“Corruption: Sand in the Gears of Afghan Reconstruction”
Thank you for the kind introduction. I would also like to thank Dr. de Nevers and the Institute for National Security and Counterterrorism for the invitation to be here today as one of the David Everett Post Conflict Reconstruction speakers. Having seen the list of the prior speakers, I only hope I can live up to that great tradition and your expectation.
But speaking of tradition, it is a special honor to be speaking today, which is almost 92 years to the day that George Holmes Maxwell founded the Maxwell School with its unique objective to “teach practitioners those principles, facts and elements which make up our rights and duties and values as U.S. citizens.” And also, apropos of the season, and I don’t mean pumpkins and Halloween, it is especially important to talk about some of the lessons we can and must learn from America’s longest war, or as last night’s debate illustrated America’s forgotten war.
But let me pause here and ask that existential question audiences of the ages have asked of speakers, such as myself—who are you and why should I listen? I have more important things to do since I spent last night at Faegan’s flip night.
My mission as the SIGAR – that is, the Special Inspector General for Afghanistan Reconstruction – is two-fold, one, to identify and prevent waste, fraud, and abuse in the Afghanistan Reconstruction effort; and two, to provide lessons learned to allow us to better respond to future contingencies – the ones you might find yourselves working on a decade or two from now.
You may wonder why Congress saw fit to create a special inspector general just to focus on the reconstruction effort in Afghanistan. To understand that, you need to understand the sheer scale of the reconstruction effort. To date, the United States has spent nearly $115 billion on the Afghanistan Reconstruction effort -- more than on any other reconstruction effort in our history, including the Marshall Plan to rebuild Europe after World War II, when adjusted for inflation. Congress did not have faith that the agencies involved were responsibly spending the billions of tax dollars going to the reconstruction effort in Afghanistan. Nor, did Congress feel the usual oversight function performed by the State, DoD and USAID offices of Inspectors General were also up to this task. Ergo, my office, SIGAR, was created in 2008.
Now, you may not be familiar with Inspectors General in general, or special IGs specifically, but there are over 75 of us, almost all housed within one specific agency and with jurisdiction over only that agency and only 2 special IGs. What makes SIGAR special is that we are not housed in any particular agency but have jurisdiction over every aspect of the reconstruction effort – whether it’s salaries for the Afghan Army and Police paid for by the Defense Department; whether it’s hospitals and schools built by USAID, whether it’s drug eradication and law enforcement programs run by the State Department, or whether it is USDA funding to set up a soybean market in Afghanistan.
Given the scale of the investment, it’s a daunting enterprise. And time is of the essence, SIGAR is a temporary agency – yes, there is such a thing – and we’ll go out of business when the amount of reconstruction dollars available drops below $250 million. Right now there is roughly $9 billion already appropriated but not yet expended for Afghanistan reconstruction, with more on the way. But we know the American people are tired of this war – so I demand that my roughly 200 employees move fast, work hard, and maintain a “fire in the belly.” And we’re not simply bean counters sitting behind desks in DC. We have 35 people forward deployed in Kabul, and are constantly rotating headquarters staff on temporary assignments that last weeks to months, sometimes even years. Given that security is so bad that you have to take a helicopter for the 3 kilometer trek from the airport in Kabul to the Embassy, it’s a tough environment, and I’m grateful to my staff for taking up this important work.
Their sacrifices have resulted in some impressive results, however. We have issued nearly 250 audits, inspections, alert letters, and other products which included more than 700 recommendations to a multitude of agencies – over 85% of which I can say have been adopted. In addition, our investigations unit, which consists of gun-carrying law enforcement personnel, has conducted several hundred investigations resulting in over 100 arrests, 125 criminal indictments and charges, 100 convictions or guilty pleas, and nearly 100 sentencings. Our little agency has, to date, identified nearly $2 billion in savings for the U.S. taxpayer, including over $950 million in civil fines and forfeitures.
While I personally feel all of this is impressive given our annual budget of $57 million, we at SIGAR hope to make a longer-term impact beyond the indictments, convictions, and audits. As I said earlier, history has a funny way of repeating itself. More to the point, basically after every international intervention the United States has engaged in starting with the Korean War, we’ve heard promises from politicians that we won’t do nation-building ever again. Yet over 9,000 troops sit in Afghanistan and thousands more have returned to Iraq. So if we’re going to keep doing this, shouldn’t we find a way to do it better?
I’ll admit this part of the mission wasn’t at the forefront of my mind when I was appointed SIGAR by President Obama in 2012. But in meetings with generals and government officials, I constantly heard the refrain that we must learn from these 15 years the United States has spent in Afghanistan. In particular, General John Allen, the former commander of U.S. forces in Afghanistan, and Ambassador Ryan Crocker, who served two stints in Afghanistan, said it was pivotal that SIGAR undertake this work because we are the sole federal organization with cross-agency jurisdiction.
Too often, lessons learned efforts, if they’re undertaken at all, are stove-piped--they look at one agency, because they are authored by a single agency – and frankly, the Defense Department is the only one who does them with any regularity. USAID did do an evaluation of all its work in Afghanistan up to the Soviet invasion, written in the early 80’s, it was a massive tome and you would be amazed at how many of the lessons from then are applicable today – the only problem? The only known copy somehow survived in a Kabul library and when we brought it back, no one at USAID had even heard of it, let alone read it.
So SIGAR has set up a lessons learned program, and we are currently undertaking a half dozen reports, with more to come on everything from the U.S. counter narcotics strategy in Afghanistan to the interagency policy process. But the first out of the gate, which was released last month, quite appropriately, focused on anti-corruption efforts in Afghanistan, and that’s what I’m here to talk about today. The report, Corruption in Conflict: Lessons from the U.S. Experience in Afghanistan is available on our web site –www.sigar.mil
And yes, contrary to popular belief, there are places more corrupt than upstate New York, and my old stomping grounds of Cleveland and Youngstown, Ohio, and Afghanistan is one of them.
Corruption in Afghanistan
The significance of corruption and its impact on our reconstruction efforts in Afghanistan were best summed up by a report commissioned by now-Chairman of the Joint Chiefs Joe Dunford back when he was the commanding general in Afghanistan. The report stated that “corruption directly threatens the viability and legitimacy of the Afghan state…alienates key elements of the population, discredits the government and security forces, undermines international support, subverts state functions and rule of law, robs the state of revenue, and creates barriers to economic growth.” In other words, it’s a problem.
SIGAR’s recently released lessons learned report, nearly two years in the making, interviewed dozens of officials from all relevant agencies including State, DOD, USAID, Treasury, Justice and others, and reviewed thousands of documents, open sources and some not available to the public.
In short, our research found that anti-corruption efforts were often the ugly stepchild of the reconstruction effort; that the international reconstruction efforts actually made corruption worse; other policy and political objectives were given a higher priority, and even when anti-corruption efforts were prioritized, they met a wall of resistance from the Afghan government.
But, as our report noted, rather than being subordinate to, or mutually exclusive from, security or reconstruction goals, anti-corruption efforts are a fundamental piece of creating lasting security, political stability, and a strong and sustainable economy. All things, you’ll note, that Afghanistan currently lacks.
The United States and our coalition partners obviously didn’t enter Afghanistan with the goal of making corruption worse – and certainly corruption existed in Afghanistan prior to our arrival in 2001. But early on, in an effort to maintain a light footprint in Afghanistan, the U.S. partnered with abusive and corrupt warlords in order to run al-Qaeda and the Taliban out of the country. These individuals were then in a position to demand positions in the newly formed government, which enabled them to access the streams of cash pouring into a virtually non-existent economy with a complete lack of judicial and legal structures to prevent abuse. Combined with limited U.S. oversight of funds and our government’s perverse incentive structure which rewards officials with pushing money out the door, without ever holding them accountable for how well that money is spent, money was sloshing around the Afghan economy like a bathtub running over.
Eventually – eight years into the reconstruction effort – U.S. officials became increasingly concerned that corruption was fueling the ongoing insurgency by financing insurgent groups and stoking popular grievances. U.S. agencies, notably the Treasury and Justice Departments, set up and supported several U.S. and Afghan organizations to tackle the problem.
However, by then, the U.S. effort in Afghanistan was so deeply entrenched that there were two major obstacles to the success of the anti-corruption efforts. First, U.S. efforts were increasingly reliant on the cooperation of the Afghan government to achieve certain security goals, and were hesitant to rock the boat. And second, even when they mustered the fortitude to rock that boat, the Afghans knew they had us over a barrel.
For example, an aide to then-President Karzai named Mohammed Zia Salehi was thought to have contributed to the laundering of nearly $3 billion out of the country. The U.S.-mentored Major Crimes Task Force used wiretaps to collect enough evidence, and working with Afghan law enforcement, played the tapes for a senior aide to Karzai who authorized Salehi’s arrest. In July 2010, the Task Force arrested Salehi. Within hours, President Karzai ordered his release and charges were ultimately dropped. The Task Force never felt it could successfully prosecute a case after that.
President Karzai demonstrated no interest in pursuing any of the officials responsible for the Ponzi-scheme, otherwise named Kabul Bank, that led to nearly $1 billion of assets disappearing from Afghanistan. That’s the equivalent of $1 trillion leaving the U.S. economy virtually overnight.
The reluctance was not limited to Afghan officials. Ahmed Wali Karzai, the president’s brother who basically ran Kandahar province was, according to a recent book by Washington Post correspondent Joshua Partlow widely assumed to be involved in the opium trade, which helped fund the insurgency. Yet coalition commanders operating in Kandahar would consistently state that they needed Ahmed Wali Karzai’s assistance to know what was going on in Kandahar and to protect their forces – and the situation in Kandahar did deteriorate after Ahmed Wali was assassinated in 2011. I’m not suggesting these are easy choices, especially when coalition lives are at stake, but it speaks to the difficulty of the challenge.
Lessons Learned
None of our work, including this report, is meant as a negative critique or criticism or the many brave and honest men and women who have served, and continue to serve, in Afghanistan. Nor, is our report meant to imply all Afghans are corrupt nor impugn the thousands of Afghans who daily fight corruption to their detriment. Rather, our report is an account of the U.S. experience addressing corruption in Afghanistan and hopefully will lead to new thinking and new efforts before we encounter a similar situation in the future. Let me briefly discuss the lessons our report identified:
- First, anticorruption efforts must be a top priority so that corruption does not sabotage the overall objectives of the reconstruction efforts. As Ambassador Crocker told us, “the corruption lens has got to be in place at the outset, and even before the outset, in the formulation of reconstruction and development strategy, because once it gets to the level [the Ambassador] saw…it’s somewhere between unbelievably hard and outright impossible to fix.”
- Second, U.S. agencies must analyze and jointly understand how corruption works in the political economy and networks of the host country. In Afghanistan, the U.S. was too slow to understand the dangers that virtually unimpeded corruption posed because our government didn’t understand how it had infiltrated virtually every corner of Afghan society. If corruption is the giant redwood tree, we need to identify all the roots and follow them wherever they may lead, whether to the government or the enemy, or even to our own forces. Afghans started supporting the insurgency because they were tired of government corruption, at the same time the insurgency was benefitting financially from all the corruption. It was a win-win for the insurgency, and the coalition didn’t realize it quickly enough.
- Third, the U.S. government must better assess how much foreign assistance the host country can reasonably absorb without completely distorting the economy and improve our own ability to oversee and monitor that assistance. Imagine pouring water on a sponge. At some point the sponge becomes full and the water spills off to the side. In terms of foreign assistance, amounts provided that are more than 15 to 45% of a country’s annual GDP is generally considered counterproductive. On multiple occasions, U.S. assistance alone equaled Afghanistan’s annual GDP, so more than double the high end of the recommendation, and was over the high end of 45% every year from 2004-2013. Combined with poor oversight and contracting practices, this was a recipe for disaster.
- Fourth, the U.S., when possible, should limit alliances with malign powerbrokers – in other words, bad guys. As I noted earlier, decisions about who to deal with in a war zone can be complicated, particularly in place where blood is on virtually everybody’s hands. That said, the least we should do is a cost-benefit analysis of whether partnering with that particular warlord or corrupt official is worth the cost of perpetuating corruption further. The mission must come first – but winning the mission requires limiting corruption.
- Fifth, anti-corruption efforts must be seen as a key contributor to overall security and stability goals and not simply a “nice to have.” We know corruption has undermined the mission in Afghanistan, so anti-corruption efforts should not be marginalized to the sidelines.
- Finally, none of these recommendations will bear any fruit unless there is the political will at every level of the U.S. government to treat anti-corruption as a major goal and to insist on cooperation from our partners. In Afghanistan, corruption flowed from the top down, yet the U.S. too often attempted to rely on technical approaches to fix it without having the difficult conversations necessary to force changes from the top. Given the Karzai regime, perhaps such efforts may not have worked – but we should have at least tried.
In addition to these key lessons, SIGAR made eleven recommendations. Three to Congress and Eight to the executive branch. Such things as improving contractor vetting efforts and sanctioning corrupt leaders need to be on the table, and I encourage you to look at the report for more details. But the single most important thing the government needs to do is prioritize anti-corruption efforts – Congress needs to insist on it and hold the executive branch accountable for it; every agency involved in reconstruction must think about anti-corruption in every action they take and program they fund; and the National Security Council needs to ensure it stays a major political priority.
Transparency and Publicity
As I said earlier, our goal with this report was not to criticize or condemn the dedicated Americans who were dealt a very tough hand. That said, egos in Washington bruise easily. One top USAID official, when asked about our report, said he didn’t find it helpful to be reminded there was a corruption problem in Afghanistan. I understand why people may feel frustrated that SIGAR is pointing out things they’ve known but refused to publicly acknowledge for years, or that we seem to be know-it-alls who don’t have to deal with the daily challenges they do. Moreover, they wish that if we do do our work, we keep it out of public view, but I reject that notion.
The U.S. government pours out thousands of reports a year. How many do you hear about? I didn’t accept this job to become Mr. Popular or angle for another government job. In fact, a member of my security detail at the Embassy once told me he was more worried about threats to me from Embassy staff than from the Taliban. I’m pretty sure he was joking. Or, at least I hope he was since I am about to return to Kabul next week.
From nearly 25 years of experience on Capitol Hill, working for such great statesmen as Senator Sam Nunn and Congressman John Dingell, I learned that if you want to change something, it needs to be in the public spotlight. In the oft-quoted words of former Supreme Court Justice Brandeis, “sunlight is the best disinfectant.” For SIGAR, that means the taxpayer has a right to know how their money is being spent even if it’s inconvenient or embarrassing for some bureaucrats, politicians and contractors.
My office undertook this anti-corruption lessons learned report to encourage and enact improvements in how we do reconstruction in Afghanistan and elsewhere. It was not a paper exercise meant to kill trees, create headlines or fodder for late night comedy routines – although I must confess some of the most egregious fraud we have uncovered has made it onto Steven Cobert’s and John Stewart’s shows.
It is important to all of you who plan to be practitioners in public policy, administration, the law or journalism to remember the fundamental importance of transparency in any democracy. Transparency and publicity is essential to effectuate reform. For example:
- Transparency and Publicity can bring problems to the attention of senior leaders whose staff generally avoid telling them bad news;
- Transparency and Publicity can deter government contractors from cutting corners, using substandard materials, or tolerating unsafe practices. SIGAR has referred over 750 entities for suspension and/or debarment – essentially recommending that they be prevented from receiving any more government contracts – we publish that list every quarter, and it’s not one contractors want to find themselves on.
- Transparency and Publicity can deter fraud. When someone considering breaking the law reads about a federal civilian, military member, or contractor going to jail and paying big fines for taking kickbacks or bribes, stealing, or smuggling, they may decide to resist the entreaties of whoever’s incentivizing them to look the other way.
- Transparency and Publicity can encourage people to come forward to the IG community. Some of our best tips have come from senior officials, including generals and ambassadors, who approach us. We also receive calls every single day from ordinary Afghans through our anonymous Hotline which has been heavily publicized in Afghanistan.
- Transparency and Publicity can educate by pointing out successes and best practices, such as the anti-corruption report does which we hope can encourage agencies to continue improving their own performance.
- Most importantly, publicizing our work gives American taxpayers – and congressional appropriators and oversight committees – confidence that someone appointed by the president of the United States is looking out for how their tax dollars are spent.
While I may be the messenger, I sometimes have to remind people I’m not the one who decided to build a $36 million Marine headquarters building no one wanted or used; or spend $43 million for a compressed natural gas station in a country with no market for such fuel; or spend millions to import a handful of rare Italian goats in an ill-fated attempt to improve the Afghan cashmere industry.
Let’s face it, no matter how good a SIGAR audit, GAO report, Congressional committee report, or university research study may be, if it falls into the background noise in Washington, it will go unnoticed and help no one. I hope SIGAR’s legacy will be judged on what improvements were made as a result of our work – we cannot simply play the game the agencies would prefer we play Washington and slip our reports under their doors in the middle of the night and hope the taxpayer is none the wiser.
Conclusion
After 15 years and nearly $115 billion spent just on reconstruction, we have to learn the lessons we can from Afghanistan. Unchecked corruption in Afghanistan continues to threaten the reconstruction effort. Time is running out. Surveys indicate that Afghan optimism is at its lowest level in decades, as is confidence in the government. If we are going to work with the Afghans to address this problem, we must identify what we’ve done wrong in the past, how we can improve in the future, and we make sure those lessons cut through the Beltway noise. And finally, one day you may find yourself working on a reconstruction effort in Syria, Yemen, or some place that’s not even on our radar yet – and I hope you’ll try and keep some of these things in mind – and that’s why I’m happy to have spoken to you today.
Thank you very much, and I look forward to any questions you may have.