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Watchdog warns US fuel purchases in Afghanistan could be aiding Iran

By Phillip Swarts

Wednesday - 2/13/2013, 12:53pm  ET

The government's chief watchdog for Afghanistan reconstruction is warning that U.S. fuel purchases in that country are so mismanaged that American money could be aiding Iran in violation of international sanctions.

"The United States could be the biggest violator of the oil embargo," Special Inspector General for Afghanistan Reconstruction John Sopko told lawmakers on Wednesday.  "We have no real controls in place.”

Sopko also told a House committee that the United States continues to waste billions of dollars on the Afghan reconstruction, with no end in sight.

"The impending end of the combat mission in Afghanistan has led some to erroneously believe that the Afghan reconstruction effort is waning," he said. "The next two years and beyond will be the most critical period for reconstruction."

Testifying before the national security subcommittee of the House Committee on Oversight and Government Reform, Sopko stunned lawmakers when he testified that there is concern that a troubled U.S.-funded fuel program is actually sending dollars to Iran.

"Iran supplies a large percent of oil to Afghanistan," he said, because "Iranian oil is the cheapest."

The troubled program gives funding to the Afghan national government to allow it to purchase fuel for its military operations.  But despite giving more than $1 billion to the Afghan National Army to purchase the fuel, Sopko's office found Defense Department officials haven't kept tabs on the program.

 In fact, financial records for the program are largely missing from 2007 until February 2011, and SIGAR has previously said they have evidence that some of the records were shredded.

"The U.S. lacks oversight and accountability over more than $1 billion in fuel that it has provided to the Afghan Army over the last five years," said the committee's ranking member, Rep. John Tierney, D-Mass.

Once the money is given to Afghanistan, the U.S. has been largely taking a hands-off approach, Sopko said.  But if the Afghans are in turn using U.S. funds to purchase cheap Iranian fuel, then America could be violating an international embargo on Iranian oil, designed to put pressure on the regime as it pursues nuclear capabilities.

The Pentagon's program to supply Afghanistan with oil previously won the Washington Guardian's Golden Hammer, a distinction given to examples of government waste, fraud and abuse, he said.

Lawmakers said they were upset about the ongoing waste and abuse in Afghanistan, and suggested it's time to debate whether the U.S. should withhold funding until oversight improves.

"We continue to provide direct assistance worth billions of dollars to one of the most corrupt states in existence," said sub-committee Chairman Jason Chaffetz, R-Utah, who said maybe the U.S. should make payments "straight to Dubai and skip the middle man."

Fellow Republican John Mica, Fla., said that "Afghanistan is turning into a huge black hole for the American taxpayer and almost a bottomless pit for expenditures."

Sopko said money is given to the Afghan government to spend as it allows them more independence over their own affairs.  But the lack of continuing oversight by the U.S. means the money is falling prey to corruption and fraud.

And America's own plans are making oversight difficult, he said.  Civilian inspectors like SIGAR must follow the rule of the "Golden Hour," meaning they can be no more than an hour travel time away from a qualified medical facility.  As U.S. troops draw down, the "bubble" of territory that SIGAR can safely inspect will shrink, Sopko said.

"As our U.S. troops continue to withdraw, the amount of territory in Afghanistan that falls outside of the bubble will increase," he said.

Recently, investigators were unable to travel to a region in northern Afghanistan that was considered to be too dangerous.

"As a result, 38 projects and over $72 million in taxpayer money is beyond our inspection," he said.

Sopko said he was concerned that many government agencies seemed unprepared for the change in the environment that the withdrawal of U.S. troops would cause.

"This shouldn’t have been a shock or surprise," he said.  "The administration has been talking about a reduction of troops since way before the last election."

The U.S. needs to continue to evaluate whether the Afghans need certain projects - and if they can continue to be supported after U.S. funding ends.

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