Open Technology Fund Files Suit at the Court of Federal Claims: Seeks $20 Million in Internet Freedom Funding Unjustifiably Withheld (Press Release)

Last updated: 2020-08-24T17:44:18.672Z
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WASHINGTON — The Open Technology Fund (OTF), an independent, non-profit grantee of the US Agency for Global Media (USAGM), has filed a complaint at the Court of Federal Claims alleging multiple breaches of contract by USAGM and seeking roughly $20 million in Internet Freedom funding that has been unjustifiably withheld. The lawsuit was filed in direct response to new USAGM CEO Michael Pack’s intervention to stop the disbursing of Congressionally allocated funds to the DC-based non-profit. Pack’s intervention has drawn bipartisan criticism from Congress and runs counter to both USAGM’s pre-existing contractual obligations and the Congressional mandate to disburse these funds to OTF.

A key funder in the global fight for internet freedom, OTF has been under attack from USAGM since Pack was confirmed as CEO in early June. Pack dismissed the heads of Radio Free Asia, Middle East Broadcasting, Radio Free Europe/Radio Liberty, and OTF directly after assuming control of the agency. He then attempted to unilaterally disband OTF’s Board of Directors and fire the organization’s President and acting CEO. In response, OTF and its Board of Directors filed suit in the District Court of the District of Columbia seeking injunctive relief to nullify Pack’s unlawful actions. The District of Columbia’s Attorney General also filed suit alleging that Pack’s actions violated DC corporate law.

Although the DC Circuit Court of Appeals has temporarily halted Pack’s attempted purge of OTF’s officers and directors, and enjoined Pack from taking further action against them, the non-profit remains in dire financial straits due to Pack’s continued refusal to transfer contractually obligated funding. Pack’s actions have caused massive disruptions to the organization and OTF was forced to issue stop-work orders to the vast majority of its projects in August. Given USAGM’s continuing efforts to undermine OTF through the withholding of contractually and Congressionally mandated funding, OTF filed suit on August 20 at the Court of Federal Claims, which has exclusive jurisdiction over the contract claims at issue.

The complaint lays out three specific breach of contract allegations against USAGM:

  1. USAGM has withheld $9.4 million in funding owed under OTF’s 2020 Grant Agreement, which “the agency promised OTF and falsey assured both Congress and a federal court that it would provide”;
  2. USAGM has withheld $9.8 million in prior OTF program grants held by Radio Free Asia, OTF’s former parent organization, “in violation of its agreement with OTF to transfer those funds”; and,
  3. USAGM violated its duty of good faith and fair dealing by engaging in “transparently pretextual efforts to force OTF into breaching its grant agreement—repeatedly insisting, for example, that OTF comply with burdensome disclosure requests under impossible timeframes.”

OTF is asking the Court of Federal Claims to award it all funds due under the terms of its 2020 Grant Agreement with USAGM, all funds due under the terms of its agreement with USAGM to transfer funds held by Radio Free Asia, and all reasonable costs, expenses, and attorney’s fees.

Of note, last week’s filing also brings to light serious concerns regarding the actions of Pack’s Senior Advisor, Mora Namdar. According to the complaint, Namdar actively intervened to prevent USAGM’s own CFO, Grant Turner, from transferring funds to OTF. Instead, Namdar attempted to appropriate $2.9 million of OTF’s allocated grant funds held by Radio Free Asia without notifying Turner, Congress, or the Office of Management and Budget. When Turner learned of Namdar’s actions, he informed her that he believed them to be unlawful. The following day, Pack put Turner on administrative leave and revoked his security clearance. Turner’s subsequent replacement as CFO, John Barkhammer, raised the exact same concerns but was still ordered to complete the transfer. Instead, Barkhammer chose to resign and report the improper conduct to the Office of the Inspector General.

The mismanagement and ongoing wrongful actions by senior leadership at USAGM has drawn the ire of politicians on both sides of the aisle.

“We are extremely concerned by the state of affairs at USAGM,” Rep. Michael McCaul (R-TX), lead Republican on the Foreign Affairs Committee, and Sen. Marsha Blackburn (R-TN), a member of the Senate Armed Services Committee, said in a statement last week. “With dangerous totalitarian regimes on the rise, including the CCP, it is essential that USAGM programs & that of their grantees like the Open Technology Fund, are up and running, and performing their vital work in accordance with their preexisting agreement with USAGM. We have given USAGM multiple opportunities to answer pertinent questions about both personnel & programming issues, but have been met with continued resistance and, at times, misleading statements, from their leadership.”

Pack is set to testify before the House Foreign Affairs Committee on September 24, 2020. Committee Chairman Eliot L. Engel (D-NY) has already noted that he will have “much to answer for.”