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Rats and audits: A tale of dissatisfaction

Pacific Reflections By Gabriel McCoard

I once quipped that an island doomsday apocalyptic nightmare that would cause me to force my way onto a plane and get off the island as quickly as possible – consequences be dammed – would be an outbreak of rabies.

Consider the scenario: An island filled with hordes of dogs that rank somewhere between discarded pets and full-blown feral creatures. A diseased rat scurries from the hold of a Kiowa Line vessel and bites a marauding mongrel. The ensuing nervous system paralysis spreads like a West Maui wildfire as dogs bite each other and their human tormentors, aided by the close quarters and communal living common to the islands, killing in a manner both slow and excruciating (at least according to Gizmodo; neither the World Health Organization nor the US Centers for Disease Control opted to use adjectives, but noted fatality as almost a certainty once symptoms begin.)

Given the near-total lack of medical care for humans, never mind that veterinary care is barely a concept, the scenario was not so far-fetched.

Until I discovered that rats don’t carry rabies. My brain must have been addled by the rats running across my bed at night.

A recent report about federal financial tracking of the Compact of Free Association funds has left me similarly addled.

The Government Accountability Office, the congressional watchdog that audits the use of U.S. taxpayer funds, reported that several U.S. agencies, notably the Departments of the Interior and Health and Human Services, had been less than careful with how they oversaw American money in the Pacific. That report from September with the scintillating title “Agencies Should Enhance Procedures to Address Millions of Dollars in Questionable Spending,” speaks for itself. Well, not really.

Briefly put, under the Compacts of Free Association, the three freely associated states— Palau, the Federated States of Micronesia and the Marshall Islands— receive various forms of financial assistance from the U.S.


 I will scream about this until I pass out from lack of oxygen: the compacts are not being renegotiated. The compacts are permanent agreements and remain in effect until and unless one of the countries in the agreement begins the withdrawal and termination process.

Individual U.S. laws that authorized and appropriated COFA spending will expire, as will specific funding agreements between the U.S. and respective nations.

This is not a hair-splitting distinction but fundamental to diplomacy. The compacts themselves are not subject to renegotiation. The financial assistance provided under the compacts is what is up for renegotiation.

When Congress appropriates money for COFA funding, which largely comes in the form of grants, the U.S. Treasury first doles out this money to certain government agencies to disperse. In the case of COFA aid, DOI and HHS are responsible for dispersing these grants to the respective COFA republic, or, in the preferred language of such, for administering the grant program.

Enter GAO, a semi-independent agency of Congress with the mandate to perform audits of U.S.- funded spending, which is to say the dispersal of tax dollars.

Due to the amounts in question, each of the receiving nations is responsible for providing an audit of the use of such funds to the U.S. agency providing it. This is known as a “single audit.” The agency, DOI or HHS, has six months to issue a “management decision” for each finding that the audit raised. Mostly these have to do with questionable spending under the grant, and the agency’s management decision must address those questions.


What GAO found was that both HHS and DOI could not show that they resolved several long-standing concerns from the audits, particularly in the Marshall Islands and the FSM. In the case of HHS, it did not respond to questionable spending in the Marshall Islands dating to 2010. These costs amounted to over $600,000. As to the DOI, there were questioned costs in the Marshall Islands and the FSM dating to 2008. Despite attestations to GAO, they could not substantiate that they had in fact developed procedures to resolve audit concerns.

GAO recommended a series of process changes for the issuing of management decisions. Much like a legal research memo about a deliberately ambiguous statute whose conclusion is, “it could use clarification,” GAO’s response was bureaucratic, tepid and anticlimactic.

My only surprise was that the disputed amounts were so low. The fact that the audits raised suspicions and that those suspicions were ignored for well over a decade, was not a shock.


As it turns out, what one should focus on the most is usually right in front of you.

Why did it take so long for anyone to notice these concerns, or has ignored your own information simply been built into the mutual expectations of bilateral relationships?

Hawaii’s own experts, after all, warned of wildfire dangers long before this year’s hellscape.

As for my rabid horror-fantasy, the real health risks in the islands are much more obvious. As recent articles from Palau show, almost a quarter of the population live with diabetes. Most of these people are undiagnosed and untreated.

My only surprise was that the percentage was so low.

Gabriel McCoard is an attorney who previously worked in Palau and Chuuk State. Send feedback to

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