The Fiscal Times, December 27, 2010

The US Government Can’t Account For Billions Spent In Afghanistan

The money flows from Washington to Afghanistan, with little oversight and accountability, and at every step along the way someone else takes a cut

By David Francis

KANDAHAR CITY -- In its bid to win the hearts and minds of Afghanistan’s teeming population, the United States has spent more than $55 billion to rebuild and bolster the war-ravaged country.

That money was meant to cover everything from the construction of government buildings and economic development projects to the salaries of U.S. government employees working closely with Afghans.

Yet no one can say with any authority or precision how that money was spent and who profited from it. Most of the funds were funneled to a vast array of U.S. and foreign contractors. But according to a recent audit by the Special Inspector General for Afghanistan Reconstruction (SIGAR), there is no way of knowing whether the money went for the intended purposes.

“The audit shows that navigating the confusing labyrinth of government contracting is difficult, at best,” SIGAR said in releasing the audit. “USAID, the State Department and the Pentagon are unable to readily report on how much money they spend on contracting for reconstruction activities in Afghanistan.”

One large part of the problem is that the United States is not demanding accountability for outgoing funds from U.S. companies which have little incentive to fully disclose where the U.S. money is going. Add to this the many Afghan companies that have minimal accounting capabilities and you have a recipe for a massive misappropriation of funds. The money flows from Washington to Afghanistan, with little oversight and accountability, and at every step along the way someone else takes a cut.

“There’s no mechanism to track where this money is going,” said Scott Amey, general counsel for the Project on Government Oversight, an independent, nonprofit group that investigates government corruption. “Security problems persist and this money doesn’t seem to be accomplishing a real mission.”

As staggering amounts of U.S. tax dollars virtually vanish down a black hole, many of the government projects designed to foster improved relations with the Afghan people and undermine the appeal of the Taliban have fallen far behind schedule or simply aren’t completed. In October, SIGAR found that six Afghan National Police buildings were so poorly built that they are unusable. They were constructed at a cost of $5 million by Basirat Construction, an Afghan construction company.

Arnold Fields, special inspector general for Afghanistan reconstruction, said the cost of U.S. assistance funding diverted or squandered since 2002 could reach "well into the millions, if not billions, of dollars."
"There are no controls in place sufficient enough to ensure taxpayers' money is used for the (intended) purpose," said Fields, whose independent office was created in 2008 to energize oversight of what U.S. auditors have described as a giant, poorly coordinated aid effort that has sunk some $56 billion into Afghanistan since 2002.
Reuters, Dec. 20, 2010

Another report found that the United States has spent nearly $200 million on Afghan security service buildings that cannot be used. SIGAR also found that the U.S. Agency for International Development (USAID) couldn’t account for nearly $18 billion that was paid to some 7,000 U.S. and Afghan contractors for development projects. Afghan contractors often pay kickbacks to local warlords, like Ahmad Wali Karzai, the president’s brother and the so-called “King of Kandahar.” Their actions often undermine the work of the coalition.

Botched construction projects aren’t the only U.S. failures. Earlier this summer, coalition forces cleared Malajat, a longstanding Taliban stronghold in the eastern flatlands just outside of Kandahar City. But after they were forced out in September, many of the residents of Malajat remained sympathetic to the Taliban’s cause.

In an effort to project provincial and national authority and strengthen Afghan infrastructure, Canada’s Commander's Emergency Response Program and the USAID ordered the construction of four government buildings in Malajat where local residents could meet with government officials to air grievances. The complex was meant to symbolically supplant Taliban power and influence.

In accordance with U.S. General David Petraeus’ plan to expand contracting awards to Afghan firms, Afghan companies were hired late in September. The contractors then hired Afghan subcontractors to begin construction in the shadow of a fortress built by Alexander the Great around 330 B.C.

Since then, however, little work has been done and the project has fallen behind schedule. As of early November, Afghans earning about a dollar a day had only dug holes for the foundation of the building complex, which was optimistically scheduled to be completed by July.

Work Habits, Cultural Mandates

Most Afghans do little work in the winter months. Despite numerous inquiries, U.S. and Canadian officials could not estimate the cost of the project. Gen. Ben Hodges, a former top U.S. commander in Kandahar, told The Fiscal Times that the success of the Kandahar offensive will depend in part on the United States and its allies building Afghan economic, political and security infrastructure over the winter. Projects like the Malajat government building are essential to keeping the Taliban out once the fighting season resumes next spring, especially as the U.S. strategy review has shown tenuous progress here. But there is little confidence among soldiers and development workers that this project will be completed in time.

“We can pour as much money as we want into this and it’s not getting done by the spring,” said an official with the Kandahar Provincial Reconstruction Team (KPRT), a civilian and Canadian-led organization jointly operated with the United States. “These people [Afghan contractors] have no accountability.” Thomas Ford, a spokesman for the KPRT project, said he could not reveal the identities of Afghan contractors involved because of security concerns. He also said he did “not have the exact cost figures in front of [him]”and declined to provide them. Canadian forces, along with KPRT, are scheduled to leave next summer. The United States is expected to assume sole responsibility for their projects.

Petraeus, commander of the NATO International Security Assistance Force (ISAF) and U.S. Forces Afghanistan, acknowledged in a September memorandum that the contracting process in Afghanistan has been deeply flawed for years and needed to be changed if the Afghan war is to be won.

“With proper oversight, contracting can spur economic development and support the Afghan government and NATO's campaign objectives," wrote Petraeus. "If, however, we spend large quantities of international contracting funds quickly and with insufficient oversight, it is likely that some of those funds will unintentionally fuel corruption, finance insurgent organizations, strengthen criminal patronage networks and undermine our efforts in Afghanistan."

At Kandahar Airfield, a base the size of London’s Heathrow Airport located just outside of Kandahar City, contractors provide transportation, food service, sanitation and construction, among other services. According to a July 2010 Congressional Research Service report, as of last March private contractors made up 57 percent of all personnel in Afghanistan employed by the Department of Defense. "This apparently [represents] the highest recorded percentage of contractors used by DOD in any conflict in the history of the United States," the study found.

According to the report, there were 68,197 Pentagon contractors in Afghanistan, compared with 52,300 uniformed U.S. personnel. Of the Pentagon contractors, 9,300 were U.S. citizens, 52,000 were Afghan, and 7,000 were third-country nationals. There has been a 300 percent increase in contractors since 2007, according to the Defense Contract Management Agency.

Outside of U.S. bases, Afghan firms are primarily employed due to security concerns in places like Kandahar City. As with the Malajat buildings, locals are hired for construction projects that U.S. military commanders have said are key to demonstrating Kabul’s central authority, especially in provinces reluctant to recognize Afghan President Harmid Karzai as their ruler. Afghan contractors have also been hired to help train Afghan police.

As a result of U.S. pressure, the Afghan government recently arrested American Roy Carver, CEO of Red Sea Engineers and Constructors, a company that has received $500 million in Pentagon contracts to construct buildings at U.S. bases. Carver is charged with not paying his Afghan subcontractors.

Amey, of the Project on Government Oversight, said the situation in Afghanistan mirrors the U.S. experience in Iraq: Security concerns made it difficult for foreign contractors to work on the battlefield, forcing reliance on local contractors with little accountability. It’s an endless cycle of frustration and failure.

“It seems as if there wasn’t a lessons- learned approach carrying into Afghanistan, which is not to waste federal taxpayer dollars on contracting projects like this,” Amey said in an interview with The Fiscal Times. “We can build an embassy and things can work around that, but what are we doing around the rest of country? If our money is going to security and the rest is going to impractical projects that aren’t being completed, then the government has to reevaluate the model.”

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