Pentagon cannot account for $1.3 billion sent to US commanders in Afghanistan

The Pentagon is unable to account for $1.3 billion in funds sent to commanders in Afghanistan through the years 2004 to 2014 for reconstruction projects.

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These funds were sent to military commanders in order to bypass bureaucracy to speed up construction of badly needed infrastructure, including roads, bridges, schools, hospitals, and water treatment facilities. The $1.3 billion for which there is no account represents about 60 percent of funds allocated to the program. About 70 percent of the $100 billion the US has spent during its 13.5 years in aid to Afghanistan has gone through the Pentagon with the remainder distributed through the US Agency for International Development(USAID) and other civilian departments.

John Sopko, the US special investigator general for Afghan reconstruction (SIGAR), spent a year studying the $2.26 billion spent on the Commander's Emergency Response Program(CERP). Sopko's report said:"In reviewing this data, SIGAR found that the Department of Defense could only provide financial information relating to the disbursement of funds for CERP projects totaling $890 million (40 percent) of the approximately $2.2 billion in obligated funds at that time,"

The report analyzed the expenditures under 20 categories such as, transportation, water and sanitation, health care, education, etc. However, there was an added category called "unknown" that contained 5,163 projects while all the other categories together came only to 4,494 projects. The Pentagon so far has not commented on the SIGAR findings.

US Central Command, the overseer of military operations in Afghanistan as well as many other countries said that some of the money could have been redirected to other more urgent military requirements such as counterinsurgency. In a Feb. 25 email to Sopko's office Central Command said: “Although the (inspector general’s) report is technically accurate, it did not discuss the counterinsurgency strategies in relationship to CERP, In addition (to) the 20 uses of CERP funds, it was also used as a tool for counterinsurgency.”This comment hardly explains why money set aside for emergency reconstruction had to be used for counter insurgency. The bulk of the approximately $800 billion spent on the Afghan war was for military needs. "Counterinsurgency" is just not one of the 20 defined categories under this emergency response program.

Almost half of the funds under the CERP program were spent in just two provinces, Kandahar, and Helmand two areas with the most Taliban activities and bloodiest battles. Almost a third of the funds, $289 million were spent in Kandahar. Since being established in 2008, SIGAR has issued dozens of reports documenting how billions in aid has been lost through waste or corruption. One report found that tens of thousands of surplus AK-47 assault weapons and other weapons shipped to Afghanistan had simply disappeared. Another report found that the US continued to give Afghan security forces a planned $1.4 billion for gasoline purchases even though evidence showed that some of the money had been siphoned off for other unexplained uses.

New Ukrainian finance minister an American and president of USAID project

Ukrainian President Poroshenko with John Kerry

Natalie Jaresko was granted Ukrainian citizenship just this week. Jaresko was president and CEO of Western NIS Enterprise Fund(WNISEF) a project funded by the U.S. Agency for International Development (USAID).

WNISEF was a fund of $150 million originally used to spur business activity and investment in the Ukraine. The website of the fund is here but is apparently undergoing renovations! The website is run by Horizon Capital of which Jaresko is the cofounder and managing partner. Horizon Capital manages WNISEF's investments and collected fees for doing so that have exceeded $1 million in recent years according to the 2012 report. The 2012 report shows that not only were there substantial management fees paid to Horizon Capital but that there were other "insider" dealings: In the 2012 report, the section on “related party transactions” covered some two pages and included not only the management fees to Jaresko’s Horizon Capital ($1,037,603 in 2011 and $1,023,689 in 2012) but also WNISEF’s co-investments in projects with the Emerging Europe Growth Fund [EEGF], where Jaresko was founding partner and chief executive officer. Jaresko’s Horizon Capital also managed EEGF.

 The report also lists several other deals involving WNISEF and EEGF. This all took place during the period before president Yanukovych was overthrown. His regime was plagued by charges of corruption. The 2012 report of WNISEF shows that the value of the Fund was then under $100 million. US taxpayers had already lost one third of their investment.

 Jaresko's ex-husband Ihor Figlius has made allegations of improper dealings by Jaresko but his allegations stopped after a court order to stop his whistleblowing at the insistence of Jaresko.The details of the dispute are related in an article by John Helmer here: Exactly what happened when Jaresko left the State Department to go into her government-paid business in Ukraine has been spelled out by her ex-husband in papers filed in the Chancery Court of Delaware in 2012 and 2013. …Without Figlus and without the US Government, Jaresko would not have had an investment business in Ukraine. The money to finance the business, and their partnership stakes, turns out to have been loaned to Figlus and Jaresko from Washington.” Helmer claims that when Figlus reviewed company records in 2011, he concluded that some loans were improper. Lacking funds to investigate the matter further he turned the matter over to Mark Rachkevych, a reporter for the Kyiv Post for further investigation. However, Figlus had signed a non-disclosure agreement and Jaresko was granted an injunction preventing Figlus from revealing any further material about company dealings.

 The Ukrainian president Petro Poroshenko, himself an oligarch, cited Jaresko's experience in WNISEF and EEGF as his reason for choosing an American to run Ukrainian finances and grant her Ukrainian citizenship.

Critical comments removed from report on USAID in Egypt

After Egyptian President Hosni Mubarak was overthrown in 2011, the US Agency for International Development(USAID) paid several nongovernmental organizations(NGOs) to begin pro-democracy programs even though they were not registered to work in Egypt.

In less than a year, Egypt charged 43 workers with operating in the country illegally. Sixteen of those charged were Americans. The son of then-U.S. transportation secretary Ray Lahood was one of those arrested. In March 2012 the US workers were freed but only after USAID secretly paid $4.6 million for "bail." As the Washington Post reports, just two months afterward the Office of the Inspector General(OIG) of AID did a confidential draft audit that brought into question the legality of the program and of the "bail" payment. However, when the IOG office issued its final audit five months afterwards, what had been originally a 21-page report was now just nine. The earlier questioning and criticism of the "bail" payment were gone along with other critical remarks. In recent interviews, a number of current auditors and other employees anonymously complained about the censoring of audits between 2011 and 2013. While these negative comments were sent via "management letters" to senior USAID officials, the letters are confidential and not usually made available to the public.
 Some employees complained that the OIG whose function was to be an internal watchdog of the agency, had instead become a defender of it against any internal criticism. More than 400 negative references had been taken out of the draft audits before the final versions were released. Under the acting inspector general Michael Carroll, some auditors complained that he did not want to create controversy during the period he was awaiting his confirmation as the permanent inspector general. His actions seem to have had the opposite effect. Carroll withdrew his nomination just last Wednesday after it had been pending for a year and four months. He declined to discuss why he made the decision.
 State Department spokesperson Jen Psakii said on Thursday that the OIG's draft report on programs in Egypt contained "inaccuracies" that were cleared up during a meeting with OIG staff and Anne Patterson who was then US ambassador to Egypt. Psaki said that the bail money was paid by non-governmental organizations with money they received for the Egyptian programs. Psaki claims the role of the US government in the payment was revealed publicly in 2012. This hardly explains why criticism of the payment should have been removed from the report nor does it explain why the "bail" was a proper use of the NGO's funds.
 Darren Roman an audit supervisor at the OIG who retired back in 2012 said: “The office is a watchdog not doing its job. It’s just easier for upper management to go along to get along. The message is: ‘Don’t make waves, don’t report any problems.’” A number of auditors and other employers felt that their authority had been undermined by the changes made in drafts that were critical of the organization. According to Jen Psaki it is standard practice for government officials to meet with OIG officials prior to a report being issued. Perhaps it is government pressure that also intervenes to remove negative comments. As shown by the appended video USAID programs often are intended to promote US government agendas while appearing to be independent NGO's. As in Egypt,  this can sometimes land NGO employees in hot water in host countries.

US Pakistan Frontier Aid Program a Flop: Audit

Given that there has been a Pakistani offensive in the areas and thousands are displaced it is not too surprising that the contractor was not able to achieve all that much. Even so no doubt the funding has created some jobs for those hired by the contractor even though it may have done little to achieve the aims. Maybe this is less about helping Pakistan than providing pork for private contractors.


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US Aid Program for Pakistan Frontier a Flop, Audit Says

Posted By Sananda Sahoo

A 45-million-dollar program funded by the U.S. Agency for International Development (USAID) that has been in place for nearly two years in Pakistan’s Federally Administered Tribal Areas (FATA) has failed to develop local government agencies to ensure delivery of basic services, according to an audit by USAID’s inspector general.

The three-year project is run by Maryland-based private contractor Development Alternatives, Inc (DAI). The program is one of several in western Pakistan that are funded by U.S. taxpayers to counter the growing influence of Taliban and al Qaeda in the region.

Pakistan is set to receive 7.5 billion dollars over the next five years from U.S. President Barack Obama’s administration as part of a long-term economic assistance plan.

The region has been the site of an intense conflict between the Pakistani military and Taliban fighters since 2008. The fight has displaced thousands of civilians and has killed hundreds.

Two years and 15 million dollars later, the report said, all that DAI was able to achieve was to provide some initial steps toward modernizing the institutions in the region along the Afghan-Pakistan border, and complete some media activities.

"Little has been achieved in building the capacity of FATA governmental institutions and NGOs," said the audit report, dated Jan. 28.

The USAID program aims to empower the FATA Secretariat, which is responsible for providing services such as health care, education and public works. The FATA Development Authority, a governmental institution that was created in 2006, is responsible for the region’s economic development.

Both the agencies report to the governor of the North-West Frontier Province, a particularly poor region of Pakistan.

In January 2008, USAID awarded a three-year, 43.4-million-dollar contract to Development Alternatives to increase the capacity of FATA governmental institutions and NGOs.

In May 2009, to cover the cost of security measures, the mission increased the contract amount by 2.2 million dollars to a total of 45.6 million dollars. The increase includes the costs of relocating contractor expatriate staff from Peshawar to Islamabad, following the assassination of the chief of another USAID program in November 2008.

As of Oct. 31, 2009, USAID had allocated around 19.7 million dollars and spent around 15.5 million dollars.

According to the report, most capacity building activities began after October 2008, 10 months into the 36-month period. The late start led to little progress in building the capacity of the FATA Secretariat and the FATA Development Authority.

The audit says that one of the reasons for the delay is the deteriorating security situation in Peshawar.

Still, it criticized the project’s plans involving installing computers and training of staff. It said 340 of the 400 computers remained boxed up and unused.

"The report is a very partial perspective on a broader issue," Steven O’Connor, DAI’s communications director, told IPS. "It can be dangerous for the people – both from DAI and Pakistanis – who are working on the project."

The report said that the program also failed to increase the capacity of NGOs to promote good governance. It, however, acknowledges that the few FATA-based NGOs that exist lack human and financial resources to promote aims of the program effectively.

The report noted that in most instances, local NGOs needed to strengthen their proposal preparation skills, financial management practices, and monitoring and evaluation capabilities before they could start to promote good governance.

After President Obama took office last year, the United States started rethinking its strategy toward Pakistan, including greater involvement of Pakistani organizations in implementing aid programs. As a result, in June 2009, USAID rejected a DAI funding request of 15.3 million dollars and approved 4.7 million dollars in additional funds.

The report did not address the financial problems of the project consistently, according to O’Connor. "This project was stopped in its tracks by funding freeze," he said.

It also did not take into account the security issues which have been a key factor in the project, he said. As the project was picking up speed, there was a spike in drone attacks and later, almost midway through the project, there was a blanket order to move the project out of Peshawar, O’Connor said.

"That eroded the trust of the people," he said.

There also is a discrepancy between some facts in the report and DAI’s version of it. The inspector general’s report recommends that USAID confirm the existence of 72 laptops that were given to DAI.

But O’Connor says that all those laptops were in use in the field when they were reported "missing."

"We have accounted for 68 laptops and I am sure the rest will be accounted for soon," O’Connor said.

The Maryland-based company says that the project is ongoing and is still funded.

Inter Press Service


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