Grab Kabul by the Horns!
Ladies and gentlemen, today let’s honor the buffoonery of perhaps the most incompetent agency in the federal government, USAID.
On March 16, the Office of Inspector General for the United States Agency for International Development published on its website a bracing report detailing pervasive insider fraud that led to a run on the largest thrift in Afghanistan, the Kabul Bank.
But shortly after the report went up here, the IG took it down. Why? Because USAID moved to retroactively classify key documents used in the study, effectively removing it from public scrutiny.
I think Steve Aftergood of the Federation of American Scientists was the first one to notice, although the Washington Post and New York Times — among others — used the now-disappeared report for stories.
FAS has preserved the original IG report for you. Take that, censoring USAID beadles!
To me, the IG’s audit is fascinating for a pair of reasons: 1) It spells out in microcosm what a great flop economic development has been in Afghanistan for nearly a decade; and, 2) It highlights the expanding culture of secrecy at all our agencies during the post-9/11 imperial presidencies of George W. Bush and Barack H. Obama.
But let’s look at the fraud, waste and abuse of taxpayer dollars in Afghanistan first. USAID sure doesn’t want you to do so!
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Ideally, USAID should function as the soft hand of American power projection overseas, one that works in tandem with the hard fist of military might.
In Afghanistan and Pakistan, however, USAID often has been part of the problem. Sometimes this is because nation-building itself is a failed effort that doesn’t address our policy goals in AfPak when balanced against the blood and treasure necessary for funding it.
But even if we granted that USAID might help pacify a state undergoing a brutal civil or anti-occupation war, like Afghanistan, questions remain about whether the agency can do so competently.
Most civilians don’t understand that the State Department’s USAID really functions more like FEMA than the Pentagon. Its main task is writing checks to contractors who carry out the bulk of the agency’s functions in Afghanistan – spurring economic development, slashing infant mortality rates, building a judiciary, handing out loans to female entrepreneurs, et al.
If you notice that none of this seems to have pacified Afghanistan but rather enriched people who now contribute even more to the various insurgencies roiling the country, you’re right.
But that’s not the point of this blog post.
Rather, it’s that our government came to believe that a cornerstone of Afghanistan’s future was a modern banking system, and USAID hired international accounting firm Deloitte for $92 million to make it so.
As advisers to Afghanistan’s central bank, however, the firm’s auditors never noticed fraud so pervasive at Kabul Bank that nearly $850 million in loans traveled to insiders, often for offshore real estate speculations or vacation villas, according to the IG report.
That’s only about 94 percent of the outstanding loans at Afghanistan’s largest lending institution, the joint that cashes most of the checks for the nation’s security forces.
The crony capitalism endemic to the Karzai kleptocracy that led to the corruption and collapse of Kabul Bank wasn’t brought to light by Deloitte, but rather by the Washington Post for considerably less than $92 million.
The Feb. 22, 2010 WAPO probe cataloged insider deals orchestrated at the highest levels of Kabul Bank. It was a devastating detailing of how the Mayor of Kabul’s kin and their fat cat cronies managed to buy, illegally, multi-million dollar villas in Dubai through a scheme concocted at Kabul Bank but never noticed by the hapless government central bank.
In the IG report, investigators took to task both the “weak” oversight of USAID and Deloitte that should’ve picked up on the scheming. Investigators determined that USAID and its contractor failed to properly supervise Afghanistan’s central bank and overlooked warning signs that included the intimidation of auditors, death threats against banking contractors and ongoing rumors about fraud and Kabul Bank’s shaky finances.
Most amazing to me, after nearly a decade in Afghanistan USAID still doesn’t have clear, written policies that mandate contractors report suspicions of fraud, threats or abuse to them.
So Deloitte and other contractors didn’t do it.
No, you can’t make this up.
On the bright side, USAID says it will have those requirements in place by the end of the month.
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Let’s look beyond Deloitte for a moment. A key reason why the contractors didn’t do their jobs is because of tepid scrutiny by the USAID staff in Afghanistan , a crew left without enough resources to oversee the help our nation hired.
As one unnamed official in the IG report put it, “Deloitte was managing USAID, rather than the other way around.”
But that’s not unique to Afghanistan or USAID.
USAID has long been dogged by scandals that make Kabul Bank seem pedestrian. Whether it’s being caught hiding information from taxpayers on behalf of NGOs, bumbling the oversight of nonprofits before their graft and corruption reached a crisis, or generally cocking up everything, experts have long questioned whether it can reliably help the U.S. exert influence where it matters.
Here at home, it’s probably best known as the department to stash political hacks.
Before the war in AfPak winds down, we likely won’t have reformed USAID to the point that we even know what we want it to be: Either a down-on-its-luck overseas version of FEMA or an active and equal partner in U.S. power projection.
Congress and the White House could help this, but I doubt we’ll see much of that.
House Republicans seem willing to just shutter the damned thing, and I’m not convinced that – in spirit — they’re wrong.
I think someone could make a compelling argument that closing USAID (or barring it from south Asia) could be a strategic gain for the US there.
Perhaps one of my more industrious readers will do just that.
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Until then, we have the second reason why the latest USAID online kerfuffle is interesting.
I like to remind people that the Obama administration really hasn’t been any better than W’s when it comes to government secrecy.
The fact that USAID retroactively classified documents and got a damning report of its incompetence offline shouldn’t be seen in isolation.
Last week, the Department of Justice was caught in an ongoing conspiracy to lie to a federal judge about documents requested by citizens under the Freedom of Information Act.
That’s neither unusual for the Obama administration nor is it cheap. Annually, the Pentagon and 40 other federal agencies spend $10.17 billion classifying documents to keep them away from prying eyes.
That’s about four times higher than in 2000 and classification spending is rising at an annual rate of 15 percent, despite the many hollow promises of Obama to make government more transparent.
And that sum is really a mere pittance because it doesn’t include the Central Intelligence Agency, the Defense Intelligence Agency, the Office of the Director of National Intelligence, the National Geospatial– Intelligence Agency, the National Reconnaissance Office and the National Security Agency, departments that classify everything or the terrorists win.
We’ve arrived at a strange moment in American history when U.S. Rep. Darrel Issa, R-Burglar Alarms, is doing more to help taxpayers find where their money is spent than the rest of the federal government combined.
Perhaps the White House that brought you Bank of Kabul can do better, eh?
H/T The Barefoot COINtessa. And this guy!
Tags: Bank of Kabul, Bush, FAS, FOIA, Inspector General, Obama, USAID
