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Watchdog: Afghan government collecting millions in fees from contractors

Special Inspector General for Afghan Reconstruction John F. Sopko, center, arrives in Herat, Afghanistan, for a site visit in August 2012.

SIGAR/COURTESY TO STARS AND STRIPES

By JOSH SMITH | STARS AND STRIPES Published: July 1, 2013

KABUL — In addition to collecting nearly $1 billion in taxes and penalties from contractors, a U.S. watchdog agency says, the Afghan government has exacted millions of dollars in additional fees that may have been imposed in violation of international agreements.

In a letter sent to U.S. congressional committees on Monday, Special Inspector General for Afghanistan Reconstruction John Sopko identified about $150 million in improper fines for unprocessed customs declaration forms, as well as over $1 million in customs processing fees for exempt goods.

Additionally, the inspector general’s letter noted business license and registration fees for companies supporting U.S. operations of $100 to $1,000 annually, totalling from $113,700 to $1,137,000 for the roughly 1,138 companies that were operating in Afghanistan in 2012. Registration fees for security companies are much higher, totalling between $2.3 million and $4.5 million, the letter noted.

At least 1,138 companies operated in Afghanistan in 2012 in support of U.S. operations, the report said. But it added that fees associated with registering security companies were significantly higher, amounting to $113,000 per company plus an additional $378,000 to be held in reserve to be confiscated in the event of a security incident. At least 40 security companies have applied for or been issued licenses.

That is in addition to the nearly $1 billion in business taxes and penalties identified in an audit released in May.

“Congress’s appropriations for the Afghanistan reconstruction effort are intended to build Afghan security forces, improve governance, and foster economic development in Afghanistan,” Sopko wrote. “However, as SIGAR has found, a substantial portion of these funds are being spent not to achieve these important goals, but, rather, to pay the cost of doing business in Afghanistan.”

Najeeb Manalai, a spokesman for Afghanistan’s Ministry of Finance, denied that the government was breaking any agreements.

“These taxes that we ask these companies to pay are according to the laws of Afghanistan,” he said. “Afghanistan loses a lot through that military cooperation agreement. But still we respect that and we follow all the agreements we have made.”

Many of the contractors that do work for the international forces also do outside business in Afghanistan, and for that private business the companies are charged, Manalai said. He said the amount levied by the Afghan government is closer to $100 million to $200 million, not $1 billion. “We won’t let anyone misuse that military agreement.”

Sopko said that U.S. agencies are aware of the issue, but he said it was important that Congress consider the costs as it determines future appropriators.

Zubair Babakarkhail contributed to this report.

smith.josh@stripes.com
Twitter: @joshjonsmith

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