SIGAR

Good Morning. Thank you for that kind introduction. It is a pleasure to be with you all. I am particularly pleased to see so many of our Afghan partners here as key participants in these discussions. I appreciate this opportunity to speak to you today about SIGAR's mission to provide oversight of funds the U.S. Congress has appropriated to re-build Afghanistan.

As I look across this audience I see two key groups: government officials with reconstruction dollars to spend and contractors looking to help them spend it. My office was created to keep a beady eye on both of you. Our job is to watch you closely and carefully. Our mission is to ensure that U.S. taxpayer dollars are being spent effectively and are not subject to fraud, waste or abuse.

Since 2002, the Congress has provided $51 billion for the reconstruction of Afghanistan. This will, in all likelihood, grow in 2011. While these reconstruction funds account for only a fraction of the trillion dollars that the United States has spent on the military campaigns in Iraq and Afghanistan, they are by any other measure a lot of money. The success of the U.S. strategy in Afghanistan depends to a large degree on the effective use of these taxpayer dollars to build the Afghan security forces, improve governance, and lay the foundation for sustained economic development. Everyone involved in the contracting process from the initial drafting of requests for proposals to the implementation of projects plays an important role in helping the United States achieve its objectives in Afghanistan.

I am often asked why we need a Special Inspector General for Afghanistan Reconstruction. After all, each implementing agency has its own inspector general and we have the Government Accountability Office GAO that reports to Congress. What can SIGAR do that these other agencies can't or don't?

My answer is this: In Afghanistan SIGAR's auditors and investigators are bringing focused oversight to reconstruction activities that are funded through and implemented by multiple agencies. We not only look at individual projects and contracts, but at how these projects and contracts fit into larger programs. We are looking at whether programs support U.S. strategic goals. We also look at how U.S. agencies coordinate with each other. In Afghanistan, where there is a significant international involvement, we are also examining whether U.S.-funded programs have been coordinated with the international donor community to realize common reconstruction objectives. At the end of every quarter, SIGAR provides a report to Congress that summarizes current and historical data on reconstruction activities.

SIGAR' through its audits and investigations seeks to foster a culture of accountability that permeates every aspect of the reconstruction effort in Afghanistan. What do we mean by accountability? Obviously, the first thing is keeping track of the money. However, my auditors are concerned about much more than whether agencies and contractors are keeping good books. They want to know if the agencies and their implementing partners have the controls in place to mitigate against fraud. Is the money going for activities to achieve objectives that support the larger U.S. goals? Are their metrics in place to measure progress? Are projects and activities coordinated with others to prevent duplication of effort? Are taxpayer dollars being used for activities that will have a lasting effect? Does the Afghan government have the ability to operate and maintain infrastructure? What are we doing to help the Afghan government build capacity to sustain programs in the education, health, agriculture, and justice sectors. What are we doing to make sure that the Afghan National Police and the Afghan National Army will be able to provide security for the Afghan people?

At SIGAR, we believe that everyone involved in reconstruction from the U.S. government agencies and contractors to the Afghan government, which is the beneficiary of our assistance has a responsibility to provide good stewardship of public funds. SIGAR's work to date has shown that everyone needs to do much more to be accountable for the reconstruction money the United States is spending in Afghanistan. I am going to spend the next few minutes talking about each of the key players: implementing agencies, contractors, and the Afghan government.

Implementing Agencies

In my view, the primary obligation for oversight rests with the agencies administering funds. The Department of Defense, the Department of State, and USAID have been allocated the majority of reconstruction funds for Afghanistan, but the Departments of the Treasury, Justice, Homeland Security, and Agriculture also have significant roles in helping to rebuild Afghanistan. These agencies are responsible for spending taxpayer dollars carefully and wisely.

This responsibility includes designing projects to achieve clear goals. This is perhaps the most difficult task of all. Without clear goals, projects flounder. Just consider for a moment the Afghan National Security Forces. More than half of all reconstruction dollars about $26 billion to date go to build the Afghan National Army and the Afghan National Police. Last month, the Inspectors General of the Departments of State and Defense produced a joint report that concluded that the Department of State's Civilian Police Program contract which was valued about $1 billion did not meet the Department of Defense's needs in developing an Afghan police force capable of countering the growing insurgency in Afghanistan.

Let's look at that word needs. Since 2002, there has been disagreement within U.S. agencies, between U.S. agencies, and among international donors over just what kind of police force we were trying to build in Afghanistan. Are we building a counter-insurgency force? Are we building a civilian police force? What are our metrics? What kind of police force does the Afghan government want and need? The UN Secretary General noted in his recent report the UN Security Council that the lack of agreement over these questions has stalled police reform for years and given rise to contradictory approaches on the part of major donors. From my perspective, implementing agencies have an obligation to clearly define their objectives and then create programs to achieve them. When multiple agencies and donors are involved, it is imperative that they reach a consensus on program goals and not work at cross purposes. I understand that we are operating in a war zone and that decisions often need to be made quickly, but building programs without clear objectives and metrics risks wasting U.S. reconstruction dollars.

SIGAR is currently conducting an audit to evaluate the reliability of the rating system used to measure the capabilities of the Afghan National Security Forces. We are interested not only in how many troops and police are being trained, but if our programs are developing Afghan security forces capable of protecting the Afghan people and defending the Afghan state so that U.S. forces can withdraw.

Once a program is developed and a contract awarded, implementing agencies are responsible for overseeing the implementation of the contract. That, however, does not mean that you contractors out there are off the hook.

Contracts and Contractors

The United States government depends on private contractors to perform a wide variety of reconstruction activities. Private contractors are building everything from power plants and roads to schools, clinics, courthouses, and prisons. Contractors are developing alternative agriculture projects, running training and capacity building programs, and providing security for reconstruction activities. They are also helping the U.S. government to train and equip the Afghan security forces.

The United States could not achieve its goals in Afghanistan without these contractors. At the same time, contractors also need to be held accountable. They must have systems in place to ensure that they complete projects in compliance with their statements of work on time and within budgets. The onus is on the prime contractors to monitor subcontractors to ensure they deliver a quality project.

While U.S. agencies will continue to rely on private contractors to implement many of their reconstruction programs in Afghanistan, the new U.S. strategy in Afghanistan is to work in greater partnership with the Afghan government. The United States and other donors have said that, in principle, they would like to increase the proportion of development aid delivered through Afghan government institutions to 50 percent in the next two years. This support depends on the Afghan government making progress in several areas, including strengthening its public financial management systems, improving budget execution, and reducing corruption.

I believe that the Afghan government should be much more involved in every aspect of reconstruction. But, I also believe that Afghan government institutions, no less than U.S. implementing agencies and private contractors, must be held accountable for all monies at their disposal. This brings me to the important issue of Afghan government capacity and political will.

Afghan Government Capacity

For the new U.S. policy to work, Afghan institutions must have the capacity and the desire to manage all funds be they from international donors or Afghan taxpayers and protect them from waste, fraud, and abuse, and other forms of corruption.

Everyone of the donors, international organizations, the Afghan government, and, most importantly, the Afghan people is disturbed by the pervasive corruption in Afghanistan. A recent survey of 12 provinces by the United Nations Office on Drugs and Crime found that the average Afghan is more concerned about corruption (59 percent) than security (54 percent). Half of the Afghans surveyed said they had to pay at least one kickback to a public official during the preceding 12 months. The average amount was $160 this in a country where the per capita GDP is only $425 per year.

Bribery is just one aspect of corruption. The World Bank has reported what it calls a criminal culture with networks of corruption, which include not only the buying and selling of government positions, but also sweetheart deals in procurement and the award of contracts. Corruption robs the poor, causes the misallocation of resources, and weakens private sector growth. Most important, it destroys trust in government.

Because corruption corrodes the government's legitimacy and undermines international development efforts, strengthening the Afghan government's capability to fight corruption must be an integral part of the U.S. reconstruction effort. Therefore, SIGAR launched an anti-corruption initiative last year to 1) build the capacity of Afghan institutions to deter corruption and strengthen the rule of law and 2) determine the extent to which various national and local institutions have systems in place to account properly for donor funds.

Last December we issued an audit of the High Office of Oversight (HOO). We found that this key office needs significantly more authority, independence and donor support to become an effective anti-corruption institutions. SIGAR is pleased to note that last week, President Karzai issued a decree which gave the HOO more independence and authority to investigate and sanction corrupt officials. This is a good step forward.

We have two ongoing audits as part of our anti-corruption initiative. The first is reviewing U.S. and other donor effort to strengthen the capabilities of Afghanistan's Control and Audit Office. The second is assessing the Afghan government's ability to account for U.S. government payments of salaries to Afghan government officials and advisors.

Our anti-corruption work will help our implementing agencies identify the Afghan institutions we can work with as partners; it will also help identify areas where we can use our reconstruction dollars to improve accountability. We are expanding this program and hope to have more than 20 auditors working at the national and provincial levels by the end of the year.

Improving accountability at every level from senior officials to the policeman in a remote district office must be at the heart of our reconstruction effort. Neither military power nor all the reconstruction dollars in the world no matter how well projects are designed and executed can produce a secure and stable Afghanistan if Afghans do not believe in their government.

SIGAR's goal is to see U.S. implementing agencies, contractors large and small, and the governing institutions in Afghanistan be accountable to U.S and Afghan citizens.

Thank you again for inviting me to this summit to share some thoughts on Afghanistan's reconstruction. It is my sincere hope that as my auditors and investigators scrutinize the use of reconstruction funds, they find that those of you involved in reconstruction have contributed to the culture of accountability we are seeking to establish.