El Salvador

Transfers of Military Assistance Fuels Gao ID: NSIAD-89-186 August 29, 1989

Pursuant to a congressional request, GAO reviewed the Department of State's efforts to investigate: (1) the propriety of fuel purchases with U.S. military assistance program (MAP) funds for El Salvador and fuel transfers to aircrews involved in a supply operation supporting the Nicaraguan Contras; and (2) whether any U.S. personnel approved or were aware of the transfers.

GAO found that: (1) El Salvador transferred MAP-funded fuel to third parties without U.S. government consent; (2) the transfers involved 61,107 gallons of aviation gas and commercial jet fuel sold to aircrews and pilots involved in the Nicaraguan supply operation and an unknown quantity of fuel provided to private and foreign government parties; (3) the transfers violated sales agreements between the United States and El Salvador and required reporting to Congress under the Arms Export Control Act; (4) the State investigation focused only on aviation gas because there were no allegations of any other type of fuel transfers; (5) although State did not question anyone with direct knowledge of the refuelling activities and concluded that no substantial diversion had occurred, it could have determined that the transfers had occurred if it had expanded its inquiry; (6) penalties for third-party transfers were not applicable to the unauthorized MAP-funded fuel transfers, since the Salvadoran government received MAP grant funds, rather than credits; (7) from 1985 to 1988, El Salvador transferred about 942,509 gallons of MAP-funded commercial jet fuel to the U.S government for refuelling U.S. military aircraft and received about $691,732 in direct payments; and (8) due to concern about the propriety of direct payments to El Salvador and lack of U.S. control over the use of the funds, implementation of a new credit system resulted in the return of sales proceeds to a holding account for El Salvador in the Foreign Military Sales (FMS) trust fund.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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