Sat, Aug 20, 2011 - Page 7 News List

US loses $360 million to Afghani ‘malign actors’

OUTSOURCING:A former chairman of the House oversight panel that investigated the lost money said that the US must stop the diversion of taxpayer dollars to the enemy

AP, Washington

After examining hundreds of combat support and reconstruction contracts in Afghanistan, the US military estimates US$360 million has ended up in the hands of people the US-led coalition has spent nearly a decade battling: the Taliban, criminals and power brokers with ties to both.

The losses underscore the challenges the US and its international partners face in overcoming corruption in Afghanistan. A central part of US President Barack Obama’s strategy has been to award US-financed contracts to Afghan businesses to help improve quality of life and stoke the country’s economy.

However, a special task force assembled by General David Petraeus that began its investigation last year, revealed that the coalition had little insight into the connections many Afghan companies and their vast network of subcontractors had with insurgents and criminals — groups military officials call “malign actors.”

In a murky process known as “reverse money laundering,” payments from the US pass through companies hired by the military for transportation, construction, power projects, fuel and other services to businesses and individuals with ties to the insurgency or criminal networks, according to -interviews and task force documents.

“Funds begin as clean monies,” according to one document, then “either through direct payments or through the flow of funds in the subcontractor network, the monies become tainted.”

The conclusions reached by Task Force 2010 represent the most definitive assessment of how US military spending and aid to Afghanistan has been diverted to the enemy or stolen. Only a small percentage of the US$360 million has been garnered by the Taliban and insurgent groups, a senior US military official in Kabul said. The bulk of the money was lost to profiteering, bribery and extortion by criminals and power brokers, said the official, who declined to provide a specific breakdown.

Overall, US$360 million represents a fraction of the US$31 billion in active US contracts that the task force reviewed, but insurgents rely on crude weaponry and requires little money to operate. Moreover, the illicit gains buttress what the International Crisis Group, a Brussels-based think tank, referred to in a June report as a “nexus between criminal enterprises, insurgent networks and corrupt political elites” in Afghanistan.

More than half the losses flowed through a large transportation contract called Host Nation Trucking, the official said. Eight companies served as prime contractors and hired a web of nearly three dozen subcontractors for vehicles and convoy security to ship huge amounts of food, water, fuel and ammunition to UStroops stationed at bases across Afghanistan.

The US Department of Defense announced on Monday that it had selected 20 separate contractors for a new transportation contract potentially worth US$983.5 million to replace Host Nation Trucking. Officials said the new arrangement would reduce the reliance on subcontractors and diminish the risk of money being lost.

The Pentagon did not provide the names of the 20 companies picked due to worries that larger contractors who weren’t selected could try to coerce them into a takeover, the senior defense official said. None of the eight prime contractors affiliated with the Host Nation Trucking contract are part of the new arrangement, the official added.

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