An Afghan Scam

Billions lost to waste, fraud, and possible purchase of Iranian oil

February 13, 2013

Billions of U.S. taxpayer dollars are being wasted in Afghanistan on fruitless reconstruction projects that are awash in corruption and have little government oversight, according to the Special Inspector General for Afghanistan Reconstruction (SIGAR).

Additionally, lack of oversight may have led to the United States funding the purchase of Iranian oil in direct violation of sanctions against Iran.

As the U.S. begins to withdraw 34,000 troops from Afghanistan it continues to pump billion of dollars in direct assistance to the government, which is free to spend the money in any way it sees fit.

The lack of oversight has potentially allowed the Afghan government to spend millions of U.S. dollars purchasing Iranian oil. Such expenditures would constitute a violation of economic sanctions, according to lead inspector John Sopko, who told Congress Wednesday that the Obama administration has failed to account for how funds are spent.

The administration plans to increase spending in Afghanistan in the coming years as it reduces troop levels despite these concerns, a move that has sparked numerous concerns about security.

"We found out that Iranian oil is the cheapest oil," Sopko told the House Subcommittee on National Security, Homeland Defense, and Foreign Operations, Committee on Oversight and Government Reform. "Then we thought, ‘Hold it, we have no control … we have no idea where they’re [the Afghan government] buying the oil."

"I said the U.S. could be the biggest violator of the oil embargo," Sopko said. "We went out a took a look and found that no one knows because we weren’t keeping records."

The Department of Defense has failed to provide SIGAR with any records or documentation detailing how U.S. oil purchases in Afghanistan were made.

"When we turned the money over to the Afghan government to buy the oil we have no real controls in place," Sopko said, attributing the problem to government "incompetency."

Subcommittee Chairman Jason Chaffetz (R., Utah) lamented that the Obama administration could in fact "be one of the worst violators of the Iran sanctions act."

"We are throwing hundreds of millions of dollars into what is the most corrupt government on the planet," Chaffetz said. "Million of dollars is potentially going to the country of Iran to purchase this oil."

The U.S. has provided the Afghan government almost $50 billion since 2005 for training and security-related programs. It remains unclear if the money was actually spent on these measures.

Sopko testified that the Defense Department has been unable to provide him with a justification and detailed records for the multiple projects into which it has pumped money.

"A senior official told me in Afghanistan, ‘You’re never going to see those records,’" Sopko said, speculating that many records had either been destroyed or shredded.

Sopko also warned that Afghan security forces are woefully underprepared to take over once U.S. troops depart.

"We reported that the Afghan government will likely be incapable of fully sustaining Afghan National Security Forces facilities after the transition in 2014," Sopko said in his testimony. "We found that the Afghan National Security Forces lack personnel with the technical skills necessary to operate and maintain critical facilities and that the Afghan government had filled less than 40 percent of its authorized operation and maintenance positions."

The Afghan government has a crippling inability to root out corruption, Sopko said.

"Each year the U.S. spends billions of taxpayer dollars on direct assistance to the government of Afghanistan, often with little oversight as to how the money is allotted, distributed, and invested," Sopko said in his testimony.

"Afghanistan’s reputation for corruption is deep-rooted and widespread," he said.

"If the president’s [2013 budget] is approved, there will be about $30 billion left to be obligated or expended, and much of this money is slated to be spent on direct assistance programs," Sopko said.

Rep. John Tierney (D., Mass.) said the lack of "oversight and accountability" could "exacerbate the likelihood of mission failure" in Afghanistan.

"Afghanistan is turning into a huge black hole for the American taxpayer," Rep. John Mica (R., Fla.) said. "The theft, the overcharging, the waste, we have to somehow apply the breaks to this and apply some accountability."

"The days of the U.S. financing this fiasco must be brought to a halt," he said.

Sopko additionally explained that the Defense Department continues to dole out funds without having an "idea [of] how much money is needed for fuel, where it’s used or how much is lost."

"This lack of accountability increases the risk that U.S. funds and fuel will be stolen," Sopko said, explaining that there is already evidence this type of theft has taken place.

SIGAR will have even less of an ability to investigate fraud, waste, and corruption once U.S. forces leave Afghanistan, Sopko said.

"As our U.S. troops continue to withdraw, the amount of territory in Afghanistan that falls outside these security ‘bubbles’ will increase," he said.

"SIGAR’s ability (as well as the ability of implementing agencies) to conduct on-site inspections, audits, and investigations may be hindered in the very near future by security restrictions," Sopko said in his testimony. "U.S. and coalition forces have already pulled out of a number of locations in Afghanistan, leaving some of those places too dangerous for SIGAR or other agencies to visit."

"We are at a critical juncture in Afghanistan," Sopko said. "The success or failure of our entire 10 year engagement in Afghanistan is teetering" due to widespread corruption and a lack of accountability.