Oct 30, 2015 — Afghan National Army corps commander Brigadier General Dawood Shah Wafadar, left, greets U.S. Army Brigadier General Paul Bontrager
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QUARTERLY REPORT TO THE UNITED STATE S CONGRESS4SIGAR | QUARTERLY REPORT TO THE UNITED STATE S CONGRESS | OCTOBER 30, 2015SIGARSPECIAL INSPECTOR GENERALFOR AFGHANISTAN RECONSTRUCTION2530 Crystal DriveArlington, VA 22202www.sigar.mil FRAUD, WASTE, OR ABUSE MAY BE REPORTED TO SIGAR™S HOTLINEBy phone: AfghanistanCell: 0700107300DSN: 318-237-3912 ext. 7303All voicemail is in Dari, Pashto, and English.By phone: United StatesToll-free: 866-329-8893DSN: 312-664-0378All voicemail is in English and answered during business hours. By fax: 703-601-4065By e-mail: [email protected] By Web submission: www.sigar.mil/investigations/hotline/report-fraud.aspx Report Fraud, Waste or Abuse SIGARFINAL_Oct2015_Cover.indd 110/16/2015 8:07:35 AM
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Quarterly Report Staff Michael Bindell, Economic and Social Development Subject Matter Expert Emmett Schneider, Senior Data Analyst/Senior Auditor Clark Irwin, Senior Writer/Editor Deborah Scroggins, Director of Research and Analysis Directorate/Editor Vong Lim, Visual Information Specialist Solange Toura Gaba, Research Assistant Jennifer Manzullo, Program Manager Daniel Weggeland, Governance Subject Matter Expert Jonathan Ned, Student Trainee Genevieve Wilson, Security Subject Matter Expert Olivia Paek, Visual Information Specialist Joseph Windrem, Deputy Director of Research and Analysis Directorate/Editor The National Defense Authorization Act for FY 2008 (Pub. L. No. 110-181) established the Special Inspector General for Afghanistan Reconstruction (SIGAR). SIGAR™s oversight mission, as de˜ned 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, ef˜ciency, 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 de˜ciencies 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, or other funding mechanism entered into by any department or agency of the U.S. government that involves the use of amounts appropriated or otherwise made available for the reconstruction of Afghanistan. Source: Pub. L. No. 110-181, fiNational Defense Authorization Act for FY 2008,fl 1/28/2008.(For a list of the congressionally mandated contents of this report, see Section 3.)Children in Afghan dress take part in an Afghan cultural festival in Rosslyn, Virginia. ( SIGAR photo by Shokoor Siddiqi) Cover photo:More than 4,500 candidates competed for 600 slots in the National Military Academy of Afghanistan™s class of 2015. (NATO Training Mission Afghanistan photo by Sarah Brown)FINAL_Oct2015_Cover.indd 210/16/2015 8:07:36 AM
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PAKTIKAKHOWSTTAKHARBADAKHSHANBAGHLANBAMYANFARYABWARDAKKUNARKUNDUZNURISTANNANGARHARFARAHNIMROZHELMANDKANDAHARURUZGANZABULGHORGHAZNIBALKHBADGHISKABULKAPISAPAKTIYALOGARLAGHMANJOWZJANPARWANSAR-E PULHERATDAYKUNDISAMANGANPANJSHIRProvinces where SIGAR has conducted audit, inspection, and investigation workCurrent SIGAR of˜ces
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I am pleased to submit to Congress, and the Secretaries of State and Defense, SIGAR™s 29th quarterly report on the status of the U.S. reconstruction effort in Afghanistan.This quarter Afghanistan™s national-unity government completed its ˜rst year in of˜ce. The anniversary was marked by success as well as failure. At the request of the Afghan government, President Barack Obama announced in October that the United States would halt its military withdrawal from Afghanistan and keep the current U.S. force of 9,800 troops in place through most of 2016. On September 5, international donors welcomed the government™s reform program at the Senior Of˜cials Meeting in Kabul and reaf˜rmed their commitments to Afghanistan under a new framework called the Self-Reliance through Mutual Accountability Framework.However, a major setback occurred on September 28, when the Taliban seized the city of Kunduz, the ˜rst provincial capital the insurgents had captured since 2001. Afghan forces have since retaken the city. Tragically, during the ˜ghting, a U.S. aerial gunship, possibly at the direction of Afghan forces on the ground, ˜red on a Doctors Without Borders hospital, killing at least 22 people. The commander of the U.S. forces in Afghanistan, General John F. Campbell, has pledged a full investigation into the attack. The ease with which a relatively small number of Taliban ˜ghters overran Kunduz called into question the leadership and readiness of the Afghan National Defense and Security Forces (ANDSF). The United States has invested the lion™s share of its reconstruction funding, some $65˚billion, to build up the Afghan army and police forces. As outlined in Section˚3 of this report, SIGAR has repeatedly raised concerns about ANDSF capabilities and will continue to monitor closely their performance. News reports suggest that ten- sions over the misbehavior of the Afghan Local Police (ALP) contributed to the collapse of Kunduz™s defenses. This quarter a SIGAR performance audit found that despite the Department of Defense™s spending about $470 million to help support the ALP, the ALP lack logistical support, oversight, and a plan for either disbanding the force or incorporating it into the Afghan National Police.As a part of SIGAR™s ongoing effort to assess the reconstruction effort, President Ashraf Ghani graciously agreed to be interviewed in September for this quarterly report. In a wide- ranging discussion, the president pointed to the development of the ANDSF as the greatest achievement of reconstruction and called for lifting rural incomes to drive out the narcotics trade. An edited transcript appears in Section 1 of this report. SIGAR investigations achieved signi˜cant results once again in this reporting period. Investigations achieved cost savings to the U.S. government of approximately $123.7 mil- lion; ˜nes, forfeitures, and restitutions total over $26.7 million. Additionally, there were two arrests, ˜ve criminal charges, seven convictions, and nine sentencings. SIGAR initiated 18 new investigations and closed 22, bringing the total number of ongoing investigations to 306. Savings to date from SIGAR investigations total over $944.5 million.SIGAR issued 17 audits, inspections, alert letters, and other products. One SIGAR per-formance audit found that the United Nations High Commissioner for Refugees and the Department of State are unable to independently verify the number of Afghan refugees SPECIAL INSPECTOR GENERAL FORAFGHANISTAN RECONSTRUCTION
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reported by the Pakistani and Iranian governments, and that the Afghan Ministry of Refugees and Repatriation has limited capacity to ful˜ll its obligations, despite interna- tional assistance. The Audits and Inspections Directorate also issued three alert letters this quarter. Two letters (one classi˜ed) expressed concerns about the fate of a command- and-control facility at Camp Brown. A third letter alerted DOD of˜cials and U.S. military commanders of potential critical shortages of cold-weather gear for the ANDSF. This quarter, SIGAR issued six ˜nancial audit reports. To date, SIGAR™s ˜nancial audits have identi˜ed more than $280.4 million in questioned costs and $289,880 in unremitted interest on advanced federal funds or other amounts payable to the government. As of October 30, 2015, funding agencies had reached a management decision on 50 audits and are seeking recovery of over $16.7 million in questioned amounts.SIGAR published an inspection report that found that while a power-grid project at the Counter Narcotics Strip Mall in Kabul was completed within budget and met contract performance standards, the power grid was not tested and deemed operable until more than 18 months after its completion. This quarter, SIGAR™s Of˜ce of Special Projects pub – lished its review of the Task Force for Business and Stability Operations™ Downstream Gas Utilization project. The of˜ce also wrote to U.S. military commanders to request informa- tion about the necessity for, and potential wastefulness of, several recent procurements made on behalf of the ANDSF. Additionally, the Of˜ce of Special Projects wrote two letters to the U.S. Agency for International Development (USAID) that reviewed operations at the Tarakhil Power Plant and stressed the importance of maintaining accurate geospatial information for USAID- supported health facilities. As part of its ongoing review of USAID-supported health facilities in provinces throughout Afghanistan, SIGAR also wrote to USAID to provide the results of recent site inspections conducted by SIGAR to verify the accuracy of USAID loca- tional data and operating conditions at 23 USAID-funded public-health facilities in Herat. SIGAR™s suspension and debarment program referred 18 individuals and 12 companies for suspension or debarment from receiving U.S. government contracts. Three of these indi- viduals were referred for suspension based upon criminal charges being ˜led against them for misconduct related to or affecting reconstruction contracting in Afghanistan. These referrals bring the total number of individuals and companies referred by SIGAR since 2008 to 680, encompassing 361 individuals and 319 companies to date.With the United States committed to spend billions in the coming years to help Afghanistan pay for its security forces and strengthen its institutions, my staff and I look forward to working with Congress and other stakeholders to provide fair and transparent oversight of the U.S.-funded reconstruction.Respectfully, John F. Sopko Special Inspector General for Afghanistan Reconstruction
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ivEXECUTIVE SUMMARYSIGAR OVERVIEW AUDITS SIGAR produced three alert letters, two performance audits, six ˜nancial audits, and one inspection.The alert letters addressed:Concerns over the fate of a command-and-control facility at Camp Brown (SIGAR issued one unclassi˜ed and one classi˜ed letter)The potential critical shortage of cold-weather gear for the Afghan National Defense and Security Forces (ANDSF)The performance audits found:The United Nations High Commissioner for Refugees and the Department of State (State) are unable to independently verify the number of Afghan refugees reported by the Pakistani and Iranian governments, and that the Afghan Ministry of Refugees and Repatriation has limited capacity to ful˜ll its obliga- tions, despite international assistance. Despite the Department of Defense™s (DOD) spending about $470 million to help support the Afghan Local Police (ALP), the ALP lack adequate logistics support, oversight, and a plan for either disbanding the force or incorporating it into the Afghan National Police.The ˜nancial audits identi˜ed over $1.2 million in ques-tioned costs as a result of internal-control de˜ciencies and noncompliance issues. These de˜ciencies and non- compliance issues included among other things, failure to follow competitive procurement procedures, pur-chase of materials from restricted sources, overcharging due to utilization of improper currency exchange rates, lack of suf˜cient documentation to support costs incurred, and billing for ineligible tax ˜nes and penalties.The inspection report of a U.S.-funded facility found:While a power grid project was completed within budget and met contract performance standards, the power grid was not tested and deemed operable until over 18 months after its completion.NEW AUDITS AND INSPECTIONSThis quarter, SIGAR initiated two new perfor -mance audits which will assess effectiveness of the Commander™s Emergency Response Program and the award, administration, and performance of Legacy research contracts. SIGAR also initiated ˜ve new inspec- tions of the construction for the Afghan National Army™s Ground Forces Command, Garrison Support Unit, and Army Support Command; Afghan 3rd Air Squadron This report summarizes SIGAR™s oversight work and updates developments in the three major sec -tors of Afghanistan™s reconstruction effort from July 1 to September 30, 2015.* It also includes a transcript of SIGAR™s interview with Afghan President Ashraf Ghani. During this reporting period, SIGAR published 17 audits, inspections, alert letters, and other reports assessing the U.S. efforts to build the Afghan security forces, improve governance, and facilitate economic and social devel – opment. These reports identi˜ed a number of problems, including a lack of accountability, failures of planning, and construction de˜ciencies. The cost savings to the U.S. government from SIGAR™s investigative work amounted to approximately $150.4 million. SIGAR investigations also resulted in two arrests, ˜ve criminal charges, seven convictions, and nine sentencings. Additionally, SIGAR referred 18 individuals and 12 companies for suspension or debarment based on allegations that they engaged in fraud and nonperformance in contracts. * SIGAR may also report on products and events occurring after September 30, 2015, up to the publication date.
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TABLE OF CONTENTSSECTION 1 1 IN TERVI EW WITH AFGHANISTAN™S PRESIDENT 7 Quarterly Highlight: Dr. Mohammad Ashraf Ghani SECTION 2 17 SIG AR OV ERSIGHT 20 Audits 36 Inspections 38 Special Projects 42 Lessons Learned 44 Investigations 46 Quarterly Highlight: SIGAR Hotline Outreach 52 Quarterly Highlight: Federal Judge Hands Down Stiff Sentences as a Result of a Bribery and Fuel Theft Conspiracy Investigation 57 Other SIGAR Oversight Activities This Quarter 61 SIGAR Budget 61 SIGAR StaffSECTION 3 63 RECON STRU CTION UPDATE 68 Status of Funds 84 Security 87 Quarterly Highlight: After Kunduz: Assessing the ANDSF 130 Governance 160 Economic and Social Development
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TABLE OF CONTENTSSECTION 4 193 OTH ER AG ENCY OV ERSIGHT 196 Completed Oversight Activities 199 Ongoing Oversight ActivitiesAPPENDICES & ENDNOTES 206 Appendix A: Cross-Reference of Report to Statutory Requirements 212 Appendix B: U.S. Funds for Afghanistan Reconstruction 214 Appendix C: SIGAR Written Products 218 Appendix D: SIGAR Investigations and Hotline 225 Appendix E: Acronyms 231 Endnotes
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Source: SIGAR, fiPrepared Remarks of John F. Sopko for Delivery at the Royal United Services Institute,fl London, September˜22,˜2015.fiWhile we face daunting obstacles, we can also glimpse opportunities. The most encouraging sign we have had in some time is that the contentious and controversial 2014 elections in Afghanistan ultimately and nonviolently produced a National Unity Government that appears to be working. The leadership of President Ashraf Ghani and Chief Executive Abdullah Abdullah encourages me.fl Š Special Inspector General John F. Sopko
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