$360M lost to Taliban, criminals in Afghanistan

In this Aug. 2, 2007 file photo, a U.S. military convoy passes the main road of the Ghazni province, west of Kabul, Afghanistan. AP Photo/Rahmat Gul, File

WASHINGTON - The U.S. military estimates that $360 million spent on combat support and reconstruction contracts in Afghanistan has ended up in the hands of people the American-led coalition has battled for nearly a decade: the Taliban, criminals and local power brokers with ties to both, The Associated Press has learned.

The losses, measured over the past year by a special task force assembled by Gen. David Petraeus, underscore the challenges the U.S. and its international partners face in overcoming corruption in Afghanistan. A central part of the Obama administration's strategy has been to award U.S.-financed contracts to Afghan businesses to help improve quality of life and stoke the country's economy.

But until Task Force 2010 began its investigation, there was little visibility into the connections these companies and their vast network of subcontractors had with insurgents and criminals, what military officials call "malign actors."

The murky process is known as "reverse money laundering." Payments from the U.S. pass through companies hired by the military for transportation, construction, power projects, fuel and other services to businesses and individuals with ties to the insurgency or criminal networks. "Funds begin as clean monies," according to task force documents obtained by the AP, then "either through direct payments or through the flow of funds in the subcontractor network, the monies become tainted."

The conclusions by Task Force 2010 represent the most definitive assessment of how U.S. military spending and aid to Afghanistan has been diverted to the enemy or stolen by criminal elements. Only a small percentage of the $360 million has been garnered by the Taliban and insurgent groups, said a senior U.S. military official in Kabul. The bulk of the money was lost to profiteering, bribery and extortion by criminals and power brokers, said the official, who declined to provide a specific breakdown.

The official requested anonymity to discuss the task force's investigation into the movement of U.S. contract money in Afghanistan. The documents obtained by AP were prepared earlier this year and provide an overview of the task force's work.

Overall, the $360 million represents a fraction of the $31 billion in active U.S. contracts that the task force reviewed. But insurgents rely on crude weaponry and require little money to operate. And the illicit gains buttress what the International Crisis Group, a Brussels-based think tank, referred to in a report in June as a "nexus between criminal enterprises, insurgent networks and corrupt political elites."

More than half the losses — more than $180 million — flowed through a transportation contract called Host Nation Trucking, the official said. Eight companies served as prime contractors and hired a web of nearly three dozen subcontractors for vehicles and security to ship huge amounts of food, water, fuel and ammunition to American troops stationed at bases across Afghanistan.

The Defense Department announced Monday that it had selected 20 separate contractors for a new transportation contract potentially worth $983.5 million to replace Host Nation Trucking. Officials said the new arrangement will reduce the reliance on subcontractors and diminish the risk of money being lost. Under the new National Afghan Trucking Services contract, the military will be able to choose from a deeper pool of companies competing against one another to offer the best price to move supplies. The new arrangement also gives the U.S. more flexibility in determining whether security is needed for supply convoys and who should provide it, according to a description of the contract.

The Pentagon did not provide the names of the 20 companies picked, but the senior defense official said none of the eight prime contractors affiliated with the Host Nation Trucking contract are part of the new arrangement.

HEB International Logistics of Dubai, a Host Nation Trucking prime contractor, "made payments directly to malign actors," one of the task force documents reads. In 2009 and 2010, an HEB subcontractor identified in the document only as "Rohullah" received $1.7 million in payments. A congressional report issued last year said Rohullah, whose name is spelled Ruhallah in that report, is a warlord who controlled the convoy security business along the highway between Kabul and Kandahar, the two largest cities in Afghanistan.

Half a dozen attempts to reach officials at HEB's offices in Dubai by telephone were unsuccessful due to calls being transferred and lines going dead. It is also the holy month of Ramadan when many employees work shortened days and offices close early.

The congressional report said Rohullah's hundreds of heavily armed guards operated a protection racket, charging contractors moving U.S. military supplies along Highway 1 as much as $1,500 a vehicle. Failure to pay virtually guaranteed a convoy of being attacked by Rohullah's forces, said the report, "Warlord Inc." Rohullah's guards regularly fought with the Taliban, but investigators believe Rohullah moved money to the Taliban when it was in his interest to do so.

Both Rohullah and the security company he was affiliated with, Watan Risk Management, denied ever making payments to the insurgents, according to the report. But in December, the U.S. placed Watan in "proposed debarment status," which prevented it from signing new contracts or renewing existing contracts. Watan challenged the decision in federal court. Two weeks ago, Watan and U.S. officials signed an agreement that states the company may not bid on any mobile security contracts for the next three years.

The task force also said contractors engaged in profiteering by forming dummy companies. A task force document shows three tiers of subcontractors below Guzar Mirbacha Kot Transportation, an Afghan-owned trucking company known as GMT. Four of the subcontractors appear on the first and second tiers, collecting $14.2 million in payments.

Basir Mujahid, a GMT representative in Kabul, said top company officials were in Dubai and could not be reached for immediate comment.

Power brokers — a term widely used in Afghanistan — refer to Afghans who leverage their political and business connections to advance their own interests.

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