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#USAID, Ukraine's orphans and 'Marshall Plan'

This is the full text of the letter sent to USAID and the Council on Foreign Relations, where P-CED founder Terry Hallman raises the issue of R.I.C.O activities including a trade in body parts.  In the notes he published before his death, he refers to UNICEF being wilfully blind and USAID wanting nothing to do with the issues raised. A corporate US interest might well explain their reluctance.   

Terry Hallman

Kharkiv, Ukraine

Tel: +



USAID Ukraine

Kyiv, Ukraine


Eurasia Foundation Ukraine

Kyiv, Ukraine


Re: Genesis


February 17, 2008


Honorable Ladies and Gentlemen:


I am writing to you to request your support in advancing critical relief for Ukrainian citizens – with first focus on children in state care, the worst result of Ukraine’s political machinations. This is mentioned in some detail in “A Marshall Plan for Ukraine” referenced at the end of this document. I will fill in some gaps here.


I am very encouraged to read Henrietta Fore’s remarks “Foreign Assistance: An Agenda for Reform” at Center for Global Development in DC on February 1. For example:


“We will devote more of our management, technical expertise and financing resources to coordinating international development    to avert duplication of effort, break down silos, and build partnerships that accelerate the pace of progress.”


Let me talk briefly about one issue in particular that will illustrate this as perhaps nothing else can. This won’t necessarily read politely, as it concerns matters and issues that are not at all suited for polite discussion. That is the matter of tens of thousands of children tossed aside in state child “care” institutions, most particularly psychoneurological (PN) “care” facilities.


Whether by intent or default, rural PN facilities have become money farms and money laundries having almost nothing to do with child care. Kids are thrown in at age 4, often with barbaric and draconian misdiagnoses, and essentially left to die from neglect. They are not there for medical help. They are there to justify government budget expenditures out into the middle of nowhere in places most people haven’t reason to know about and thus no reason to ask or care about. When folks do know about it, they almost without exception do not dare to speak openly about it. These facilities have been extremely difficult to research. University professors, social protection officers, pediatricians, judges, lawyers, doctors and ordinary citizens who have some knowledge of PNs all understand full well that PNs are hands-off and people do NOT ask questions about them. Here’s why.


These institutions can be billed any vaguely believable amount of money for any operating costs supplied by state and regional public budgets. For example, one institute is charged $20,000 for heating for one month – for a building one-third the size of my apartment block. For comparison, my entire apartment block near central Kharkiv can be heated for ten percent of that amount, about $2000 per month, using natural gas even after brisk gas price hikes. Rural facilities are usually off the gas pipes and rely on coal and oil. Even allowing that coal and oil might somehow be three times more costly than gas per BTU, that still comes to only $2000 a month for heating a building a third the size of where I live. The result is that $20,000 gets paid in a PN billing scheme for an actual cost of no more than $2000, per one month. That breaks loose $18,000 a month in black money from public budget. That’s one bill, in one PN, in one month. Multiply this by a dozens of PNs (precise number heavily obfuscated), and you begin to see the scope of only one operation. Multiply all of it by five, and you have about equivalent cash value stateside. And, we begin to understand that this is an organized crime operation. Mafia, in other words. Practically everyone has been afraid to even talk about it, never mind try and change anything. Local judiciary have considered it to be impossible to fix the problem, because of mafia. Not that judiciary and others who know approve in any way. Like most other people, they have families to think about, and that’s that. It takes considerable time before anyone will open to say anything at all, even in hushed whispers. Children are left in conditions of neglect and medical ignorance, without benefit of even the most basic modern medical interventions that could reduce their suffering and give them a life reflecting human compassion that the vast majority of Ukrainian citizens want for all of Ukraine’s children, in my experience. Whether these kids live or die is of little, if any, concern to mafia. Many kids die from sheer human neglect. Staffers cannot possibly provide the level of nurture needed, because there’s not enough staff. There’s not enough staff because taking care of kids isn’t even the point. The main function is extraction of money from state and regional budgets. Regardless of how and why this came about, whether or not this arrangement was intentional from the start or emerged out of Ukraine’s twisted, tragic modern history, that is what is going on.


Or, that is what has been going on. I explored this “issue” very publicly in mid-2006. That was the “Death Camps” series, referenced at the end of this document. In early March of last year, government capitulated and cut to the chase. Without admitting any wrongdoing by anyone, government agreed that there is a problem and it would be resolved by opening more than 400 new treatment centers for psychoneurologically (mentally) handicapped children. (Still waiting.) Which, in turn, would wipe out all invisible, formerly top-secret, PN facilities operating as government money laundries, along with lucrative black money revenue streams.


Behind the scenes, I had already written and submitted the “Marshall Plan” into friendly official – but duly skeptical – channels. I made a deal, that I would recommend Ukraine for a joint project with the US side on condition that Kyiv approved the US side’s involvement and took the initiative to get started. I made clear that decisions regarding project approval would be up to others. In the interest of participative development, I told the Ukrainian side that they would have to take initiative and start the project themselves. If they did that, then I would proceed as described. To demonstrate that initiative, Ukraine would have to unilaterally agree and undertake the most critical factor first – abandoned children in psychoneurological facilities. Final revision of circulation document was submitted into Ukrainian channels in mid-February last year. Kyiv announced their decision about two weeks later to open at their own expense more than 400 new treatment facilities (reference at end.) In mid-March, I forwarded a copy to Ambassador Taylor with recommendation to proceed if the US side found interest in doing so. Appropriate negotiations could only be between US government officials and Kyiv government officials. Kyiv’s renegade (my opinion) parliament was dissolved two weeks later leaving Ukraine’s overall government status up in the air until December.


That didn’t prevent ongoing research, just in case. Ukrainians managed to maneuver into an impossible-to-access PN facility by bringing in clowns, entertainment, parties, toys, supplies – and cameras to record the gaiety. I had been unable to provide in my articles any mention of specific locations and photo evidence due to having been sworn to secrecy by sources. Sources wanted me to be able to know about what is going on as fully as possible, including photo evidence. But they had to speak off the record, in strict confidence, because the children in question had been threatened if their locations and/or photos were exposed. The Death Camps series was quietly translated and distributed through citizens’ action network channels, the same network that sprang the Orange Revolution. The surreptitious effort by certain Ukrainians in getting in and getting evidence went under radar and quietly confirmed everything, in March, June and December of last year (references at end.) For most of that time, there was no one in government to work with to move things forward because no one was entirely sure who government was.


Now there is a government. And a government who I think is proving to be quite adamant towards helping all of Ukraine’s children and citizens, the forgotten ones first. But government alone cannot do this, nor are citizens inclined to trust government after prior government have been directly involved in funding what are known as organized crime operations with children as bait. Present government remains under siege of criminal elements whose primary function is to undermine government as necessary in order to neutralize any and all efforts impinging on a multitude of long-held racketeer influenced corrupt organizations. NGOs have to take the lead, if only because government is rather tenuous and fragile, and could change or disappear at any time. NGOs have more staying power, focus – and determination. We don’t usually disappear these days, even if and when government does.


As a by-product, this will shut down one of the most invisible, most untouchable, and possibly blackest, organized crime operations in Ukraine. There is bound to be foot-dragging within Ukraine’s institutionalized mafia representatives in parliament and ministries. We (network) are not interested in having smoke blown up our rear ends. We are interested in getting this done, for the very simple reason that children and people are suffering and we know how to stop it.


This is an emergency situation with a metaphorical house afire. We need funding/strategic partners, ASAP or sooner.



Although the PN reality is perhaps the absolute worst part of all things in Ukraine stemming from RICO, it is far from the only part in the same vein. There is also the much more visible matter of kids in “regular” orphanages and kids living on the streets and in sewers. Orphanages have been another money-maker via selling “top” kids to foreign adoptions. Kids with lesser market value (over seven years old and/or serious health issues) were shunted to lesser quality, out-of-the-way orphanages. Kids with no market value were tossed aside completely, i.e., PN facilities a.k.a. Death Camps, for Children. President Yushchenko rightfully suspended foreign adoptions for a period of time because orphanages were normally operated more like livestock farms with product for sale. It’s mostly not the staff who are any sort of problem in these orphanages, although redundant independent evidence strongly indicates that sometimes arrangements have somehow been made for adults to come in and “play” with children of their choosing during the night. More often it comes down to even the best, most sincere staff having had their hands tied regarding what little they could do for the children assigned to them, because so much money was displaced as to leave comparative crumbs for caring for the kids. Once orphanage children reach the age of seventeen, they’re booted out into the world with hardly any preparation to deal with it. If kids are attractive enough, they can be (and are) taken into prostitution rings and rented out for sex work. If they got a bit of training at night in their orphanage, they are better prepared for sex work. (In Kharkiv, militia runs that operation. For Donetsk and Donbass, it’s Donetsk mafia. Variations on the same theme play out across Ukraine.) Street kids are street kids mainly because they consider living in orphanages until seventeen worse than living on the streets and sleeping in sewers. Of course they also have access to street drugs to take the edge off their miseries. That coupled with unprotected sex and inevitable prostitution produces an HIV/AIDS factory. In Ukraine at this moment, HIV is a pandemic and getting worse.


Then there’s another kids issue, that of baby parts. Allegations against maternity hospital number six here in Kharkiv, for one example I happen to know due to close proximity, have been investigated and confirmed by BBC and rapporteurs from Parliamentary Assembly of Council of Europe regarding killing healthy babies in hospital at birth and disappearing body parts into an international black market. At least one mass grave was located and disinterred, showing babies chopped to pieces with brains, internal organs, and apparently bone marrow having been removed. This was exposed by way of extraordinary bravery on the part of one young lady affiliated with Kharkiv Human Rights Group (KHPG). Why there is no criminal case about this, I do not know. Ask Kyiv, and observe what happens. BBC and PACE have all evidence.


We (Ukraine citizens network) work together but separately. Most of us in the network understand things well enough to know that if one person isn’t quite enough for a target, then two together double the odds. We know each other, but not in such a way as to increase danger to each other, if you understand. Thus, each of us inhabit our own silo – not due to lack of organization, but due to lack of resources to be able to band together more effectively and safely.


Which is why I am now turning to you. I need grants sufficient to provide the beginning of foundation funding. With that, and with the publicity and communications machinery we have in place via P-CED, Maidan, KHPG, ForUa, and U-CAN among others, we can get this done. Immediately, I/we need $25,000 to go ahead and fully activate PN rescue and recovery operations, which is in turn part of a larger network ready-to-go as soon as funding is available. No one person knows all network nodes, but nodes and persons understand each other is around, focused on the same objectives and ready to move forward. I find myself in default position of lead organizer due to two main factors. One is the catalyst effect of the Death Camps series in 2006, which put me at epicenter. Two is my US citizenship. Whacking me would make a much more difficult mess than whacking a Ukrainian citizen, not least due to the nature of the work I’m doing in childcare reform and poverty relief according to and protected by Ukraine’s own laws – most especially the human rights section (section two) of Ukraine’s own Constitution. If I get whacked, there is only one organization in Ukraine with motive and hutzpa to take that chance: “UkrCosaNostra.” That would be the folks who stand to lose lucrative black cash flows. To counter publicly, it has been suggested that their activities are sufficiently grand and reprehensible as to bypass Ukrainian machinations altogether in favor of international law via European Court of Human Rights, and possibly even the Hague for crimes against humanity. Much of the opposition noise in Ukraine’s Verkhovna Rada at the moment is mafia hired hands scrambling to protect various organized crime rackets and income. Transparency, free media, and anti-corruption efforts of any kind are their worst enemies. We are merely emblematic of their worst fears.


Additionally, I/we need a three million dollar grant to start a foundation to provide for our “Genesis” network. Government has at least agreed to provide 400+ new physical facilities for PN children. We (network) will manage relocating kids and organizing care and medical services to be sure it gets done and doesn’t end up as an empty black promise aimed at offsetting pressure against mafia operations.. Funding will be placed in a hryvnia deposit account yielding around 14% interest. We will operate on the interest and thus be self-sustaining from the start, given such relatively generous returns on a deposit account. A deposit account pays no interest until the end of the first year. Allowing three hundred thousand for year one reduces the total deposit to $2.7 million to produce operating budget from there on, yielding about $375,000 per year. We will operate on 10% return rather than 14%, holding the balance in reserve to leave seed money to grow and produce increasing reserve funding. We will thus be able to respond to immediate needs on the ground anywhere in Ukraine within a matter of days if not hours. Working with US funding should reduce the chances of a given bank of deposit finding a document deficiency (wrong color ink , missing official stamp, document suddenly disappeared, etc.) and thus weaseling out of payments. I fully anticipate that there will be some degree of attacks by certain administrative resources, as some have had me under attack and threat of prison since last spring. Attacks by government administrative resources are old news in Ukraine. There will surely be attempts to loot funding, not least via “requests” for private payments (bribes) to get stamps and documents along the way and quite possibly stronger insistence (extortion) if the first effort fails. Suffice to say without going into too much detail just now that any such attempts are fairly likely to have a surprising outcome for anyone making such an attempt. Kharkiv, for example, has some interesting countermeasures in place who would dearly love to eat unsuspecting miscreant officials. Still, attempts will be made and I/we have to be prepared to counter fast and directly. That means lawyers as immediate defense turning to offense, going on the attack in court, and very possibly even in an honest court.


The network is ready, including key players in Ukraine’s upper echelons aiming to protect and defend. I will work directly with other network partners in Ukraine and provide them with what they need. That network exists under the watchful eye of specific people in Ukraine whose job it is to know such things and to protect Ukrainian citizens as well as legal foreigners going out of their way to protect Ukraine’s people and legally insisting that Ukraine’s own laws be obeyed by more than mere foreigners. I have been assured that this particular governmental organization are my/our guardian angels. The network now needs cash and resources to help move things along. That is the P-CED Foundation that I am asking you to help get started.


MCC might still have some remnants of $45 million over two fiscal years aimed specifically at anti-corruption in Ukraine. That’s my home turf, although that was not necessarily my interest or intent. Fulfilling this particular phase of things constitutes a full frontal assault on organized crime without being a full frontal assault on organized crime. Not to put too fine a point on it. It is not my purpose to identify and dismantle organized crime rings. However, when organized crime, “UkrCosaNostra”, are the cause of specific humanitarian problems I am working on – childcare reform and poverty relief – that is a different story and they become fair game by their own insistence. They won’t like it, and don’t like it already. Noise, smoke, and mirrors flare up all the way to parliament reflecting mafia losing long-held cash streams, one of which runs at the mere cost of a few thousand kids whom they unilaterally considered to be not worth a damn anyway. This is not the only black cash stream likely to be arrested under the current and apparently very progressive government. Noise about this is mixed with similar noise about similar losses in other venues.


Finally, these words, again from H. Fore’s remarks to GDC:


We are creating, and becoming part of, a Global Development Commons: A community of continuous and real time information exchange, coordination, partnership and action between public and private donors, agencies, NGOs, host governments and civil society   all in constant collaboration. A Global Development Commons gives people in the developing world the tools they need to lead their own development.


To support this ideal of a more cohesive development network, we must enlist technology. I've directed USAID to assemble an information platform    one that is pragmatic and affordable, leverages what's already up and running    to connect people on the ground with partners and solutions that can help us all work smarter.


There is increasing congruence and synchronicity in play now, to the point of attunement. What Ms. Fore is describing has been central to P-CED’s main message, advocacy and activity for a decade. That, and helping establish an alternative form of capitalism, where profits and/or aid money are put to use in investment vehicles with the singular purpose of helping the world’s poorest and most vulnerable people. The paper on which that is based is in Clinton’s library, dated September 16, 1996, author yours’ truly. That is reflected in P-CED’s home page and history section. In fact, you might notice a number of ideas and writings there that have now made their way into the mainstream of economics and aid thinking, how to make business and aid work smarter and more effectively in relieving poverty and the misery and risks that result. Bill Gates – as hard-edged a capitalist as has ever existed – reiterated the same things in Wall Street Journal a couple of weeks ago (ref below.) It sounds as though Ms. Fore’s remarks very much reflect this sort of thinking. Now it’s time to move forward and get it done.


Thank you for your time and attention to this. I and others will look forward to hearing from you. I hope we continue to realize ever more fully that outside the box and inside the box have only a box in the way. We outside the box know quite a bit of what’s going on, many times in exquisite detail, perhaps in ways that those inside the box can’t quite as easily access if at all. We are grossly underfunded in favor of missiles, bombs, and ordnance, which is about 100% backwards. Now, with even the US Pentagon stating that they’ve learned their lesson in Iraq and realize (so says top US general in Iraq ten days or so ago) that winning hearts and minds is the best option, I and others shall continue to think positive and look for aid budgets and funding spigots to be opened much more for people and NGOs in silos, foxholes and trenches, insisting on better than ordnance, and who understand things and how to fix them. We can do that. We can even do it cost-effectively and with far better efficiency than the ordnance route. Welcome to our brave new world. Except it’s not so new: learn to love and respect each other first, especially the weakest, most defenseless, most voiceless among us, then figure out the rest. There aren’t other more important things to do first. This message has been around for at least two thousand years. How difficult is it for us to understand?




Terry E. Hallman

Founder, People-Centered Economic Development

Kharkiv, Ukraine



US Ambassador William Taylor

US Senate Committee on Foreign Relations

U-CAN (Ukraine - Citizens Action Network)







Ukraine: Death Camps, for Children. Terry Hallman, Maidan, April - July 2006.


Ukraine to see creation of over 400 rehab centers for mentally disabled children. Government of Ukraine, March 5, 2007.


A photoreport: “From Heart to Heart – 2”: a trip to the rural orphanages of Zaporozhye region. March 14, 2007.


Photo reporting: "From Heart To Heart   3rd trip to Kalinovka and Molochansk orphanages. June 8, 2007.


Microeconomic Development and Social Enterprise in Ukraine: A “Marshall Plan” for Ukraine – Part One. Terry Hallman, August 6, 2007.



Microeconomic Development and Social Enterprise in Ukraine: A “Marshall Plan” for Ukraine – Part Two. Terry Hallman, August 9, 2007.



Photo Report: Visit of Volunteers to the Home for Disabled Children at Kalinovka, 29 December 2007 and 22 January 2008.


Bill Gates Issues Call For Kinder Capitalism. Robert Guth, Wall Street Journal, January 24, 2008, page A1.


Remarks by Henrietta H. Fore, Administrator, USAID and Director of U.S. Foreign Assistance. Center for Global Development, February 1, 2008.