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Special Inspector General for Afghanistan Reconstruction (SIGAR)

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Special Inspector General for Afghanistan Reconstruction (SIGAR) SIGARSIGAR SPECSPECIAIALL ININSPECTOPECTORR GENEGENERALRAL S for IGAR Special Inspector General APR 30 FOFORR AFAFGHANIGHANISSTAANN RECONRECONSTTRURUCTCTIONION Afghanistan Reconstruction 2014 2530 CCrystalrystal DriveDrive | SIGAR Arlington,Arlington, VA 22202 QUARTERL www.sigar.milwww.sigar.mil FFRAUDRAUD,, WASASTE, OORR ABABUSE MAMAY BE RREPOREPORTETEDD TO SIGAR’SSIGAR’S HOTLHOTLINEINE Y QUARTERLY REPORT TO THE UNITED STATES CONGRESS R By Pphone:hone: AfghanistanAfghanistan EPOR CCell:ell: 0700107300 DSDSN: 318-237-3912 ext. 7303 T AAllll voicemail is in DDari,ari, Pashto, and English. TO THE By Pphone:hone: United States Tolloll-free: Free: 866-329-8893866-329-8893 DSDSN: 312-664-0378 U AAllll voicemail is in English and answered during business hours. NITED STATE By Ffax:ax: 703-601-4065703-601-4065 By e-mail:E-mail: [email protected]@mail.mil By Web submission:Submission: www.sigar.mil/investigations/hotline/report-fraud.aspxwww.sigar.mil/investigations/hotline/ S CONGRE SS | A PRIL 30, 2014 2 SIGAR Report Fraud, Waste or Abuse FINAL_Apr2014_Cover.indd 1 4/16/2014 11:41:16 AM The National Defense Authorization Act for FY 2008 (P.L. 110-181) established the Special Inspector General for Afghanistan Reconstruction (SIGAR). SIGAR’s oversight mission, as defined by the legislation, is to provide for the independent and objective • conduct and supervision of audits and investigations relating to the programs and operations funded with amounts appropriated or otherwise made available for the reconstruction of Afghanistan. • leadership and coordination of, and recommendations on, policies designed to promote economy, efficiency, and effectiveness in the administration of the programs and operations, and to prevent and detect waste, fraud, and abuse in such programs and operations. • means of keeping the Secretary of State and the Secretary of Defense fully and currently informed about problems and deficiencies relating to the administration of such programs and operation and the necessity for and progress on corrective action. Afghanistan reconstruction includes any major contract, grant, agreement, Afghan National Army officers at a base in Laghman Province hold up blue-inked fingers that or other funding mechanism entered into by any department or agency of the show they voted in the April 5 presidential and provincial-council election. (U.S. Army photo) U.S. government that involves the use of amounts appropriated or otherwise made available for the reconstruction of Afghanistan. Source: P.L. 110-181, “National Defense Authorization Act for FY 2008,” 1/28/2008. (For a list of the congressionally mandated contents of this report, see Section 3.) Quarterly Report Staff Michael Bindell, Economic and Social Development Subject Matter Expert Emmett Schneider, Senior Data Analyst/Senior Auditor Victoria Butler, Director of Research and Analysis Directorate/Editor Deborah Scroggins, Senior Writer/Editor Clark Irwin, Deputy Director of Research and Analysis Directorate/Editor Solange Toura Gaba, Research Assistant Cover photo: Vong Lim, Visual Information Specialist Daniel Weggeland, Governance Subject Matter Expert Afghans check in at a Kabul polling place on April 5 to participate in nationwide voting to select a new Jennifer Manzullo, Program Manager Genevieve Wilson, Senior Auditor president and members of 34 provincial councils. (United Nations Assistance Mission in Afghanistan photo by Fardin Waezi) Olivia Paek, Visual Information Specialist Joseph Windrem, Security Subject Matter Expert FINAL_Apr2014_Cover.indd 2 4/16/2014 11:41:17 AM KUNDUZ BADAKHSHAN JOWZJAN BALKH TAKHAR SAMANGAN FARYAB BAGHLAN SAR-E PUL PANJSHIR BADGHIS NURISTAN PARWAN KAPISA KUNAR BAMYAN LAGHMAN KABUL HERAT WARDAK NANGARHAR Still undergoing repairs GHOR LOGAR after 2013 insurgent attack DAYKUNDI PAKTIYA GHAZNI KHOWST URUZGAN FARAH PAKTIKA ZABUL NIMROZ Current SIGAR ofces HELMAND KANDAHAR Provinces where SIGAR has conducted audit, inspection, and investigation work SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN RECONSTRUCTION I am pleased to submit to Congress, and to the Secretaries of State and Defense, SIGAR’s 23rd quarterly report on the status of the U.S. reconstruction effort in Afghanistan. Afghanistan enjoyed a rare moment of optimism this quarter. On April 5, 2014, more than seven million Afghans, 35% of them women, went to the polls to choose a new president and provincial council members, according to the National Democratic Institute. Despite Taliban threats and a string of murderous attacks on foreigners and Afghans in the weeks leading up to the elections, the Afghan National Security Forces managed to keep 6,218 out of 6,423 polling stations open. Early indications reported by Afghanistan’s Independent Election Commission suggest a runoff is likely between presidential candidates Abdullah Abdullah and Mohammad Ashraf Ghani Ahmadzai. Both men have promised to sign a bilateral security agreement which would keep some U.S. troops in Afghanistan to support continued training of Afghanistan’s security forces and pave the way for continued recon- struction support. Despite the prospect of a peaceful, democratic transition of power, grave dangers still remain for U.S.-funded reconstruction. The World Bank has predicted for several years that Afghanistan would suffer an economic contraction as Coalition troops draw down. The country’s domestic revenues for the last Afghan fiscal year (December 21, 2012– December 20, 2013) fell short of Ministry of Finance targets by 11.9%. At the same time, the Afghan government’s expenses have increased, exacerbating an already significant gap between revenue collection and budget expenditures. Afghan revenues in 2014 could cover as little as a third of the country’s $7.5 billion budget. The revenue decline comes at a time when dozens of reconstruction projects and their associated operation-and-maintenance costs are being turned over to the Afghan government. Some of SIGAR’s work this quarter focused on this issue. Customs revenue has accounted for between 44% and 48% of Afghanistan’s total domestic revenue for the past three fiscal years. Yet a SIGAR performance audit published in April found that, despite the U.S. allocation of $198 million to develop Afghan capacity to assess and collect customs revenue, its potential as a stable source of government income remains uncertain. SIGAR’s auditors found that the single biggest issue limiting collection of customs revenues is cor- ruption. Moreover, U.S. advisors report that Afghan employees who try to properly collect customs duties have been kidnapped and intimidated. Section 1 of this report discusses the threat that corruption poses to the reconstruction effort as a whole. During my visit to Afghanistan this quarter, I toured the forward operating base at the Torkham Gate Border Crossing on the border with Pakistan. About 80% of Afghanistan’s customs revenues are reportedly collected at this crossing, the country’s busiest. I was told that when U.S. mentors and observers are not present, revenue collection falls. This was not encouraging, especially as the crossing will soon be outside the reach of U.S. personnel because the U.S. military will no longer be able to provide escort to the area. I continue to have serious concerns about the ability of U.S. agencies to implement and monitor reconstruction programs as U.S. forces withdraw. In February, SIGAR, together with the United States Institute for Peace, convened a symposium to discuss the oversight challenges and identify best practices for remote management and monitoring in insecure 2530 CRYSTAL DRIVE ARLINGTON, VIRGINIA 22202 environments. We will soon issue a report on the symposium that will outline the options for oversight post-2014. The 20 audits, inspections, and other reports SIGAR issued this quarter examined programs and projects worth approximately $31 billion. They identified failures of plan- ning, construction, and oversight. They also raised concerns about International Security Assistance Force plans to sustain their capability-assessment efforts of the Afghan security forces, USAID’s strategy for Afghanistan’s water sector, and the rising cost of install- ing an additional power-generating turbine at Kajaki Dam. SIGAR also completed two financial audits which identified nearly $14.5 million in questioned costs for this quarter out of almost $75.3 million to date. Section 2 of this report summarizes our findings and recommendations. Since my last report to Congress, SIGAR has opened 60 new investigations and closed 40, bringing the total number of ongoing investigations to 338. The criminal fines, res- titutions, forfeitures, and cost savings to the U.S. government from SIGAR’s ongoing investigations in this reporting period amounted to approximately $6.7 million. SIGAR’s suspension and debarment program referred 16 individuals and 15 companies for suspen- sion or debarment based on allegations that they engaged in fraud and non-performance as part of contracts valued at almost $61 million. This quarter, I reiterate my concerns about the policies of the U.S. Army’s suspension and debarment program. As I have pointed out in the last four quarterly reports, the Army’s refusal to suspend or debar supporters of the insurgency from receiving government con- tracts because the information supporting these recommendations is classified is not only legally wrong, but contrary to sound policy and national-security goals. I continue to urge Congress to change this misguided policy
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