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U.S. government funds may have gone to Taliban

An audit says subcontractors on a development project in Afghanistan may have paid more than $5 million to militants for security purposes. Employee fraud is also alleged.

September 30, 2010|By Paul Richter, Los Angeles Times

Reporting from Washington — Millions of dollars in American taxpayer funds may have been paid to Taliban fighters in southern Afghanistan to provide security for a U.S. development project, a government audit has found.

The report, released Thursday by the inspector general of the U.S. Agency for International Development, says subcontractors hired to protect a development project near Jalalabad may have paid more than $5 million to the militants through local authorities.

Allegations often have been made about such payments, but the report is a rare investigation by the government into a specific case.

The audit examined payments for security under a $349-million contract awarded to a U.S. contractor, Development Alternatives Inc., for a small-scale infrastructure and community development project.

Because the Taliban fighters are entrenched in the area and it is deemed too dangerous to be visited regularly by the contractor, Development Alternatives left it to local subcontractors to negotiate security arrangements.

The report says local authorities often demand a 20% "protection tax" in such circumstances. Under those deals — along the lines of extortionist protection rackets in the U.S. — the Taliban sends security guards with promises that they won't attack the subcontractors or their equipment and won't try to halt the contract work, the report says.

Often local authorities will try to renegotiate the agreement just before the work begins to further jack up the price, the report says.

Officials from the agency and the contractor told the investigators that the development work was not being directly monitored because it was taking place in a war zone, so there was no way they could provide assurances that U.S. taxpayer money paid to subcontractors didn't end up in the hands of the insurgents.

If the Taliban demanded the typical 20% cut on the amount of money budgeted for security, as much as $5.2 million might have ended up in its hands, the report says.

The auditors didn't propose ways to put controls on the spending. Instead, they recommended that the agency consider whether it was even wise to try to carry out work in such areas.

The report also found "indications of pervasive fraud" in Development Alternatives' project office in Jalalabad.

The report says an Afghan employee was involved in several fraud schemes with other employees, centering on kickbacks from local subcontractors. The employee had kinship or friendship ties with one of the subcontractors, who ended up with about 20 contracts.

In other schemes, employees would provide details to favored subcontractors "on how much the project was worth, how much to bid on the project, what the project entailed and where to inflate the prices in the bids," the report says.

As one example, the report explains how the group hiked the purchase price of $32 wheelbarrows to $75, generating an additional profit of $4,300 for a lot of 100.

The report says employees also would collude to provide fabricated information on the progress of projects in areas considered too dangerous to be visited by U.S. government and foreign personnel. The employees "would take bogus photographs, or use photographs from other projects, and present them as evidence of progress on the current project," the report says.

paul.richter@latimes.com

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