US Military: $360M Ends Up With Taliban, Criminals

Contracting funds for Afghan economy 'reverse laundered' to fuel insurgency, corruption

by John Glaser, August 16, 2011

The U.S military estimates $360 million in U.S. tax dollars has ended up in the hands of the Taliban, criminals, and power brokers with ties to both. The money was awarded to Afghan businesses in a central Obama administration policy that finances business contracts to boost the economy.

These losses, which end up directly funding groups U.S. forces have been battling against for a decade, are the latest in a series of reports about large amounts of U.S. aid to Afghanistan being diverted to insurgents and corrupt parties. Last year, it was found that $3 billion in diverted U.S. aid and logistics dollars had been smuggled out of Kabul International Airport to financial safe havens or laundered to private ventures abroad. Similarly, the Senate Foreign Relations Committee’s Democratic majority staff concluded in June that U.S. nation-building efforts were fueling corruption, distorting local economies, and did not provide sustainable results.

In this case, investigated by the U.S. military, funds were diverted through a murky process known as “reverse money laundering,” where payments from the U.S. pass through companies hired by the military for transportation, construction, power projects, fuel and other services to groups with ties to the insurgency or criminal networks.

More than half the losses flowed through a large transportation contract called Host Nation Trucking, under which eight companies and nearly three dozen subcontractors provided transportation services. The Defense Department announced Monday that it had selected 20 separate contractors to replace Host Nation Trucking, but many are skeptical such waste will be put to an end.

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