WASHINGTON – It may come as little surprise that the U.S. cannot track all of the cash it has infused into Afghanistan after nearly 10 years of war and $70 billion in security and development projects. But a blistering audit released Wednesday found that untold amounts of American taxpayer dollars are vulnerable to winding up in the pockets of insurgents, and blames both countries for a dysfunctional tracking system.
How bad is it? Afghan President Hamid Karzai has barred U.S. government advisers from the Afghan central bank, according to Treasury officials who called the bank a “hostile” environment. Nobody is writing down the serial numbers of the cash flying through customs at Kabul International Airport. And the U.S. is having trouble identifying financial crimes because Afghan officials are reluctant to prosecute.
“U.S. agencies have limited visibility over U.S. cash that enters the Afghan economy -- leaving it vulnerable to fraud and diversion to the insurgency,” concluded the Office of Special Inspector General for Afghanistan Reconstruction, or SIGAR.
That assertion may not surprise reporters who have tracked wartime money. In Iraq, $6 billion held by U.S. banks went missing after it was returned to Iraq as pallets of cash.
But attention to Afghan banks has increased since last September, when a run on the banks forced the government to take control and ease public fears. The U.S. and other governments rely on Afghan banks to pay the salaries of Afghan military, police and civilian workers it says are crucial to holding the gains made in the counterinsurgency. Officials have boasted that one metric of progress is that more Afghans are now paid directly and electronically via mobile banking on their cellphones – once they are taught how to read the numbers on their bank accounts, that is.
Meanwhile, Afghan and American leaders have feuded publicly over who is to blame for losing track of aid money. SIGAR found that Afghans have resisted starting monetary security programs recommended by U.S. Agency for International Development officials because the Afghans felt they were too “difficult to implement.”
“The United States has poured billions of aid dollars into a country plagued by corruption, insurgency and the narcotics trade. It is essential that we use all available tools to ensure that U.S. dollars are protected from fraud and diversion to the insurgency,” said Herbert Richardson, acting Special Inspector General for Afghanistan Reconstruction, in a statement.
By not recording serial numbers, SIGAR stated, for example, the U.S. is letting slip away a way to trace future criminal activity.
There is a glimmer of good news in the report. The practice of paying contractors with cash is declining. The Army, SIGAR found, only used cash to pay 5.9 percent of its contractors in February – about $19 million.