(Adds State Department comment, paragraphs 7-9)
WASHINGTON, Oct 23 (Reuters) - Auditors and employees at the U.S. Agency for International Development say critical assessments of the agency's work in Egypt were removed from a report before it was released by the agency's inspector general, the Washington Post reported on Thursday.
The 21-page report was trimmed to nine pages and among the details cut was the payment of $4.6 million in what was described as bail money to the Egyptian government in 2012 to free 16 American non-government workers who had been arrested, the newspaper said.
The Americans were from organizations that USAID had hired to promote democratic programs in Egypt after President Hosni Mubarak was forced from office in 2011. The son of Ray LaHood, who was then U.S. transportation secretary, was among them.
The inspector general's office (OIG) of the USAID, the government agency that administers foreign civilian aid, put together a confidential draft audit of the agency's work in Egypt that the Post said questioned the wisdom of the program and whether it was legal to use government money to post the bail.
The final report released five months later had excised those findings and other criticisms, the newspaper said. It also cited USAID employees who said the agency's OIG, which is supposed to act as an internal watchdog, had become an in-house defender.
They said negative findings had been removed from audits between 2011 and 2013, although in some cases, those findings were included in confidential "management letters" and financial documents. A Post analysis showed that more than 400 negative references had been removed from USAID draft audits before their final versions were issued.
USAID did not have an immediate response to the Post's report. But a State Department spokeswoman said on Thursday the inspector general's draft report on USAID's programs in Egypt contained "inaccuracies" that were cleared up during a meeting between OIG staffers and then-U.S. Ambassador to Egypt Anne Patterson.
Spokeswoman Jen Psaki said it was standard practice to meet with OIG officials prior to a report being issued.
She said the bail money was paid by non-governmental organizations from money they received from the U.S. government for their Egyptian programs. Psaki said the U.S. government's connection to the bail money was made public in 2012.
The newspaper said several auditors and USAID employees felt they had been undermined and some had hired attorneys to file complaints or discrimination claims.
Michael G. Carroll had been serving as USAID's acting inspector general, but withdrew his nomination on Wednesday without giving specific reasons. He plans to remain with the agency as a deputy inspector general.
(Writing by Bill Trott; Additional reporting by Eric Beech; Editing by Gunna Dickson and Tom Brown)
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