Aug 20, 2020 - Technology

Scoop: Open Technology Fund sues administration for $20M in missing funds

Illustration of a hand holding a gavel that is about to slam down on a computer mouse.

Illustration: Aïda Amer/Axios

The Open Technology Fund (OTF) is suing the U.S. Agency for Global Media (USAGM) over roughly $20 million in congressionally appropriated funds it says the government is refusing to provide, Axios has learned.

Why it matters: There's bipartisan uproar from Congress over the funding that OTF says is being withheld. The USAGM, whose new CEO is seeking to replace OTF leaders with Trump loyalists, is required by law to provide the funding via federal grants, but it has given shifting rationales for why the money has been held up.

The big picture: The OTF is a government-supported nonprofit focused on advancing internet freedom. Without funds, it can't support work by activist journalists in places like Hong Kong and Belarus, where authorities are increasingly cracking down on internet freedom.

Details: The lawsuit, set to be filed Thursday in federal claims court, alleges the USAGM breached its contracts with the OTF in three ways:

  1. It withheld about $9.4 million in funding that it owes under OTF’s 2020 grant agreement.
  2. It withheld an additional $9.8 million in prior OTF program grants held by Radio Free Asia, OTF’s former parent organization.
  3. A USAGM senior adviser "engaged in transparently pretextual efforts to force OTF into breaching its grant agreement."

The lawsuit also says two chief financial officers at the USAGM flagged that it was illegal to withhold the funds, but the USAGM tried to move forward with the plan anyway.

  • The first CFO, Grant Turner, a longtime career civil servant, was ordered by a USAGM adviser last week to “cease and desist” transferring a portion of the promised OTF funding. Turner also protested the unlawful transfer of
    those OTF funds to another account.
  • Turner said, according to the lawsuit, that the USAGM's efforts are a “thin cover” for the “operational destruction” of the OTF.
  • The following day, Turner’s replacement, acting CFO John Barkhamer, also refused to comply with the order to transfer funds into another account, according to the lawsuit. He resigned in protest and reported USAGM leadership's conduct to the inspector general for the agency.

Be smart: The issue of funding the OTF is particularly sensitive, given that the USAGM announced on Tuesday that it plans to create and fund its own Office of Internet Freedom. Sources fear the agency is withholding the OTF's funds in order to shift them to its new agency, which is illegal if done without congressional approval.

Read the lawsuit.

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