A new report from the US Office of Special Inspector General for Afghanistan Reconstruction (SIGAR) looks in detail at the scandal of large US currency exports from Afghanistan - mostly to private bank accounts in the Gulf - and shows that efforts to safeguard US cash entering the Afghan economy have been hampered by ineffective coordination, inconsistent Afghan cooperation and insufficient cash controls.
This is not a new problem, but it has not been investigated very thoroughly in the past. The same problem dogged US operations in Iraq, where billions of dollars simply disappeared.
SIGAR says US agencies cannot easily follow what happens to cash dollars that enter Afghanistan, with the possibility (and likelihood) that much of it is being stolen or, in some cases, diverted to the Taliban.
“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 US dollars are protected from fraud and diversion to the insurgency. We must also ensure that the Afghan government is a full partner in efforts to set a fledgling financial sector on sound footing,” said Herbert Richardson, acting head of SIGAR, when launching the report today.
He pointed out that the Afghan government has not cooperated with US officials to build a strong and clean financial sector.
SIGAR says that since 2002 the US Congress has appropriated more than $70 billion to implement security and development assistance in Afghanistan. Although only a small proportion of this ends up as cash in the Afghan economy, tens or possibly hundreds of millions of dollars - SIGAR does not give a figure - very quickly leaves the country in suitcases destined for foreign bank accounts.
A recent report published by Spiegel Online found that many of the most expensive properties in Dubai have been bought by Afghans with close connections to the government.
Vulnerabilities identified by SIGAR's auditors include failing to record serial numbers of cash given out to contractors and other recipients of US funds and the failure of Afghan commercial banks to record the serial numbers of Electronic Funds Transfer payments by US agencies to contractors when they are converted to cash.
The report notes that the Afghan Attorney General's office has not cooperated fully in prosecuting individuals suspected of having committed financial crimes; out of 21 leads forwarded by FinTRACA to the Afghan government, only four were prosecuted. President Karzai has even prevented US government advisers from gaining access to the Central Bank, where the atmosphere is described as "hostile".
Ashraf Ghani talk at RUSI, 12 May 2016
2 days ago