SIGAR

Afghanistan and the bottom line

More than $100 billion in U.S. taxpayer money and counting: how billions of dollars for Afghan reconstruction were mismanaged and how billions more will flow, even after U.S. troops are gone

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Department of Defense
Afghanistan
Congress

In northern Afghanistan, a prison in Baghlan province built to house nearly 500 inmates is already falling apart — before it has even opened. Costing more than $11 million in American taxpayer money, it was built on a seismic fault line, without any safeguards. The construction, warns an independent government watchdog, is so bad at least one building has already been demolished. In a letter Wednesday to the State Department, John F. Sopko, the special inspector general for Afghanistan reconstruction, warned that any further construction using unsteady materials could "threaten employee and prisoner safety and the security of the facility."

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A prison in Baghlan province was built on a seismic fault line with no safeguards.
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The alert from the office of the Special Inspector General of Afghanistan Reconstruction (SIGAR) is only the latest warning about questionable reconstruction spending in that country. Earlier this year, the agency issued a quarterly report detailing special projects funded by the State Department, the Defense Department and the U.S. Agency for International Development that it investigated and found to be incomplete, badly constructed or, in one case, not even wanted by the U.S. military. 

As the United States begins to wind down its 13-year occupation of Afghanistan, an accounting of where the money has gone and whether it has been spent in a meaningful and substantive way is in full swing. The U.S. government has spent more than $80 billion on Afghanistan's reconstruction since it invaded the country in 2001. Half of that has gone to setting up and maintaining the country's police and military. Another $20 billion remains in the coffers amid concerns from both SIGAR and observers in Congress over how the money will be spent, whether the projects can be verified and even whether they can be sustained in a degenerating security environment with fewer U.S. troops on the ground expected by the end of the year.

"If anything, I tell people reconstruction becomes more important from a policy point of view," said Sopko. "Our stated policy for being there is to make certain Afghanistan never becomes a place where it can be a base for terrorist attacks against the United States and its allies." The U.S. military will largely be gone by 2015, he said, "so we've got to get Afghanistan reconstruction right if we really want to make a difference in the future."

The cost of the U.S. war in Afghanistan has already topped $700 billion. Together with the expense of the invasion into Iraq and the subsequent occupation, the bill to American taxpayers stands at more than $1 trillion and counting. In 2011 the Commission on Wartime Spending estimated that as much as $60 billion of U.S. spending in Iraq and Afghanistan had been lost to waste and fraud.

It's not even certain the incoming Afghan government will sign a bilateral security agreement after the April elections. If it does, a residual U.S. military force will remain. If the agreement isn't signed, even that smaller presence isn't guaranteed. And with opposition from the Taliban and with other militant groups waiting to exploit security vulnerabilities, the sustainability of million-dollar projects continues to present major challenges for the U.S. government.

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"Every time we do either a special project or an audit or an investigation, we uncover incredible amounts of waste and abuse and mismanagement," said Gene Aloise, the deputy inspector general. And "the problems we've seen in terms of contract management are the same problems I've found here doing oversight work in the U.S. ... They're just on steroids in Afghanistan."

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Deputy inspector general Gene Aloise on an inspection.
SIGAR

Aloise and other SIGAR officials are sifting their way through audits of projects that are suspected of being mismanaged. Since its creation in 2009, SIGAR, which investigates U.S.-funded programs and operations for Afghanistan's reconstruction, has also recommended policies to prevent waste and corruption and has informed the government about any problems with the programs. The agency's findings have sparked congressional oversight and led to the conviction of people charged with bribery and fraud.

SIGAR officials largely agree on the cause of many of the problems: unleashing billions of dollars into a war-riven country without the financial structure to absorb this scale of funding. Afghanistan, which barely had roads, electricity or running water when the terror attacks of Sept. 11, 2001, occurred, found itself suddenly drowning in money following the fall of the Taliban. Without a dependable banking system, people relied on cold, hard cash to pay for services, employ people and buy goods of every kind. The money was carried around in "bricks" — $100 notes in stacks of 1,000 each, totaling $100,000 per packet. Customs officers at the Kabul airport would watch as bundles of currency, estimated at around $1 billion a year, would fly out of the country in suitcases toted by well-dressed Afghan travelers. President Hamid Karzai famously referred to the stacks of CIA money dropped off at his office as "petty cash," which he would use to pay off warlords and other Afghan leaders. In 2011 a U.S. congressional report found that Afghans themselves thought that foreign funds had come into the country too quickly to be efficiently managed. 

"The country couldn't absorb it, and when you put too much money into a country too fast, what happens to it? It gets siphoned off into people's pockets," Aloise said.

Pledging tens of millions of dollars to single projects could lead to confusion, mismanagement and corruption. In a society where kickbacks are an expected part of the culture, accounting for bribes became a line item in budgeting. And throughout the years of spending and investment in programs ranging from education and health to the judiciary, there was never a centralized system established to account for everything that was spent. SIGAR official Mia Bonarski is trying to build one.

"It's incredibly hard!" she said, speaking in her office in Crystal City, Va. "As a citizen you think, 'Well, if I bought a pair of shoes, I would know about that pair of shoes until I got rid of that pair of shoes,' and so what we get a lot of is, 'Yeah, we bought a ton of shoes for Afghanistan — he bought red ones, and some other folks bought a white pair back in the day.' It's not centralized."

Some of the projects appear random and, in some cases, even unwanted. For example, a $34 million headquarters was constructed for the U.S. military at Camp Leatherneck, which the senior officers on the ground said they did not want because the units it was being built for were moving out of the area and no one was coming to replace them. Nearly half a billion dollars was spent on Italian-made G222 turbo-prop airplanes, 16 of which sit on the tarmac in Kabul, collecting dust. 

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Grates have not been placed over these open culverts, making it easy for militants to place IEDs under the road.
SIGAR

A culvert protection system — gratings placed over culverts under roads to prevent militants from burying roadside bombs underneath the pipes, for which a $1 million contract was issued — was never installed. In a speech in May 2013, Sopko said that allowed insurgents to place bombs “along a critical stretch of highway in Ghazni province and led to the death of two American soldiers.” At least one Afghan contractor has been charged with fraud and negligent homicide. U.S. military officials in Afghanistan said they were instituting better guidelines and were working to locate the grates.

For Sopko, the culvert findings were an example of the corollary damage fraud can do. And there are other examples: “Schools that are melting, falling down, built and just being used for goat pens,” he said. “Horrible clinics where some kid had her teeth pulled by some rusty wrench. Newborns washed with untreated water." 

The Afghan contractor was paid for his work on the clinic he was referring to, Sopko said. In a recent report, the U.S. military said it was unable to reinspect the facility because of security threats.

There’s a familiar narrative among the investigating officials at the special inspector’s offices in Virginia.

“I got a call from John Sopko when he was appointed the IG, and he asked me to be his deputy,” recalled Aloise, who at the time was a director at the Government Accountability Office, working on the nuclear security program.

Doug Domin, SIGAR’s assistant inspector general for investigations, is a former FBI agent who first worked with Sopko more than 30 years ago investigating Italian organized crime in Cleveland. Most of his shop is staffed by former federal-law enforcement agents. The work, he said, isn’t dissimilar.

“We operate just like federal law enforcement anywhere in the U.S.,” he said, “so informants, undercover operations, different electronic ways we can pick up information, exchanges with our partners in Afghanistan.” SIGAR has set up a hotline in Afghanistan for people to report mismanagement, as well as an email address: sigar.hotline@mail.mil. The line is staffed by Afghans who communicate in Pashto, Dari and English.

General counsel John Arlington worked with Sopko at a Washington think tank before they both went to Capitol Hill to work on oversight for the House Energy and Commerce Committee.

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SIGAR general counsel John Arlington.
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Arlington was chief counsel for the Committee on Oversight and Government Reform when the chairman of Toyota was brought in to testify over faulty accelerators, an investigation that resulted in a $1 billion fine for the company. "Technically, I don't have subpoena power in Japan," Arlington said with a laugh. 

Nor does he have it in Afghanistan, but that did not prevent him from issuing an arrest warrant for a corrupt businessman in Kabul who made off with more than $70 million of American taxpayer money through kickbacks, bribery and fraud. “SIGAR doesn’t have jurisdiction over banks in Afghanistan,” Arlington said, but it “got an arrest warrant issued for those assets.”

What followed was a wild goose chase to try to trap the money. Under Afghan law, the warrant went to the country’s attorney general, who Arlington says is rumored to be “the single most corrupt member of the Afghan government.” The attorney general sat on the warrant, and by the time he issued it, most of the $70 million had been transferred to banks in Dubai and elsewhere.

"When he did that, it made it easier,” Arlington says. “All those banks are well known, large international banks [that] have correspondent relationships with banks in the U.S., and under international law and U.S. law we can serve arrest warrants and seize the money. Which we did.” The Afghan businessman, Hikmatullah Shadman, told Afghan media he was detained by U.S. forces under accusations of helping the Taliban as well as of corruption. The Wall Street Journal reported that “two people purporting to work for U.S. Special Operations Command attempted to intervene on Mr. Shadman’s behalf.” SIGAR officials are still investigating the case.

For many of SIGAR’s officials, this, as Sopko put it, is their “last hurrah.”

“I’m outta here after this,” Sopko said. “I don’t expect to get another federal job. I want to make a difference. I hired a lot of people here who gave up good-paying jobs. I want to try to change … how we work as a government, because the government is broken.”

SIGAR will continue its mandate as long as the spending for reconstruction in Afghanistan remains above $250 million. It’s expected to be much more than that till at least 2019.

Some contractors — Afghan as well as Western — whom SIGAR has found to be negligent or guilty of bribery have been imprisoned. U.S. troops deployed to Afghanistan and caught in bribery schemes have been fined and arrested. 

The pugnacious Sopko has long had a reputation for publicly calling out government agencies as well as the State and Defense departments for questionable spending in Afghanistan. He has published his correspondence with the State and Defense Departments and USAID on SIGAR’s website, and publicized the reports SIGAR issues and every alert his office has received signaling some form of waste or fraud in Afghanistan reconstruction. In March 2013 he wrote all three departments asking them to list their most and least successful reconstruction projects as a way to measure progress.

The responses point to general metrics rather than actual programs and projects. “According to the Afghanistan Mortality Survey 2010, Afghanistan has seen a rise in life expectancy from 44 years to more than 60, or an increase of 15-20 years, in the last decade,” USAID stated in its letter.

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John Sopko, special inspector general for Afghanistan reconstruction, arrives in Herat, August 2012.
SIGAR

“That’s baloney,” Sopko responded. “They don’t know what the beginning date is, because they don’t collect data. They don’t collect birth and death rates.”

USAID, a frequent target of his criticism, says the World Health Organization reported those numbers in 2004. In an interview, Kathy Campbell, USAID’s deputy head of the Afghanistan program, insisted the mortality rate and the growth in education are some of the biggest achievements so far, part of the $12 billion the agency invested in programs in the country as part of the reconstruction fund.

“USAID has built over 600 schools, we’ve trained more than 54,000 teachers, and we’ve provided community-based education programs for 42,000 children,” she said. “In 2002, there were 900,000 boys in school and almost no girls. Now there’s 8 million. A little more than a third of them are girls. All those statistics imply more things to do, but there’s been huge progress.”

Campbell said the Afghan economy has grown by $2 billion a year, primarily from increased revenue, particularly in tax collection. However, about half of that is believed to have come from Afghan contractors supporting U.S. operations, which means the U.S. could be paying tax on its own foreign aid. 

At the same time, Afghanistan cannot operate without foreign donors. The $2 billion its economy takes in each year, though a huge leap from previous years, isn’t enough to pay its government employees. It cannot cover the costs of the Afghan security forces, which means that even after the remaining $20 billion in reconstruction is spent, the U.S. and other donor countries will continue to give Afghanistan at least $5 billion a year to pay for its security.

Anthony Cordesman, strategy expert at the Center for Strategic and International Studies, wrote recently of a “systematic lack of professionalism and integrity in the economic reporting and claims of progress by agencies like USAID and international bodies like the World Bank.” He claimed they do not justify their sources or credibility or “provide an estimate of uncertainty. Instead, they 'cherry pick' figures to justify their funding and plants.”

In a recent report to Congress, SIGAR indicated that Afghanistan's GDP growth — which has increased substantially due to high foreign investment — was going into negative figures over the uncertain political future and the worrisome security environment.

At a recent hearing on the way forward in Afghanistan, Sen. Claire McCaskill asked Gen. Joseph Dunford how the United States will be able to oversee projects it is spending money on when troops and officials will be able to reach only about 21 percent of the country.

“We’ll have 32 projects ongoing in 2015,” Dunford responded, and “all but five of those projects will fall in areas where we will be able to provide proper oversight.”

Yet SIGAR estimates that 52 projects will extend beyond the December 2014 deadline, many of which are located outside these “bubble” areas. Out of the $20 billion that remains there is also the expected $5 billion or so per year that will continue to come in to fund the Afghan security forces and will not only pay salaries but also cover operations, maintenance, vehicles and weapons, and will be disbursed across the country. SIGAR also estimates that U.S. officials will only have limited accessibility to provide oversight. Relying on Afghan verification may create its own challenges as well.

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One building marked for security forces was used as a chicken coop.
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Dunford’s statement did not address how the United States can verify whether U.S.-financed structures are up to standard, or whether they’re being used at all — for their intended purpose or not. An inspection of Camp Monitor, a $3.9 million base for the Afghan National Army, found that it wasn't being used due to lack of a dining facility. A $7.3 million border-police headquarters in Kunduz province, in northern Afghanistan, was built to house 175 people, but an inspection found only 12 people living there. The facility appeared to be mainly unused during an inspection in January last year. A $19 million border-police base in Nangarhar province was being used as a chicken coop, among other things. The Department of Defense did not respond to requests for comment. 

One of the key challenges is verifying purchases and maintenance of projects. Campbell at USAID said the agency has developed a “multitiered oversight project” that would allow it to make these checks. “You’re trying to make sure you have different ways of triangulating what you’re hearing or seeing,” she said. “We’re either going to get public-opinion surveys, talk to government ministries, all those different sources, and make sure that what we’re hearing is the same from all these angles.”

USAID is seeking bids on the $170 million five-year contract that would be part of this verification process. Campbell expressed optimism that it will work. “If we don’t, we’ll stop it. But we’re pretty confident we’ll be able to do this, and we have been doing it in Afghanistan for a number of years.”

Despite all the reports, publicity and assurances that many of these missteps will be corrected going forward, Sopko is skeptical.

“We’re sort of the blinking amber light saying, ‘Caution, caution. Don’t do this again.’ But the American way is we sort of ignore it.”