Government Fumbles Millions in Potential Katrina Donations

April 29, 2007 — -- As the victims of Hurricane Katrina continue their struggle to recover, they are now learning that millions of dollars in promised aid from foreign countries never reached them.

According to government documents obtained by Citizens for Responsibility and Ethics in Washington (CREW), only a fraction of the nearly $1 billion pledged by foreign governments was ever collected, amounting to $126 million. And according to a Washington Post report, only $40 million has been used for the victims.

The amount of offers that poured into the State Department after Katrina was unprecedented, and an internal report last year found that there were not procedures in place to handle international assistance.

"It was a new circumstance," Secretary of State Condoleezza Rice said on ABC News' This Week with George Stephanopoulos. "The United States is, frankly, not accustomed to receiving large-scale foreign assistance offers."

In many cases, countries were advised to donate the money to private organizations. Kuwait, for example, made the largest offer, consisting of $100 million in cash and $400 million in oil. They gave $25 million to the Bush-Katrina fund and $25 million to the American Red Cross. They plan to donate $50 million more, but it is unclear what will come of the $400 million oil pledge.

Melanie Sloan, director of CREW, said "the government was incompetent" in its handling of international assistance.

"They were … saying, 'Thanks, we do want all that money,' but then they had no mechanism in place at all to actually get the money from the countries who offered it to the people who needed it," she said.

In once instance, she noted, medical supplies from Italy had be thrown out because they had spoiled from not being properly stored. In another case, the United States initially accepted the offer of two Greek cruise ships to house displaced residents. But when technical issues delayed the ships, the United States rejected the offer.

Former New Orleans mayor and National Urban League president Marc Morial called the revelations, "stunning, especially since many of the nations with whom we have had historically great relations … offered to help the United States and its people. I think we should welcome that assistance."

Morial recently visited the devastated areas, and said the funds are still desperately needed.

"It's painful because the needs are still real," he said. "People are still living in trailers. If you go through the ninth ward, there are large stretches where, obviously, there's been no rebuilding."

Sen. Mary Landrieu, D-La., is demanding Congressional hearings on the matter in reaction to the Washington Post report. She released a statement, which reads, "Louisiana and the Gulf Coast deserve better. America deserves better. And while we did not seek handouts, a hand up was and remains sorely needed."

State Department officials told ABC News that since Katrina, procedures to deal with accepting foreign aid have been put in place.