Disappearing Dollars

10.30.135:45 AM ET

The Afghan Money Pit: How Millions of Dollars Were Wasted

Hundreds of millions in U.S. aid money provided to supply Afghan security forces has been lost—and now oversight is about to get even worse.

The war in Afghanistan is transitioning to its endgame. But the drawdown hasn’t stopped the billions in U.S. aid flowing into the country, and after 12 years of spending on this scale, we’re still losing money—hundreds of millions unaccounted for—almost as fast as we can write the next check. The spotty oversight of U.S. aid to Afghan forces is now set to get even worse as the main auditing group is in the country is about to have its presence dramatically reduced.

The majority of the Department of Defense money spent in Afghanistan that doesn’t pay for U.S troops goes into projects for infrastructure and funding the Afghan security forces. The U.S. legacy in Afghanistan will be defined in large part by the success of those institutions, the Afghan army most of all, where we have focused our funding and resources.

A series of recent reports detailing the loss of hundreds of millions of dollars spent on the U.S. cornerstone efforts—some of it gone to waste, corruption, and misallocation, the rest simply missing and unaccounted for—offer a troubling picture of the return on U.S. investments and underscore how deeply the key Afghan institutions still rely on U.S. funding for daily operations.

The Special Inspector General for Afghanistan Reconstruction (SIGAR), an independent agency created by Congress to monitor U.S. spending in Afghanistan, has detailed the money wasted in the Afghan supply process in a series of audits focused on procurement of fuel and vehicle parts for Afghan security forces.

As of March 2013, the U.S. has spent (PDF) about $54 billion funding security forces in Afghanistan and $92 billion on reconstruction, agriculture, and other development projects, according to a SIGAR report.

Two October reports (PDF) on funding and supply of the Afghan National Security Forces highlight the severity of the oversight problems in transactions in Afghanistan. In Afghan bases funded by the Combined Security Transition Command-Afghanistan (CSTC-A), SIGAR counted about $370 million in unaccounted spare vehicle parts for the Afghan army and found that fuel purchases and budget needs had been overestimated by nearly a third.

Since 2010, America’s mission in Afghanistan had moved away from unilateral military operations. The first shift was to training and developing Afghan forces. Now, in the war’s final stage, the focus is on supporting those forces as the Afghans take the lead in security operations and building up the civic and economic institutions that were neglected when the country was too violent for them to take root.

The DOD’s own funding request (PDF) for 2014) lays out the realignment of U.S. priorities in Afghanistan: “The campaign in Afghanistan has shifted, with the Afghan National Security Forces (ANSF) taking over the primary responsibility for fighting insurgents and International Security Assistance Forces (ISAF) moving into a supporting role. Although the ANSF is already leading over 80% of operations they remain dependent on ISAF for many support functions.”

“The strength and success of the [Afghan National Security Forces] is critical to the overall success of the reconstruction effort, so they want to make sure they have the supplies they need,” said Elizabeth Field, the assistant inspector general for audits and inspections for SIGAR who played a key role in both the fuel purchases audit as well as the spare parts audit.

The problem of money disappearing into Afghan projects without anyone being held accountable for the loss is not new, but the widespread acknowledgement of past losses has not prevented the same funding processes from being repeated throughout the course of the war. According to Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments, the problem is ingrained in the U.S. approach to funding in Afghanistan. “A lot of the money is spent with little regard for the effectiveness of it,” Harrison said. “We don’t actually try to do small-scale experiments to figure out what type of programs are effective at achieving our objectives before rolling out large programs.”

In one case (PDF), the U.S. purchased $138 million worth of spare parts for the ANA despite not being able to account for $200 million worth of parts that had already been purchased.

According to Field, the SIGAR auditor, the disappearing funds stem from U.S. forces’ heavy reliance on Afghan record-keeping without measures to ensure that the money appropriated is being spent as originally intended.

For instance, according to Field’s audit, U.S. forces requested $134.6 million in funds to provide fuel for the Afghan National Police during the 2013 fiscal year despite having little reliable information from the Afghan forces on how the money would be spent or distributed.

To make these requests, CSTC-A relied on past ANP fuel orders as well as internal assumptions about Afghan forces’ fuel consumption. Though CSTC-A had purchased fuel for the ANP for six years, it could not provide information on the number of ANP vehicles and generators in use or the rate of consumption, according to SIGAR.

Similarly, in the case of vehicle parts CSTC-A, relied on the ANP to keep an accurate record of spending and equipment on the bases under its supply program, while keeping no separate records.

“CSTC-A is essentially guessing at how much money they need to be obligating to buy vehicle spare parts of the ANSF,” Field said. “I really think that’s the most stunning and disappointing findings in both the fuel report and the spare parts report. The U.S. government is giving hundreds of millions of dollars to the Afghan government without even knowing if they’re in the right ballpark of what they actually need.”

CSTC-A has approved $243 million in direct funding for Afghan forces for the current 2014 fiscal year, even though officials believed that such contributions would be at “high risk” for abuse. Direct funds are given straight to the Afghan government to be spent through its budget and can be very difficult to keep track of.

“We have a lot of concerns about how on budget and direct assistance is going to be monitored,” Field said.

The U.S. cannot count on the help of local oversight bodies in Afghanistan, either. “There are some oversight bodies in Afghanistan. They’re in their infancy, I would say,” Field said. “We have…found concerns about the capabilities and integrity of those agencies,” she said.

Corruption remains a pervasive problem in the Afghanistan security forces and among the politicians who control the Afghan military’s budget.

“Individuals are pocketing the money to sell fuel bought by the U.S. government that should be going to the Afghan National Police but are instead being used to line their pockets,” Field said.

In spite of these issues, the U.S. plans to contribute $1.4 billion in fuel to the ANP from now until the end of the 2018 fiscal year.

The U.S. drawdown is already leaving at least $7 billion of equipment and waste behind for Afghan residents as scrapped and too expensive to transport back home.

These reports are only the latest in a series of SIGAR reports that have sparked action in Congress. Rep. Jason Chaffetz (R-UT), who leads the House Subcommittee on National Security Oversight, is one of the members of Congress pushing for accountability in funding Afghan forces.

“This is yet another report in a series about the massive fraud and abuse in Afghanistan,” Chaffetz said. “This has been highlighted by Congress as well as the SIGAR multiple times, and yet there doesn’t seem to be the imperative in the Obama administration to fix it.”

Chaffetz introduced the Accountability of Taxpayer Funding for Afghanistan Fuels Act of 2013 in September 2012, calling for more transparency in U.S. funds to Afghan police. The legislation gained momentum in Congress when it was first introduced, but the act had to be reintroduced when Congress reconvened in 2013 and now is awaiting review in committee.

CSTC-A has acknowledged its weaknesses in response to SIGAR recommendations and is making efforts to amend the oversights. A CSTC-A spokeswoman, Capt. Isabelle Bresse, said the organization “is in the process of refining and strengthening the controls contained in Ministry of Interior fuel policy. Some of the focus areas include an overhaul of the national distribution plan creation process, as well as implementation of tighter controls over the monthly maximum amount each unit is authorized to order.”

In an October 15 press release, officials announced that new data mining and organizational structures are being put into place at Afghan bases to ensure proper inventory of spare parts.

“It’s important that the Afghan forces have systems and procedures in place to demonstrate that funds are spent on critical spare parts needed to win the fight,” Maj. Gen. Dean Milner, deputy commanding general of the NATO Training Mission-Afghanistan, said in a press release.

“It’s equally vital that practices are in place to ensure the Afghan forces can effectively order, inventory and forecast future needs regarding spare parts for their vehicles,” Milner said.

As part of its response to SIGAR’s recommendations for oversight in fuel purchases, CSTC-A also has agreed to review all fuel requirements for the 2015 fiscal year.

In an October 10 letter to Secretary of State John Kerry, SIGAR inspector general John Sopko said auditors’ access to U.S. construction projects, some totaling more than $72 million, is dwindling to an all-time low for SIGAR investigators.

“It is clear that everyone working in Afghanistan, including SIGAR, will struggle to continue providing the direct U.S. civilian oversight that is needed in Afghanistan,” Sopko wrote in his letter, projecting that oversight will fall to 21 percent of Afghanistan territory post-2014.

Of the chances that U.S. would be able to stem the continuing loss of aid in the war’s final year, Todd Harrison, the defense budget expert, said: “We’re on our way out of Afghanistan now, so it’s too late to fundamentally reform the way we do things there.”

* This story originally identified the Special Inspector General for Afghanistan Reconstruction (SIGAR) as a Congressional office; it has been changed to reflect that SIGAR is an independent agency created by Congress.