ISLAMABAD: American tax payer money has been put at risk as a number of reconstruction and development projects in Afghanistan observe waste of money.
Among such scams is $100 million scam at American University of Afghanistan (AUAF) unearthed by Office of Inspector General (OIG) in its referral investigation.
OIG is watch dog for the agency United States Agency for International Development (USAID) that deals with development and reconstruction programs in the regions facing war, poverty and underdevelopment issues.
A senior official of OIG Ann Calvaresi Barr wrote a letter to Congressmen Welch and Walberg informing them about the real picture of waste of money and abuse of funds in development and reconstruction programs in Afghanistan funded by American financial resources, channeled through USAID.
On July 25, 2018, Congressmen Welch and Walberg along with the late Congressman Jones asked OIG to provide a better understanding of the full extent of waste, fraud, and abuse of American taxpayer dollars in U.S. reconstruction efforts in Afghanistan.
Since 2008—the year a comprehensive system for tracking investigative outcomes was established —OIG’s investigative efforts in Afghanistan produced $623 million in investigative savings and recoveries, OIG officials claim.
“The financial results, which total more than $1 billion in audit and investigative return, are partial accounting of the waste, fraud, and abuse we have uncovered in Afghanistan” OIG said.
In addition, USAID officials have acknowledged the need to address inefficient management of program practices, as well as failures to comply with standards. OIG had put forward 699 recommendations in this regard in its reports.
According to the official document of OIG drafted for US Congressmen, The US Government’s investments in the American University of Afghanistan (AUAF) which has exceeded $100 million over more than a decade, have been at the core of support for higher education in Afghanistan.
However, in July 2018 a joint investigative referral and raised serious doubts that AUAF possessed any the control and accountability system necessary to be entrusted with U.S. taxpayer money.
The referral documented AUAF’s failure to comply with accounting, timekeeping, and recordkeeping standards, as well as issues surrounding key personnel, conflicts of interest, and the governance of its board.
In the referral, OIG requested that USAID assess AUAF’s responsibility and whether it should be continue to receive U.S. Government funds.
Letter to US House of Representative’s Congressmen revealed that in response to the referral, USAID’s Suspending and Debarring Official executed a comprehensive administrative agreement with AUAF, wherein the university accepted and acknowledged the need to make improvements in the areas identified.
It also included requirement for an independent consultant to monitor and report on all of AUAF’s accountability efforts: creation of an audit, compliance, and risk management committee to ensure compliance with the terms and conditions of AUAF’s assistance agreements. And frequently report to USAID on the status of corrective actions taken.
A material breach of the terms of this administrative agreement would constitute immediate suspension or debarment of AUAF. In response to issues highlighted in the joint referral from OIG office and SIGAR, USAID added supplementary award conditions, including requiring a USAID official to serve as a voting member of AUAF’s board for the duration of USAID funding, mandating full cooperation with a USAID-designated financial overseer, and ensuring that AUAF demonstrates progress towards obtaining U.S. academic accreditation.
USAID oversight of public international organizations (PIOs) has also been a point of concern. A significant portion of USAID’s assistance in Afghanistan is implemented through PIOs. The Afghanistan Reconstruction Trust Fund (ARTF), which is administered by the World Bank, has received billions in USAID funding and currently accounts for more than 40 percent of USAID’s programming in Afghanistan.
However, as OIG reported in August 2017, ARTF activities and performance indicators were not aligned with USAID/Afghanistan’s development objectives, and unlike other donors, USAID had not conducted a formal evaluation of ARTF activities to determine overall performance or justify further funding.
Review of five USAID-funded ARTF projects revealed that USAID had contributed nearly $300 million without documenting the rationale for the amounts or timing of contributions for four of the five projects.
OIG in its letter revealed that watchdog also continue to identify oversight gaps that make USAID resources vulnerable to diversions to designated terrorist groups.
In a recent case in ongoing year 2019, the Islamic State of Iraq and Syria-Khorasan (ISIS-K) recruited a former USAID Foreign Service National employee to serve as a financial adviser and courier.
The former employee received USAID funds through a sub-recipient under the Assistance in Building Afghanistan by Developing Enterprises Project. As a result of OIG investigation, the associated sub-award was cancelled, resulting in $410,000 in savings, and the former employee was fined and sentenced to 13 years of imprisonment.
Similarly Investments in infrastructure projects, particularly investments channeled through Afghan Government institutions, have been subject to complex fraud schemes. In recent years, USAID has made many of its infrastructure investments through Afghanistan’s national utility, Da Afghanistan Breshna Sherkat (DABS).
After examining these investments, OIG worked with the Special Inspector General for Afghanistan Reconstruction (SIGAR) to identify kickback schemes, collusion, contract steering, and conflicts of interest.
In a case, employees of a USAID subcontractor conspired with the owners of a security company and steered a subcontract for physical security services to that company. In another case, bribes were paid to DABS’ chief executive officer with the aim of securing a lucrative contract, while the Minister of Economy and his son solicited bribes from the winner of the contract and others seeking USAID-funded contracts. As a result of this investigation, the CEOs of DABS and the Afghan Minister of Economy have been removed from their positions.
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