends Russia's national interests, particularly against alleged Western hostility. Opponents and critics at home and abroad accuse him of undermining Russia's institutions, halting democratic development, and entrenching rule by a narrow, wealthy elite.American Embassy Moscow:
The inspection took place in Moscow between May 13 and
June 27, 2013; in Yekaterinburg, between May 20 and 23, 2013; in St. Petersburg
May 28 and June 3, 2013; and in Vladivostok between May 28 and June 3, 2013. Our team leader was Ambassador Dick Hecklinger
who I had worked with in India. Arne B. Baker (deputy team leader) had his first major inspections as DTL. I
was with Arne on his first inspection in the winter of 2002 to Luanda. He’s
done very well having recently been promoted to Asistant Inspector General for
Inspections. A large team of 17 for a large and complex mission. Other inspectors included: Karen Davidson,
(MGMT) Darren T. Felsburg (DS), Martha Fikru (IT), Alcy R. Frelick (CONS),
Barry J. Langevin (DS), Kenneth M. Hillas (POL/ECON), James R. Pritchett,
Michael E. Parks, Charles A. Rowcliffe (DS), Terry L. Rusch (Foreign
Assistance), Scott N. Thayer (POL), Dennis Thatcher (IT), Steven J. White (MGMT), and Barbara A. Zigli (PD). Steven
was the management lead also in St. Petersburg and Karen covered the other Consulates. I worked with her to provide advice about
financial management activities to review in the Consulates. We stayed in the Lotte Hotel, which was a ten-minute walk to the Embassy and close to Kremlin, Red Square and the Arbat district where we went most nights for dinner.
The Ambassador was Michael McFaul a Stanford professor and Russia expert who had written "Russia's Unfinished Revolution". He was caught up in final stages of the failed Obama/Clinton "Russian Reset". He was also dealing with the Edward Snowden incident, the former CIA employee, who admitted that he was the source of leaks about the top-secret surveillance activities of the NSA and charged with espionage and fled to Moscow.
The management section had strong leadership from Mike Hoza who I had worked with in Paris when he was the HRO. Before leaving we had a secure conference call (DVC) with Mike to confirm arrangements for our team arrival and give him an overview of what we would be inspecting. Mike entered the Foreign Service as Regional Budget and Fiscal Officer in Cote de Ivoire, Ivory Coast. He had come a long way and from Moscow was nominated as Ambassador to Cameroon (2014-2017). His deputy was Paul Blankenship who was very helpful to me in inspecting the Employee Association. John Bredin was the FMO who had come a long way since he was in my first FMO class at FSI back in 1999. Thanks to Janet Buschel I was able to get a one-year bridge assignment at FSI to teach the FMO course after leaving FSC/Paris. Unbeknownst to me before arriving in Moscow was that a former employee of mine at FSC/Bangkok, Jim Basso, was there TDY covering for a vacant FMO position. It was too late to recuse myself from the inspection, but I didn’t let that previous relationship interfere with my work.
Given the Soviet government restrictions on limiting U.S. direct hire staffing the embassy maintained a major services contract with Pacific Architects and Engineers (PAE) who provided 35 staff at an annual cost of $2.5 million. The contractors including mainly maintenance staff for the chancery and residences as well as administrative staff in HR dedicated to American employee services and support.
Findings:
Overall, there were 55 formal and a like number of
informal recommendations in the final inspection report. The financial management office had recently
implemented a Department directive to transfer all travel voucher processing to
the Department’s Post Support Unit (PSU) and, given the high cost of voucher
processing in Moscow, the embassy was developing a plan to transfer additional payment
vouchers to the PSU. There were issues
with collecting outstanding debts from employees, particularly for residential
and cellphone expenses. In addition to
improper charges to the Bureau of Overseas Buildings Operations maintenance and
repair account, my colleague Karen Davidson found several “unauthorized commitments”
that did not have funds obligated for procurement of goods and services in
advance and consequently the embassy or consulate had to request specific ratification
to authorize or pay the consequences. Value-added
tax claims had not been submitted for the last 2 fiscal years by Consulate
General Vladivostok’s official purchases.
There were serious issues with Separation
of Duties at the three consulates general between the payment, property
management, and procurement functions and designate the financial management
offices at the consulates general as the designated billing offices for payment
of the consulates general invoices.
The main timekeeper liaison for U.S. Foreign Service staff
was an American and needed additional training.
The Retail Price Surveys for Cost of Living Allowance and lodging and
meals for Per Diem had not been submitted to update the rates of per diem and
the cost of living allowance. The
embassy did not charge other agencies for long-term temporary duty officers
assigned to post. Receipts for
Representation vouchers were not translated into English as required.
Among the informal recommendations we recommended that the embassy establish a tracking system and post policy on the acceptance and disposition of gifts presented to mission employees. Also, to increase employment opportunities for Family member employment, negotiate a bilateral work agreement with the Russian Government. The embassy’s arrangement for the Ambassador and DCM Official residence staffing was out of the ordinary in that the staff was hired under a local single contractor as opposed to individually by principal officer as is common practice. There was an issue with one of the DCM’s American staff and whether or not federal income tax had to be withheld. We recommended the embassy request a determination from the Internal Revenue Service. One interesting use of the tightly controlled Suspense Deposit Abroad account was to pay for the rental of two properties for two priests, which since not authorized, required a specific waiver from CGFS.
I
spent a lot of time inspecting the operations of the American Employee
Community Association (AECA), one of the largest overseas, which included a
fitness center, cafeteria, beauty salon, video club, dry cleaning facility,
transportation, and auto repair services, among others. In May 2010,
AECA’s general manager was forced to resign for improper activities, followed
by the resignation of two of its accountants. Financial problems persisted requiring an audit by the Department. Embassy employees were
dissatisfied with the cost of AECA services and question the policy of allowing
LE staff members to use the fitness center and facilities. These employees,
including some AECA board members, take issue with LE staff using the
facilities at all, while others view excluding LE staff from facilities as
detrimental. The OIG
team counseled embassy leadership on the need to address these issues quickly
and decisively for the sake of community morale, and suggested that a
working group be established to recommend a way forward to the Ambassador. They were delinquent in submitting its 2012
annual financial statement, management letter, and audit. The AECA account at
Raiffeisen Bank had a balance ruble equivalent balance to $10,000 which had been frozen for
over two years because AECA’s status as an instrumentality of the federal
government is not recognized by the Government of Russia. Lastly, some LE staff mechanics worked on embassy personnel personal
vehicles during embassy business hours without authorization to do
so and recommended the embassy request authorization to
engage in outside employment and prohibit repair activity during working hours.
Highlights:
The embassy fitness center included a squash court and Terry Rusch's husband Wayne also played. I had not played since Bangkok but gave Wayne a good match the several times we played.
Doris arrived a week after my arrival having survived the long flight over. I met her at the airport to take the train into Moscow. See the following blogs for more photos and narratives are visits to Moscow and St. Petersburg including Peterhof and Catherine the Great's Palaces.
Russia - Moscow | Doris and Bill (dorisandbilltraveladventures.blogspot.com)
Russia - St. Petersburg | Doris and Bill (dorisandbilltraveladventures.blogspot.com)
The OIG Team in front of St.Basil's in Red Square
