In this case filed under the False Claims Act, the Zionist Advocacy Center alleged that Norwegian People’s Aid (NPA) defrauded USAID when it signed its anti-terrorism grant certification. Although the NPA’s contract with USAID was for a humanitarian program in South Sudan, the lawsuit concerned its democracy training for youth in Gaza and landmine clearing programs in Iran that included participants from U.S. terrorist lists. The case was unsealed in 2017 and the U.S. Department of Justice intervened in the case the following year. Later that year, NPA entered into a settlement agreement with the U.S. government.
A federal False Claims Act (FCA) case was filed against Norwegian People’s Aid (NPA) by the Zionist Advocacy Center (TZAC) on June 24, 2015 in the U.S. District Court for the Southern District of New York. It claimed that NPA defrauded USAID by signing grant certifications that it did not provide material support to listed terrorist organizations. NPA’s USAID grant was for a humanitarian program in South Sudan. It used other funds to provide democracy training for youth in Gaza and landmine clearing programs in Iran that included participants from listed organizations. TZAC argued, and the U.S. government agreed, that the certification applied to all NPA’s programs, regardless of funding source. Citing the cost of litigation in a foreign country, on March 28, 2018 the Norway-based organization entered into a pre-trial settlement agreement that required it to pay $2.025 to the U.S. government and make changes to its internal compliance procedures. Because the case settled prior to trial there was no legal determination as to whether the either of projects constituted material support.
Behind the Scenes Process
False Claims Act Basics
The False Claims Act is a U.S. law that imposes liability on those that knowingly defraud government programs. Private parties, called “relators,” can bring these suits on the government’s behalf. Complaints filed under the FCA are automatically sealed for 60 days while the government investigates the claims and decides whether or not they merit further action. During this time the defendant (and the public) has no notice that a case has been filed. The court can extend the sealing period for months or even years.
Once the government has investigated the claims, it may choose to:
- join the lawsuit,
- ask that the case be dismissed or
- allow the complaining party to proceed on their own.
For more information see our Issue Brief: False Claims Act Lawsuits: What Nonprofits Need to Know
Although the suit was filed in 2015, NPA did not know about it until September 2017 when USAID’s Office of Inspector General (OIG) told it an investigation was underway. This is because FCA cases are automatically sealed under procedures intended to protect whistleblowers. Earlier, in February 2017, NPA had responded to a request from the OIG about its projects in the Middle East. When told about the investigation five months later NPA hired a U.S. lawyer, David Schertler of Schertler & Onorato in Washington, DC and sought a settlement. The Department of Justice (DOJ) made confidentiality about the case a condition of settlement discussions.
DOJ officially intervened in the case on March 29, 2018. Its complaint joined TZAC’s argument that NPA’s certification was false and induced USAID to make a grant it otherwise would not have, and that its claims for payment of the grant for the South Sudan program were presented under false pretenses.
USAID’s Anti-terrorism Certification and Material Support
Under the terms of its grant agreement with USAID for the program in South Sudan, NPA submitted standard certifications between 2012 and 2106 that said “to the best of its knowledge, it did not provide, within the previous ten years, and will take all reasonable steps to ensure that it does not and will not knowingly provide, material support or resources” to any person or group on the U.S. terrorist list (Specially Designated Nationals, or SDN). It also certified that it would verify that any individuals or entities it assisted do not appear on the SDN list. (See page 6 of the settlement agreement.)
The definition of prohibited “material support” of terrorism in the Antiterrorism and Effective Death Penalty Act is broader than Norwegian law, barring provision of training and services to listed groups or persons. There is no requirement that the support be intended to support terrorism and the humanitarian exemption is limited to religious materials and medicine.
TZAC and DOJ Allegations Regarding NPA’s Programs in Gaza and Iran
In Gaza, NPA partnered with the Institute for Development Studies from 2012-16 in the “Youth of Today, Leaders of Tomorrow” program, funded by the Norwegian Agency for Development Cooperation (NORAD). Youth ages 15-28 were trained in democracy skills such as organizing, advocacy and conflict resolution, as well as human rights and responsible business conduct. TZAC’s complaint said that program included representatives associated with Hamas, the Popular Front for the Liberation of Palestine (PFLP) and the Democratic Front for the Liberation of Palestine (DFLP), entities that are on the SDN list of prohibited parties.
In addition, the Youth of Today project led workshops in Gaza intended to bridge the trust gap between youth and political parties and promote political participation. The program included Hamas, the PFLP and DFLP, which are all on the SDN list. A press release from the U.S. Attorney’s office said the workshops enabled the listed groups to “alter their behavior in order to become more attractive to youth and, thereby, benefit from increased youth support.”
The landmine removal program in Iran was undertaken with a contract with Norsk Hydro, an energy company, to clear mines as part of an oil development project. NPA planned to use the proceeds for humanitarian programs. Because NPA interacted with Iranian government officials to carry out the program and Iran is on the U.S. state sponsors of terrorism list, the U.S. considered the program to be material support, making NPA’s USAID certification false.
The complaint from TZAC included additional allegations not cited in DOJ’s complaint or the settlement agreement, as well as political statements unrelated to the legal issues. One allegation cited NPA’s funding the Palestinian Center for Democracy and Conflict Resolution (PDCDR) to conduct training for police officers regarding domestic violence and another program (no allegation of NPA funding) that trained corrections officers in conflict resolution. TZAC argued that because law enforcement is part of the Gaza government, which is controlled by Hamas, the police and corrections officers are agents of Hamas and training them constitutes material support of terrorism. The TZAC complaint also cited PDCDR and the Palestine Nongovernmental Organizations Network (PNGO) as supporters of terrorism because of conference speakers associated with listed groups but did not allege any NPA involvement in those events. With the settlement, these claims were effectively dismissed.
NPA issued a statement on the settlement that noted NPA’s “positive long-term relationship with USAID and other U.S. funding agencies since the 1990s” and explained that any false certifications were “done unintentionally” as it interpreted it to only apply to USAID funds. It went to say that:
“Although we disagreed on the fairness of the claim, NPA had accepted paying the settlement to reach closure. Due to estimated costs, resources and time necessary to take this case to trial, we have concluded that the best decision for us is to agree on the settlement. In this way we can focus on our mission of making the world a safer and more just place.”
NPA’s also released fact sheets about the programs in Gaza and Iran. The description of the Youth of Today Leaders of Tomorrow program in Gaza said it was advertised to the general public, “with registration open to all.” It goes on to say NPA “partners do not require course participants or those taking part in similar activities to reveal whom they vote for.” NPA’s description of its landmine program in Iran noted that it conducts landmine clearing in more than 20 countries, “often in cooperation with the U.S. Department of State …”
The Settlement Agreement and Closing the Case
In addition to paying the damages, in the Stipulation and Order of Settlement and Dismissal NPA agreed to revise its internal policies to comply with U.S. law, provide training on compliance with U.S. grant terms to its managers and administrative staff and submit to stringent external audits and periodic reviews on its compliance.
That does not preclude further U.S. legal action against NPA or the individuals associated with the programs in Gaza and Iran. The settlement agreement explicitly leaves open the possibility of future action by the IRS, criminal prosecution, conduct not covered by the agreement, suspension and debarment from eligibility to receive government grants and contracts or liability of individuals. (p. 9) NPA also agreed to cooperate with any U.S. investigation of those not covered by the agreement, “consistent with NPA’s obligations under Norwegian law.” It agreed to encourage cooperation of its officers, directors and employees in such investigations and furnish non-privileged documents that may be requested. (p.5-6)
NPA said its costs in defending the action were over $250,000. The law allows the private citizen to collect part of any damages paid to the government. In this case, Abrams collected $346,500.