The Pentagon is seen past the National 9/11 Memorial in Arlington, Virginia, U.S. (Photographer: Andrew Harrer/Bloomberg)

Pentagon Audit Faults World Bank's $10 Billion Afghan Effort

(Bloomberg) -- A Pentagon watchdog faulted the World Bank and Afghanistan’s government for failing to shield billions of dollars in aid from potential waste or misuse, saying that long-identified weaknesses remain in a program that provides 40 percent of non-military expenditures in the country.

“The Afghan government is not meeting its responsibilities to account for how it uses ARTF funding and to safeguard the funds from risks of misuse, waste, and fraud," according to the report on the Afghanistan Reconstruction Trust Fund by the Defense Department’s special inspector general. “The World Bank’s lack of transparency limits donors’ and the public’s knowledge about ARTF progress and results reported."

The fund was established in 2002 to provide for the rebuilding of Afghanistan after the U.S. invasion in the wake of the Sept. 11 terrorist attacks. Supported by 34 nations and administered by the World Bank, the fund is designed to bolster government and economic development programs and to protect civilian rights. Of the $10 billion contributed to the fund since 2002, the U.S. has provided more than $3 billion, making it the single largest donor.

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The report by the watchdog, known as the Special Inspector General for Afghanistan Reconstruction, is another sign of the troubles the U.S., its allies and President Ashraf Ghani’s government are having in improving governance while staving off advances by the Taliban and Islamic State.

About 60 people were killed and more than 120 were wounded in a bombing over the weekend at a voter registration center in Kabul. Islamic State claimed responsibility for the suicide attack.

Afghanistan’s central government has been losing control of swaths of territory to Taliban and other forces for years. According to the Pentagon, as of October 2017, about 56 percent of Afghanistan’s population lived in areas under government control, with 14 percent controlled by insurgents and the remaining 30 percent in contested areas.

A January report by the Pentagon watchdog, known as SIGAR, said that despite $8.7 billion spent on counter-narcotics efforts in Afghanistan, opium production was up 87 percent in the first 11 months of 2017 from the same period a year earlier, an all-time record.

U.S. Forces

President Donald Trump agreed last year to a Pentagon request to send 4,000 additional U.S. troops, including special forces, to Afghanistan. He also gave commanders in the field more authority to strike the Taliban as well as Islamic State and al-Qaeda terrorists. But those efforts don’t appear to have turned the tide against the insurgents in what has become the longest war in U.S. history.

The latest SIGAR report said the World Bank has made changes to its oversight of the reconstruction fund, but cited the effort for a lack of transparency and effective monitoring. The bank “will be unable to determine the impact that about $10 billion in donor funding has had in improving Afghan development,” according to the report.

In a letter responding to the report, the World Bank said it agreed with most of SIGAR’s recommendations but not its call to cancel or adjust the scope of projects deemed to be failing or to withhold or recover money from the Afghan government.

Shubham Chaudhuri, the World Bank’s country director for Afghanistan, called most of the findings “somewhat anecdotal” and said that while they showed a lapse in reporting at a particular moment, they were not necessarily “recurrent weaknesses that were never addressed.”

‘Lack of Transparency’

Separately, the World Bank said in a statement on its website Wednesday that it is working with the Afghan government to strengthen the program.

In its assessment, the watchdog said it selected six of 51 completed and ongoing projects for review but, due to “a lack of transparency and records,” couldn’t determine the extent to which the World Bank was monitoring the projects to determine if they were meeting their objectives. The six projects represented more than $2.25 billion in ARTF funds, according to SIGAR.

As an example of the problems with reporting and monitoring, SIGAR said the World Bank doesn’t require its third-party monitoring agent to verify that employees whose salaries are paid through the fund actually exist, despite identifying risks associated with “ghost workers” who exist only on paper.

U.S. contributions to the fund are administered by the U.S. Agency for International Development. According to the watchdog’s report, officials from USAID said they would reduce future 2018 contributions to the trust fund if the World Bank and Afghan government don’t take steps to correct the issues.

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