[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]





         OVERSIGHT OF U.S. COALITION SUPPORT FUNDS TO PAKISTAN

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY
                          AND FOREIGN AFFAIRS

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 24, 2008

                               __________

                           Serial No. 110-179

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
EDOLPHUS TOWNS, New York             TOM DAVIS, Virginia
PAUL E. KANJORSKI, Pennsylvania      DAN BURTON, Indiana
CAROLYN B. MALONEY, New York         CHRISTOPHER SHAYS, Connecticut
ELIJAH E. CUMMINGS, Maryland         JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio             JOHN L. MICA, Florida
DANNY K. DAVIS, Illinois             MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts       TODD RUSSELL PLATTS, Pennsylvania
WM. LACY CLAY, Missouri              CHRIS CANNON, Utah
DIANE E. WATSON, California          JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts      MICHAEL R. TURNER, Ohio
BRIAN HIGGINS, New York              DARRELL E. ISSA, California
JOHN A. YARMUTH, Kentucky            KENNY MARCHANT, Texas
BRUCE L. BRALEY, Iowa                LYNN A. WESTMORELAND, Georgia
ELEANOR HOLMES NORTON, District of   PATRICK T. McHENRY, North Carolina
    Columbia                         VIRGINIA FOXX, North Carolina
BETTY McCOLLUM, Minnesota            BRIAN P. BILBRAY, California
JIM COOPER, Tennessee                BILL SALI, Idaho
CHRIS VAN HOLLEN, Maryland           JIM JORDAN, Ohio
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont
------ ------

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
               Lawrence Halloran, Minority Staff Director

         Subcommittee on National Security and Foreign Affairs

                JOHN F. TIERNEY, Massachusetts, Chairman
CAROLYN B. MALONEY, New York         CHRISTOPHER SHAYS, Connecticut
STEPHEN F. LYNCH, Massachusetts      DAN BURTON, Indiana
BRIAN HIGGINS, New York              JOHN M. McHUGH, New York
                                     TODD RUSSELL PLATTS, Pennsylvania
                       Dave Turk, Staff Director













                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 24, 2008....................................     1
Statement of:
    Wilkes, Major General Bobby, USAF ret., Deputy Assistant 
      Secretary of Defense for South Asia, Office of the 
      Secretary of Defense, U.S. Department of Defense, 
      accompanied by John P. Roth, Deputy Comptroller, Program/
      Budget, Office of Undersecretary of Defense, Comptroller, 
      U.S. Department of Defense; Charles Michael Johnson, Jr., 
      Director, International Affairs and Trade, U.S. Government 
      Accountability Office, accompanied by Steve Sebastian, 
      Director, Financial Management and Assurance Team, U.S. 
      Government Accountability Office; and Ambassador Stephen D. 
      Mull, Acting Assistant Secretary, Bureau for Political-
      Military Affairs, U.S. Department of State.................    14
        Johnson, Charles Michael, Jr.............................    32
        Mull, Ambassador Stephen D...............................    26
        Wilkes, Major General Bobby..............................    14
Letters, statements, etc., submitted for the record by:
    Johnson, Charles Michael, Jr., Director, International 
      Affairs and Trade, U.S. Government Accountability Office, 
      prepared statement of......................................    34
    Mull, Ambassador Stephen D., Acting Assistant Secretary, 
      Bureau for Political-Military Affairs, U.S. Department of 
      State, prepared statement of...............................    28
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............    11
    Tierney, Hon. John F., a Representative in Congress from the 
      State of Massachusetts, prepared statement of..............     5
    Wilkes, Major General Bobby, USAF ret., Deputy Assistant 
      Secretary of Defense for South Asia, Office of the 
      Secretary of Defense, U.S. Department of Defense, prepared 
      statement of...............................................    16

 
         OVERSIGHT OF U.S. COALITION SUPPORT FUNDS TO PAKISTAN

                              ----------                              


                         TUESDAY, JUNE 24, 2008

                  House of Representatives,
     Subcommittee on National Security and Foreign 
                                           Affairs,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2 p.m. in room 
2154, Rayburn House Office Building, Hon. John F. Tierney 
(chairman of the subcommittee) presiding.
    Present: Representatives Tierney, Higgins, Shays, and 
Platts.
    Also present: Representative Moran.
    Staff present: Dave Turk, staff director; Andrew Su, 
professional staff member; Davis Hake, clerk; Andy Wright, 
counsel; A. Brooke Bennett, minority counsel; Adam Fromm and 
Todd Greenwood, minority professional staff members; and Nick 
Palarino, minority senior investigator and policy advisor.
    Mr. Tierney. Good afternoon.
    A quorum being present, the Subcommittee on National 
Security and Foreign Affairs' hearing entitled, ``Oversight of 
U.S. Coalition Support Funds to Pakistan,'' will come to order.
    I ask unanimous consent that only the chairman and ranking 
member of the subcommittee be allowed to make opening 
statements.
    Without objection, it is so ordered.
    And I ask unanimous consent that the hearing record be kept 
open for 5 business days so that all members of the 
subcommittee be allowed to submit a written statement for the 
record.
    That is without objection so ordered, as well.
    Again, good afternoon. I suspect that you folks already 
know that this hearing continues a sustained oversight by this 
committee in our interest in Pakistan and the strategic 
interests of the critical Afghan-Pakistan border area and 
region. Several of you have given us the honor of having your 
presence and testimony before and we thank you for joining us 
once again.
    Since 2007, we have had six related hearings, and we have 
dispatched three separate congressional delegations to the 
region.
    The historic February 18, 2008, elections opened a new 
chapter in Pakistani political history and represent an 
historic opportunity for the United States to strengthen our 
ties to Pakistan in a manner, ideally, that both improves the 
lives of all Pakistanis and that assures our vital U.S. 
national security interests as well as theirs.
    The United States and Pakistan forged an uneasy yet 
critical alliance following the events of September 11th and 
after decades of uneven bilateral relations. Pakistan asserts a 
repudiation of the Taliban and a public alliance with the 
United States and counterterrorism efforts. Pakistan also has 
become the third largest recipient of the U.S. military and 
economic support throughout the entire world.
    Much of this final support was developed in the crucible of 
the immediate days after 9/11 and has not been guided by a 
long-term strategic plan. In fact, previous Government 
Accountability Office reports have indicated there is still a 
failure to have a coherent and cogent strategic plan for that 
region. We will probably explore that a little bit today, as 
well, in the questioning.
    The centerpiece of the U.S. effort has been Coalition 
Support Funds, which are drawn from a Presidentially designed 
and congressionally authorized fund of money to reimburse 
counterterrorism allies for incremental costs associated with 
supporting U.S. combat operations, an incremental cost being a 
cost over and above the normal military expenditures of that 
government's military.
    To date, nearly $6 billion has been transferred under the 
Coalition Support Funds program to Pakistan. This represents 
greater than 50 percent of the U.S.'s total support to Pakistan 
and its people since 9/11.
    The Defense Department has been given enormous discretion 
and authority under this program. The entire legislative 
guidance consists of a handful of sentences. The State 
Department has a smaller role, being required to concur with 
each payment authorized by the Defense Department, and today we 
will hear from key witnesses from both of those departments.
    Our subcommittee has conducted an 8-month investigation 
into Coalition Support Funds, part of which included our 
bipartisan request to the Government Accountability Office to 
undertake the report that is being publicly released today in 
conjunction with this hearing.
    The bottom line--and I think we should be clear the more I 
learn about the U.S.'s Coalition Support Funds to Pakistan, the 
more I am troubled: first, in terms of unaccountability for a 
huge amount of U.S. taxpayer funds; second, about the program's 
failure to achieve vital U.S. security objectives, at least to 
a degree; and, third, about the program's incompatibility with 
the long-term strategic partnership between the United States 
and Pakistan and strategy overall in that region.
    Let me briefly touch on each of these concerns. I am 
hopeful we will give them a full public airing at the hearing 
today.
    First, the grave concerns about the stewardship of nearly 
$6 billion in taxpayer funds. The GAO's in-depth, on-the-ground 
investigation offers a pretty damning critique. Specifically, 
it found ``for a large number of reimbursement claims Defense 
did not obtain detailed documentation to verify that claimed 
costs were valid or actually occurred.'' ``Defense paid over $2 
billion in Pakistani reimbursement claims for military 
activities covering January 2004 through June 2007 without 
obtaining sufficient information that would enable a third 
party to calculate these costs.''
    The Defense Department paid costs that may not have been 
incremental to Pakistan's expenditures, as required by U.S. 
law. The Defense Department paid millions of dollars to 
Pakistan for reimbursements of potentially duplicative costs, 
and the Defense Department more generally established limited 
and insufficient guidance to assure financial accountability.
    We will hear more about what the GAO discovered when the 
director of the investigatory team testifies in just a few 
moments.
    Second, beyond the lack of financial accountability, there 
are grave concerns about the efficacy of the program. In short, 
how much bang or return have the U.S.'s taxpayers gotten for 
the billions of dollars or bucks that have been spent?
    A series of post-9/11 reports have documented western 
Pakistan's deterioration. In December 2005 the 9/11 
Commission's Public Disclosure Project stressed ``Taliban 
forces still pass freely across the Pakistan-Afghanistan border 
and operate in Pakistani tribal areas.''
    In April 2007 the State Department concluded, ``Pakistan 
remains a major source of Islamic extremism and a safe haven 
for some top terrorist leaders.''
    In July 2007 the National Intelligence Estimate announced 
that al Qaeda had ``protected or regenerated key elements of 
its Homeland attack capability,'' including ``a safe haven in 
the Pakistan Federally Administered Tribal Areas.''
    Coalition Support Funds, as currently structured, are 
intended to enable Pakistan to attack terrorist networks and to 
stabilize the border areas. A recent U.S. Defense Department 
report concludes, ``The war on terror has caused Pakistan to 
engage in a counter-insurgency struggle for which it is ill-
suited. The Army has been trained and equipped as a 
conventional military with a primary focus on fighting a 
conventional opponent--India. Pakistan's Frontier Corps 
soldiers are outgunned by their militant opponents. The result 
of these deficiencies in structure, tactics, doctrine and 
flexibility is that Pakistan occasionally takes `tactical 
pauses' from engagement with the enemy while it reorients for 
changing targets.''
    Some have gone even further in criticizing the U.S. funded 
post-9/11 Pakistani military efforts as, in fact, 
counterproductive. One wonders where we would be if, as at 
least one observer has noted, and I will paraphrase what he 
said, we had sought to deprive insurgent extremists of their 
base by strengthening legitimate governance throughout the 
territories of Afghanistan and Pakistan, while ending policies 
such as invading Iraq that act as recruiting tools for the 
enemy.
    Early concentration on the democratization of Pakistan to 
include civilian control of its national security strategy, 
followed by efforts to reinforce its security forces and police 
forces to act independently against Pakistan's existential 
threat of extremism, may well have presented an enduring 
partner that could ensure that foreign aid was effectively 
directed toward mutual threats.
    Let's be clear: many of our Pakistani friends have fought 
valiantly and many have died to save their country from the 
scourge of military extremism and international terrorism. 
There is no dispute about that. But that is just it. They are 
fighting an enemy that is also an existential threat to their 
government and to their families and to their neighbors, as 
well as to people in the western world.
    Which brings us to the third primary concern. The Coalition 
Support Funds program, as it is currently structured, may be 
incompatible and inconsistent with a long-term strategic 
partnership between the United States and Pakistan. Few doubt 
that aid ought to run in that direction, but many are starting 
to question the manner in which it is being given.
    Our two countries share a common set of enemies, but the 
Coalition Support Funds program furthers the damaging 
perception that Pakistan is using its military merely as a 
rented tool of U.S. interests and that Pakistan is but a client 
of the United States. This is a negative implication not only 
between our two governments, but, more fundamentally, in our 
critical long-term relationship with the Pakistani people.
    Today we hope to begin a constructive public dialog on 
Coalition Support Funds to Pakistan in an effort to 
constructively reevaluate this program and consider how best to 
transition from a program born on the ad hoc crucible of the 
first few days after 9/11 into an accountable, effective, long-
term partnership between the militaries and the governments and 
the peoples of both the United States and Pakistan.
    With that, I recognize Mr. Shays for his opening statement.
    [The prepared statement of Hon. John F. Tierney follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Shays. Mr. Chairman, thank you for holding this timely 
and important hearing on Coalition Support Funds [CSF], for 
Pakistan. I appreciate the subcommittee's serious, sustained 
oversight, yours in particular, of issues relating to Pakistan, 
including the CSF program we are examining today.
    CSF is primarily the Department of Defense's 
responsibility. It represents $6.88 billion in taxpayer funds 
disbursed to our allies in our shared fight against terrorism.
    The CSF fund program was created after September 11, 2001, 
to reimburse Coalition partners for their logistical and combat 
support for our military operations. These funds bypass normal 
congressional appropriations cycles and are reimbursements to 
nations for their support. Since 2001, CSF has flowed to 
several countries around the world; however, Pakistan has 
received over $5.56 billion, accounting for 81 percent of all 
CSF funds disbursed.
    The CSF program is not intended to be a blank check for 
Pakistan. Pakistan is reimbursed for its efforts in Pakistan 
for supporting U.S. troops in Afghanistan. This includes 
expenses associated with passage of Coalition supplies through 
Pakistan, as well as incremental costs incurred by the 
Pakistani armed forces fighting terrorists residing along the 
border between Pakistan and Afghanistan. This makes sense. Our 
No. 1 enemy, Osama Bin Laden, and his supporters, along with 
those who perpetuated the assassination of former Pakistani 
Prime Minister Benazir Bhutto are thought to be hiding in 
Pakistan's border regions, and Taliban and al Qaeda are thought 
to be planning and staging their attacks against Coalition 
forces from this region.
    What the Government Accountability Office reports today 
about the weaknesses in DOD's accountability and verification 
mechanism is disturbing. In certain instances insufficient 
documentation was obtained by DOD to verify the costs claimed 
by Pakistan were valid and actually incurred. And the parade of 
horrors in GAO's report released today--for example, double 
counting and double payments, as well as over-billing due to 
currency conversions--is perplexing. We are talking about $5.56 
billion of U.S. taxpayers' money disbursed without what seems 
to be an adequate record of receipts and verification.
    We need better oversight and visibility concerning where 
these funds are going. I am glad to see the subcommittee 
shining a very appropriate light on this issue.
    As we learned in last week's hearing on the U.S. efforts in 
training and equipping Afghan's national security forces, it is 
more than alarming to me how far behind we are in Afghanistan. 
What is more concerning is that this appears to be the result 
of extraordinary bad planning on the part of the United States.
    From the GAO's report, the planning and execution of CSF 
program appears also to have serious problems which present 
challenges to Congress' ability to conduct important oversight.
    I look forward to hearing from our witnesses about our CSF 
program, how the CSF program will be fixed.
    Mr. Chairman, I would like to add that the extent of the 
change that has come to Pakistan and the border region over the 
past year is remarkable. Just over a year ago, President 
Musharraf fired the Chief Justice of the Pakistani Supreme 
Court, sending off a grassroots movement across Pakistan led 
by, of all people, lawyers.
    In February of this year, Pakistanis went to the polls, 
asserting by their votes the choice and desire to be ruled by a 
democratically elected government. And just recently we have 
seen strong words exchanged between the leaders of Pakistan and 
its neighbors, Afghanistan, over military incursions into 
Pakistan.
    This is a region that requires our continued attention.
    Thank you, Mr. Chairman.
    [The prepared statement of Hon. Christopher Shays follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Tierney. Thank you, Mr. Shays.
    Now the subcommittee will receive testimony from the 
witnesses here today. I will give a brief introduction of each 
of them and then ask the testimony to start.
    Major General Bobby Wilkes, retired, serves as the Deputy 
Assistant Secretary of Defense for Central Asia in the Office 
of the Secretary of Defense. In this capacity, he is 
responsible for advising the Secretary of Defense in all 
aspects of policy formulation for U.S. bilateral relations with 
central Asian countries. He is a graduate of the U.S. Air Force 
Academy and completed his career as a major general. We have 
been keeping him busy lately. As I mentioned earlier, this is 
his second appearance before the committee in just as many 
weeks.
    Thank you, General.
    With him is Mr. John P. Roth, the Deputy Comptroller for 
Program Budget with the office of the Undersecretary of 
Defense, the Office of the Comptroller with the U.S. Department 
of Defense. He is responsible for the preparation of a Defense 
budget worth $515 billion. Before his current position, he was 
the Deputy Director for Investment responsible for the review 
of major Defense procurement and research programs.
    Also with us is Ambassador Stephen D. Mull. Ambassador Mull 
is the Acting Assistant Secretary for the Bureau for Political-
Military Affairs at the U.S. Department of State. Ambassador 
Mull previously represented the United States as Ambassador to 
Lithuania until June 2006, when he was appointed as the 
Principal Deputy Assistant Secretary of the Political-Military 
Affairs Bureau. Ambassador Mull is a career member of the U.S. 
Foreign Service. His career includes two tours in Poland, as 
well as in South Africa and Indonesia, where he was Deputy 
Chief of Mission and received the Baker Wilkins Award as the 
Outstanding Deputy Chief of Mission. He is also the recipient 
of the Presidential Meritorious Award and several superior 
honor awards.
    We thank you for being with us again today, having been 
with us in the full committee hearing this morning.
    Mr. Charles Michael Johnson, Jr., is the Director of the 
International Affairs and Trade Division at the U.S. Government 
Accountability Office. He has had an extremely distinguished 
27-year career with that office, having won numerous awards, 
including a special commendation award for outstanding 
performance, leadership, management, and high congressional 
client satisfaction.
    Mr. Johnson, it is terrific to see you and your team here 
again. I think this is the third time this month that you folks 
have been here, and we really do appreciate your efforts and 
your ability to get the work product out to us.
    With you today is Mr. Steve Sebastian, as I understand it. 
Mr. Sebastian is Director of the GAO's Financial Management and 
Assurance Team. He is responsible for the oversight and review 
of financial management at numerous Federal agencies. He has 
been with the GAO since 1981. He will not be giving an opening 
statement, but will be available to assist during the 
questioning and the answer portion of the hearing.
    As all of you know by now, it is our custom at this hearing 
to ask you to stand and be sworn in, so please stand and raise 
your right hands. All the people who are going to be testifying 
with you, do the same, please.
    [Witnesses sworn.]
    Mr. Tierney. Thank you. The record will please indicate 
that everybody has answered in the affirmative.
    I remind all of you what I think you already know, that 
your full written statement will be placed into the record. We 
ask you to try to keep your remarks within around 5 minutes or 
so. We understand that you will go over.
    General Wilkes, in reading your testimony I note that you 
give a lot of background information that you may or may not 
feel necessary to take up your 5 minutes with that. You may 
want to just go in and respond to some of the points raised in 
the other report. But you do as you want to do, and I thank you 
for being with us here today.

  STATEMENTS OF MAJOR GENERAL BOBBY WILKES, USAF RET., DEPUTY 
 ASSISTANT SECRETARY OF DEFENSE FOR SOUTH ASIA, OFFICE OF THE 
 SECRETARY OF DEFENSE, U.S. DEPARTMENT OF DEFENSE, ACCOMPANIED 
BY JOHN P. ROTH, DEPUTY COMPTROLLER, PROGRAM/BUDGET, OFFICE OF 
  UNDERSECRETARY OF DEFENSE, COMPTROLLER, U.S. DEPARTMENT OF 
DEFENSE; CHARLES MICHAEL JOHNSON, JR., DIRECTOR, INTERNATIONAL 
   AFFAIRS AND TRADE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, 
ACCOMPANIED BY STEVE SEBASTIAN, DIRECTOR, FINANCIAL MANAGEMENT 
AND ASSURANCE TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; AND 
AMBASSADOR STEPHEN D. MULL, ACTING ASSISTANT SECRETARY, BUREAU 
    FOR POLITICAL-MILITARY AFFAIRS, U.S. DEPARTMENT OF STATE

            STATEMENT OF MAJOR GENERAL BOBBY WILKES

    General Wilkes. Chairman Tierney, thank you again, and 
Congressman Shays. I appreciate the opportunity to come and 
talk about Pakistan and the Coalition Support Funds.
    As you know, Pakistan is the world's second most populous 
Muslim state and sixth most populous country in the world. It 
is located at the geopolitical crossroads of Central Asia and 
finds itself in the front lines of battle against global 
terrorism.
    More than ever, our national security is linked to the 
success, the security, and the stability of a democratic 
Pakistan. Pakistan has made important strides toward democracy 
in the past several months; however, Pakistan is facing severe 
budgetary, energy, and economic crises and needs to act more 
decisively to eliminate the al Qaeda and Taliban safe havens in 
the federally administered tribal areas and Northwestern 
Frontier provinces.
    Following the tragic events of September 11, 2001, Pakistan 
became a member of the Coalition formed to eliminate al Qaeda 
and the Taliban government of Afghanistan. at the request of 
the United States, Pakistan offered the use of its airspace, 
airfields, and a seaport, and deployed large numbers of its 
armed forces to protect deployed U.S. forces.
    Later, Pakistan permitted the establishment of air and 
ground lines of communication through Pakistan into 
Afghanistan. Today, much of the fuel and dry cargo required to 
support United States and NATO military operations in 
Afghanistan transit Pakistan.
    Again at our request Pakistan deployed its Army in December 
2001, into the FATA to assist U.S. operations in Afghanistan by 
capturing al Qaeda and Taliban fighters fleeing from the Tora 
Bora area. Several hundred of these fighters were eventually 
captured and turned over to the U.S. custody. Because Pakistan 
had only a limited capacity to sustain such a high level of 
military activity in support of OEF, the United States decided 
it needed a mechanism to reimburse Pakistan and other 
cooperating nations for the support they were providing on the 
war on terror. This program became known as the Coalition 
Support Funds.
    Since 2002 Congress has appropriated $7.3 billion for the 
entire CSF program. Pakistan has been the largest single 
recipient, receiving approximately $6 billion in reimbursements 
following this week's $373 million reimbursement. This 
reimbursement program is in addition to security assistance 
programs which build capacity.
    The current DOD process for reviewing and approving claims 
for CSF reimbursement is described in detail in my written 
statement; however, I would like to highlight a few of the 
following: The guidelines used by DOD to review claims were 
established in 2003 in concert with the Department of Defense 
Office of the Inspector General. The Department has sought to 
improve the CSF reimbursement process since it was first 
developed. The process is reviewed regularly, and the 
Department has issued guidance on Coalition support funds seven 
times and has requested two DOD IG visits.
    For example, in July 2006 representatives from Comptroller 
and CENTCOM visited Pakistan to provide guidance and templates 
for submitting reimbursement claims. In December 2007 the 
Undersecretaries for Policy and Comptroller requested the DOD 
IG conduct a management review of the CSF program. The most 
recent DOD Comptroller guidance was issued June 19, 2008. 
Without CSF reimbursements, Pakistan could not afford to deploy 
and maintain the 100,000 military and paramilitary forces in 
the federally administered tribal areas.
    Since 2001 the Pakistan Army has conducted 91 major and 
countless small operations in support of the war on terror. 
They have captured or killed more al Qaeda and Taliban than any 
other Coalition partner, and have sustained more than 1,400 
combat deaths, 700 just since July 2007, and more than 2,400 
wounded in action.
    In conclusion, there are no easy answers or easy solutions 
in the FATA and North West Frontier province. We will need all 
the tools available for us to be successful there. CSF is one 
of the most useful tools we have in this effort. It enables the 
United States to reimburse the logistic costs of Pakistan's 
enormous military deployment and operations in this key region. 
CSF, therefore, is critical to our eventual success in 
Afghanistan and the war on terror.
    I thank you, sir, and look forward to your questions.
    [The prepared statement of General Wilkes follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Tierney. Thank you very much, General.
    Mr. Roth, are you going to give a statement?
    Mr. Roth. No, sir.
    Mr. Tierney. Thank you, sir.
    Ambassador, if you would?

            STATEMENT OF AMBASSADOR STEPHEN D. MULL

    Ambassador Mull. Yes, sir. Thank you very much, Mr. 
Chairman. it is a pleasure to be here with your subcommittee 
this afternoon to specifically focus on the role of the State 
Department in overseeing the Coalition Support Funds program 
for Pakistan.
    The Bureau of Political-Military Affairs, which I lead, 
serves as the principal liaison between the Department of State 
and the Department of Defense on policy issues, including 
security assistance, and on coordination of U.S. military 
activities that have U.S. foreign policy implications. As such, 
the Bureau of Political-Military Affairs manages the process to 
obtain the Secretary of State's concurrence on programs like 
the Coalition Support Funds.
    We understand the fundamental purpose of this concurrence 
is to ensure that payments made under this program are 
supportive of and consistent with U.S. foreign policy 
objectives for the recipient country and that they will not 
adversely affect the balance of power in the region.
    There are three steps in this clearance process before it 
comes to the State Department. The government of Pakistan, one, 
submits a request for reimbursement for costs incurred in the 
global war on terrorism; to the Office of the Defense 
Representative at the U.S. Embassy in Islamabad, which is 
responsible for verifying that the claim is based on 
quantifiable information provided by the government of 
Pakistan.
    From there it goes to the second step, the Central Command, 
which is responsible for verifying that Pakistan's claims 
support the objectives of the global war on terror and U.S. 
military operations, and the costs would not have otherwise 
been incurred by Pakistan.
    Third, following CENTCOM's verification, the Department of 
Defense Comptroller evaluates CSF claims for credibility and 
reasonableness.
    Once these actions have been completed, the Department of 
Defense sends the CSF reimbursement request to the Department 
of State for the Secretary of State's concurrence. Acting on 
the Secretary's behalf, my bureau, the Political-Military 
Affairs Bureau, coordinates with the Bureau of South and 
Central Asian Affairs and the Office of the Director of Foreign 
Assistance in the State Department to ensure that CSF payments 
are consistent with foreign policy objectives for Pakistan and 
the region.
    For Pakistan, these objectives include establishing 
stability throughout the country, particularly on the border 
with Afghanistan, and improving Pakistan's capability to 
provide border security and to conduct counterinsurgency and 
counterterrorism operations. We also evaluate whether the 
payments will de-stabilize regional security.
    After agreement among us within the State Department, the 
Political-Military Bureau transmits Department of State 
concurrence on the CSF reimbursements back to the Department of 
Defense. We maintain a very close relationship between both 
departments, and we ensure that any concerns that we identify 
during the review process are dealt with effectively through 
our normal interagency channels.
    Pakistan is on the front lines of the war on terrorism, and 
it has incurred serious losses in the struggle, including, as 
General Wilkes said, the deaths of more than 1,400 of its 
security forces since 2001. More than ever, America's security 
is linked to the success, security, and stability of a 
democratic Pakistan. The SCS program is a key tool for enabling 
the government of Pakistan's contribution to our common 
struggle against violent extremists, particularly in Pakistan's 
frontier areas.
    That is all for my formal remarks. I look forward to 
answering your questions, sir.
    [The prepared statement of Ambassador Mull follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Tierney. Thank you, Ambassador. We appreciate that.
    Mr. Johnson, if you would, please.

           STATEMENT OF CHARLES MICHAEL JOHNSON, JR.

    Mr. Johnson. Thank you, Mr. Chairman and members of the 
subcommittee, for the opportunity to discuss the findings in 
our report released today on the Department of Defense's 
oversight of Coalition Support Funds provided to Pakistan.
    First, I will briefly describe the Department of Defense's 
oversight authority. Second, I will address the extent to which 
defense has consistently applied its guidance to validate 
Pakistani reimbursement claims. Third, I will discuss how the 
Office of Defense Representative to Pakistan's--that is 
ODRP's--role has changed over time.
    Before I discuss findings, I would like to note that 
Pakistan is the largest recipient of CSF, receiving over 80 
percent of CSF reimbursements that have been provided to 27 
partner nations since the attacks of September 11th.
    Defense officials state that CSF plays a key role in 
supporting the U.S. national security goals of combating 
terrorism in Pakistan's federally administered tribal areas, as 
well as other regions.
    With respect to the Department of Defense's oversight 
authority, in 2002 Congress granted the Secretary of Defense 
very broad authority to make CSF payments in such amounts as he 
may determine to be sufficiently documented, the Secretary's 
determination as being final and conclusive. Defense is, 
however, required to provide a 15-day notification to Congress 
of upcoming CSF reimbursements.
    Subsequent legislation required Defense to also provide 
quarterly reports on the use of CSF to the House and Senate 
appropriations and Armed Services Committees.
    Recent legislation required Defense to provide an itemized 
description of support provided by Pakistan for which the 
United States would reimburse through CSF.
    Concerning the consistency with which has applied its CSF 
oversight guidance, Defense generally conducted macro level 
analytical reviews called for in its guidance. These reviews 
involved determining whether the cost of services Pakistan is 
requesting reimbursement for is less than that which would be 
incurred by the United States.
    For a large number of reimbursement claims, however, 
Defense did not consistently apply its guidance. For example, 
as was noted earlier, Defense did not obtain detailed 
documentation to verify that claimed costs were incremental--
that is, above and beyond normal operating costs; did not 
obtain sufficient information to validate claims; and did not 
adequately document the basis for their decisions to allow or 
disallow claims.
    As the figure being displayed illustrates, we also found 
inconsistencies in Defense's payments that were not explained. 
This figure shows inconsistencies in U.S. payments to Pakistan 
for Navy boats. The shaded columns represent amounts paid, and 
the unshaded amount disallowed, so, as you can see, there have 
been some inconsistencies in paying those particular claims.
    We estimate that Defense has paid over $2 billion in 
Pakistani reimbursement claims for the months of January 2004, 
through June 2007, which was the focus of our review, without 
obtaining detailed information that would enable a third party 
to recalculate these costs. Defense may have reimbursed costs 
that were not incremental, were not based on actual activity, 
and were potentially duplicative.
    We also found areas in which Defense's oversight guidance 
could be enhanced. For example, there was no guidance requiring 
verification of exchange rates used by Pakistan, which, if 
performed, could potentially prevent over-billing. The figure 
being displayed shows that, had the exchange rate been used, 
the United States was likely to be billed less than it was 
billed in terms of U.S. dollars. The solid line represents what 
the claim amount was would have been had they applied the 
exchange rate. The dotted line is actually what the claims were 
in U.S. dollars.
    With respect to the Office of Defense Representative's 
role, we found that Defense's guidance did not specifically 
task ODRP with attempting to verify CSF claims. As such, from 
the period of January 2004 through August 2006 ODRP did not 
attempt to verify Pakistani CSF claims. Beginning in September 
2006, without any formal guidance or directive to do so, ODRP 
began an effort to validate Pakistani claims.
    As you will see from the figure displayed, ODRP's increased 
verification efforts contributed to an increase in the amount 
of Pakistani CSF claims disallowed or deferred. Prior to ODRP's 
efforts, the average Pakistani claims disallowed or deferred 
for the period January through August 2006, which is the 
unshaded area, was a little over 2 percent. In comparison, the 
average percentage of Pakistani claims disallowed or deferred 
for the period September 2006 through February 2006 was about 6 
percent, and the most recent spike shows an increase in 
disallows or defers of up to 22 percent.
    In summary, the Secretary of Defense has the authority to 
make CSF payments in such amounts as the Secretary may 
determine in his discretion based on documentation determined 
by the Secretary to be sufficient. Defense has not consistently 
applied its existing CSF oversight guidance, and opportunities 
exist to further enhance the guidance.
    Although ODRP's increased efforts contributed to greater 
oversight of Pakistani government claims, ODRP's increased 
effort may not continue unless this role is formalized.
    To improve CSF oversight, we recommend in our report 
released today that Defense consistently apply its oversight 
guidance, formalize the role and responsibilities of ODRP, and 
implement additional controls, including working with the 
Pakistani government to develop procedures to allow greater 
oversight of CSF. It is our understanding that Defense has 
taken some action in this area, and we look forward to 
reviewing the revised guidance.
    Mr. Chairman, this concludes my statement. I would be happy 
to answer any questions you may have.
    [The prepared statement of Mr. Johnson follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Tierney. Thank you, Mr. Johnson.
    I understand also that State has indicated they have taken 
some of this report and implemented some changes, and we would 
appreciate GAO's review of that and assessment to us of how far 
that goes to meeting some of the concerns that were in the 
report.
    It seems to me that we had $6.88 billion as of May 2008 
being spent by 27 countries under this CSF program. Of that, 
$5.56 billion went to Pakistan, 81 percent of it, so the lion's 
share is going there. It has the appearance that Pakistan was 
very important after 9/11 in the efforts to go into 
Afghanistan, and there was an acknowledgement that the small 
military budget of Pakistan may not be enough to cover what 
needed to be done to support that effort, and so the United 
States was looking for a way to help finance some of that to 
reimburse them, and put this whole program into place. I get 
that. But I also get the fact that in the beginning, before it 
was set up and operated very long, it may have been a little 
loose on some of the followup and accountability.
    It is a very, very broad program. The Secretary of Defense 
has wide discretion. Basically, they need to get documentation 
adequately accounting for the money to validate that the 
support was provided, validate that the costs were incurred, 
validate that the costs were incremental to normal military 
operations, they exceeded that. But $2 billion in claims 
without detailed analysis indicating or allowing a third party 
to recalculate the cost, that went on way too long and in way 
too sloppy a fashion. If we put that in the favorable light 
that it was just sloppy and hope that it wasn't more--we have 
to look at that, as well--but the failure to document the more 
than $200 million for air defense radar without anybody first 
raising the question about whether or not the Federally 
Administered Tribal Areas had a need for radar, and finally the 
debate about some of it being disallowed.
    There was $30 million spent on road construction, $50 
million on bunker construction without any evidence that those 
things were ever done, and $19,000 per vehicle per month spent 
on the Pakistan's Navy's passenger vehicles, far in excess of 
what the other military force packages were spending for 
vehicles that were actually engaged in conflict. So you are 
talking about 20 vehicles at $19,000 per vehicle per month. 
Extrapolate that out before anybody sort of gets to the 
question of whether or not it was duplicative.
    Helicopters--on one of our trips there, we were discussing 
the fact that money was going, some $55 million, for the 
maintenance of helicopters at the border, only to find out that 
many of them were still in disrepair after the money had 
supposedly been spent.
    So there are a number of questions that come from this, not 
the least of which is: is this the right program to be doing 
this? If we are taking the word of the Pakistani military as to 
where it went, with bad documentation on that, and then finding 
out afterwards that the money didn't end up fixing, say, 
helicopters, or wasn't applicable for food cost, Navy cost, 
because it goes into the general treasury of Pakistan, and once 
it goes in there we can't follow where it goes on that. So 
maybe we have the wrong vehicle. I want at some point to 
discuss that.
    But first, General, just tell me what are you doing to 
tighten up that accountability procedure so you don't have that 
$2 billion hole? And all of it I understand may not be lost or 
be inappropriately spent, but the question shouldn't be a $2 
billion question.
    General Wilkes. Yes, sir. Thank you. As I mentioned in my 
remarks here, over the last few years we have had about seven 
interventions plus two DOD IG reports. Last week we obviously 
reissued some more guidance to address some of these issues. At 
our own behalf earlier this year we asked our DOD IG to go out 
and look at the program, also, and that is the second time they 
have looked at this.
    The program is a reimbursement program, so when that money 
goes paid to the Pakistan government, they use that to cover 
the costs that they have already incurred, so the question of 
being able to follow it into their national treasury, they have 
already spent those funds.
    The issue of the helicopter maintenance and those types of 
things, yes, I think that what I would say on that is our ODRP 
folks are the ones that are discovering this, and rightly so. 
That is part of their job out there.
    Mr. Tierney. So they weren't engaged in that early on 
because the guidance didn't even ask them to do it, right?
    General Wilkes. Well, I would take some issue with that, in 
that ODRP is an arm of Central Command, and as our combatant 
commander they have been tasked to implement this program for 
the Department of Defense.
    Mr. Tierney. So they just weren't doing it?
    General Wilkes. Sir----
    Mr. Tierney. Look, we are just looking at this. It doesn't 
have to be overly critical. Let's find out where the problems 
run. From the beginning of the program to probably 2006, ODRP 
was not doing that on the ground. When they started doing it, 
all of the sudden we jumped to 22 percent questions from 6 
percent.
    General Wilkes. First off, let me say that we had a visit 
from DOD out there in the summertime which sparked some of that 
look from ODRP, and that was our oversight to that. I do take 
exception to the fact that DOD hasn't been involved in this 
process. So the ODRP was then doing their job. There may have 
been some folks out there that weren't properly trained or 
aware of some of those things, and that was the purpose of that 
visit was to get those folks up to speed.
    But CENTCOM and the OSD, the Comptroller level, have 
traveled out there and done that, and we have done it again, 
and we have had our DOD IG again this year, and we have reached 
guidance and we have a planned trip out here in about August to 
re-look at it again. So there is oversight.
    What I was saying is that yes, there is probably some need 
for more training, more focus on some of these things. Looking 
at it from the perspective of the helicopters, for instance, 
how do you build capacity and keep those helicopters operating? 
That sort of falls under the security assistance role of this, 
and that is where the money should be funneled, but the parts 
and pieces are paid for under the CSF piece to make sure that 
those helicopters that were used in battle----
    Mr. Tierney. Except did they tell you that they used some 
helicopters in battle and that they now have a maintenance bill 
of $55 million? Do you believe that to be the case? You cut 
them a check for $55 million, it goes into the general treasury 
of Pakistan. You find out a short while later that those 
helicopters are still in need of repair. That is a problem.
    General Wilkes. That is a problem, and we agree.
    Mr. Tierney. Probably part of the problem is it is very 
difficult for U.S. officials to get up into the federally 
administered tribal areas to ever take a look at those 
helicopters, and so that is one major problem that we are going 
to have, no matter what it is, in that region, the North West 
Provinces that have to be physically viewed.
    General Wilkes. I agree with you, Mr. Chairman. As we work 
with the security assistance piece of this, we tried to improve 
their program management to look at their mission capable rates 
and to make sure that they are putting money back into the 
helicopters or any other type of equipment they need to be 
doing, and so we do need to focus on how we can get that piece 
of it under wraps and make sure they are rebuilding the 
capacity that they are using out.
    Mr. Tierney. There was a period of time during the first 
so-called truces that were put into place out there in the FATA 
and the North West Province territory where it is said that we 
were spending about $80 million a month for troops that were at 
that point in time inactive on that. I mean, that is another 
issue. Who verifies that the activity is actually taking place 
if the money is being spent on that? Those are huge numbers and 
create some real problems and questions in that program.
    General Wilkes. Yes, sir. As you know, the access to 
Pakistan is controlled by the government, and not having U.S. 
troops there or access to some of this stuff--and we don't have 
access in the FATA--creates an issue for us in looking at it 
and verifying and validating. A lot of that is dependent upon 
the Pakistani government to give us those statistics on what 
they are using out there. We can verify it through other 
sources as to whether an operation took place.
    Let me also remind you that----
    Mr. Tierney. Let me stop you there for a second. Why didn't 
we, because we obviously would have kept paying that money even 
though the operations weren't taking place for that period of 
time.
    General Wilkes. Well, we do have a list of the operations 
that took place that CENTCOM has validated to us and provided 
it at the OSD level.
    Mr. Tierney. So CENTCOM is telling us that during the 
period of that truce period, when we are told that it was a 
stand-down basically of military activity by the Pakistan 
forces in that region, that there was still enough activity 
going on to warrant the same amount of money pre-truce during 
the truce and after the truce? It was consistent all the way 
along, even though they changed the mode of operation or 
whether they were operating at all?
    General Wilkes. I have followed your question here. I am 
going to have to check on the data for that for you, because I 
don't know exactly what was approved or not approved during a 
particular truce piece of it.
    Mr. Tierney. I didn't want to cut you short. Did you have 
something else you wanted to say?
    General Wilkes. Well, the point that I was going to make is 
that this gets back to the discussion of incremental costs and 
do we pay for this. I think getting to your point of is there a 
consistency of $80 million a month being paid, we have to 
remember that before 2001 there were no Pakistani forces 
employed in the FATA region, and they were put there at our 
request. We couldn't control the level or the numbers of troops 
that were put in there. That is a Pakistani government call. 
But the fact that they moved in there is something that they 
weren't doing before, so therefore should be considered an 
incremental increase in their normal operating costs.
    Mr. Tierney. I understand that point. The question is 
whether or not they were actively engaged and whether or not 
there was a fluctuation of how much money they were spending 
because they were doing something versus how much money they 
were spending because they were sitting there.
    General Wilkes. Yes, sir. Sitting there, they were not in a 
garrison force; they were there providing border security. They 
have check points and----
    Mr. Tierney. Mr. Johnson, do you have any numbers as to 
that period of time from your report?
    Mr. Johnson. The period of time with----
    Mr. Tierney. During that so-called truce period.
    Mr. Johnson. We do have I guess the spike figure that was 
shown that was put up earlier reflected the period of time. We 
don't reflect the period. We do have that information. We can 
get with you within that spike there. We can get that to you, 
Mr. Chairman.
    Mr. Tierney. All right. We appreciate it.
    Mr. Johnson. Yes, sir.
    Mr. Tierney. My initial round time has expired, but we are 
going to come back to some of these questions. I think it is 
well worth exploring.
    Mr. Shays, you are recognized for 10 minutes.
    Mr. Shays. Thank you again, Mr. Chairman, for having this 
hearing and spending so much of your time and focus on Pakistan 
and Afghanistan.
    I want someone first to tell me why Pakistan should get 80 
percent of the dollars.
    Mr. Roth. Well, I don't think it is a question, sir, that 
Pakistan gets 80 percent of the dollars. I think the way the 
facts have occurred post-9/11 is the Coalition Support Fund was 
set up to take care of these kinds of events where we did, in 
fact, get support from certain Coalition partners where they 
request reimbursement. We then----
    Mr. Shays. Let me ask this question: Pakistan gets 80 
percent of the dollars. Explain to me why they should. Why 
should 80 percent of the effort be a Pakistani effort? I mean, 
there is a reason. I am just wanting to know what, in your 
words, it is.
    General Wilkes. Well, Congressman----
    Mr. Shays. In other words, there are 28 countries, give or 
take, so when one takes such a giant amount, there is a reason 
why we allow that to happen, and I am just wrestling with why.
    General Wilkes. Well, Congressman, I would just say it goes 
back to the border issue that we have there with our commitment 
in Afghanistan, and, as you know, this safe haven that is 
created in that area. The Pakistani forces can take this 
mission on and do it at a far less cost than we could, even if 
we were allowed to be deployed in there, which we aren't. So 
they are doing a mission set under the OEF hat that our U.S. 
forces can't take on or the Coalition forces.
    Mr. Shays. So tell me what you think we have gotten for 
$5.6 billion. And that is over what period of time?
    General Wilkes. That is from 2001, late 2001, 2002, to 
present, 7 years.
    Mr. Shays. What have we gotten for that? What did it buy 
us?
    General Wilkes. We have a partner in the war on terror that 
is trying to control the safe havens, that it recognizes that 
they have an internal insurgency problem, and that are 
participating with us to stop cross-border activities and to 
control this insurgency that has grown in that area.
    Mr. Shays. I am at a disadvantage because I spend all my 
focus on Iraq, but everything I have read has said that 
basically Pakistan is pretty much a basket case--I don't mean 
the central government, but the areas where al Qaeda seems to 
be--and that we really haven't gotten really anything for it. 
In other words, things have gotten worse. Sharia law seems to 
be more important in those regions. It seems to be more 
lawless. It doesn't seem to me like things have gone in the 
right direction.
    Mr. Roth, maybe you could comment?
    Mr. Roth. Well, sir, in terms of the actual progress being 
made in Afghanistan, I think I need to defer to the policy 
folks. As I understand your question, sir, it is more a policy 
question, what have we gotten for the month.
    Mr. Shays. Right.
    Mr. Roth. Rather than have we appropriately reimbursed the 
costs that have been outlined to us.
    Mr. Shays. I think it is pretty clear that we haven't 
appropriated the cost. This reminds me of what we did with the 
Iraqis with their $9 billion. We gave them the $9 billion. It 
was theirs. They didn't have a tracking system. They paid their 
soldiers--and who knows how many soldiers they had, so we gave 
their generals some money and we can't account in a positive 
way for how the Iraqis spent the money that we gave them that 
was their money. This just seems to be the same story. The 
difference is it is our money. It is just like a bad dream for 
me to be hearing this.
    We aren't sure that they actually got the money that they 
deserved to get. We are pretty sure they overcharged us. But 
then I want to know, OK, all things that notwithstanding, we 
allowed that to happen. I think Mr. Gates is changing that. But 
I don't know what we have. I don't know what we bought with 
that money. I don't know what it did. It makes me think the 
program is really kind of seriously flawed.
    General Wilkes. Sir, if I could add that, besides a key 
ally on the war on terror, we do have to remember that we have 
the access through Pakistan, an air transit corridor which 
allows all of our resupply air through Pakistan unfettered. We 
have the ground lines of communication that are there, where we 
have about probably 80 percent of our effort of ground 
transportation coming through the port in Karachi up through 
the two passes in the Frontier provinces. And we have probably 
about 60--I am going to say 53 to 55 percent of our oil that is 
our gas that is being resupplied into Afghanistan is initiated 
out of Pakistan. So there is a great logistical base.
    To remind, it is a very difficult resupply environment 
there if you have to come in through the Central Asian region, 
Europe through Baku across versus being able to transit 
Pakistan. That would create quite a difficulty for us, 
military, to resupply.
    Mr. Shays. OK. Let me ask you, Mr. Johnson--and welcome 
back, as well--the United Kingdom newspaper, The Guardian, 
claimed that as much as 70 percent of the $5.56 billion 
reimbursed to Pakistan was mis-spent. Was that their reading of 
what you did and just interpreting it falsely, or do you think 
70 percent of these dollars were misspent?
    Mr. Johnson. We have not specifically looked at the 
expenditure, but at the oversight process for reimbursing them. 
We did not have a 70 percent calculation we can share at this 
time.
    Mr. Shays. OK. I will end by having any of you tell me why 
we should maintain this program.
    General Wilkes. Well, sir, I think, first off, I would say 
that, because of this key ally, and it is a nation state that 
is in the central area of the world where this nexus of 
terrorism is really embedded, we have to continue to support 
them in order to achieve our aims there. The Pakistani budget 
has a problem right now. Obviously, we have a lot of work to do 
in trying to solidify their budget. They are not able to 
support these operations that are over and above what their 
normal costs would be for maintaining these forces in garrison 
focused on the eastern border, and so deployed out of there 
these are incremental costs that they are going to have to 
incur if we want them to continue support in the war on terror. 
They can't afford it, and if we don't it won't happen.
    Mr. Shays. Thank you, Mr. Chairman.
    Mr. Tierney. Thank you, Mr. Shays.
    Mr. Higgins, you are recognized for 10 minutes.
    Mr. Higgins. Thank you, Mr. Chairman, and thank you for 
your leadership, as well, on this very important issue. 
Pakistan and Afghanistan are critical to the long-term security 
of our Nation, and obviously making progress in the war on 
terror is fundamental to progress in Pakistan and Afghanistan.
    General Wilkes, you had mentioned that the Coalition 
Support Funds were critical to the success of our effort there, 
that $5.6 billion in a 7-year period, in addition $300 million 
in military assistance. You know, at least a year ago in 
Pakistan there seemed to be one person in charge, maybe not the 
ideal person in charge, but there was some line of 
accountability. Today there is a huge leadership void in 
Pakistan. Nobody seems to be in charge. There is conflicting 
information coming from the civilian government. Part of the 
civilian government has withdrawn from the responsibility 
altogether.
    Now, we have a $5.5 billion commitment to an area. It seems 
like a lot of those resources have been squandered altogether 
and have produced a result that is undesirable.
    I just want to make reference to the report in response to 
section 1232(a) of the National Defense Authorization Act. The 
Department of Defense states, ``The war on terror has caused 
Pakistan to engage in a counterinsurgency struggle for which it 
is ill suited. The Army has been trained and equipped as a 
conventional military with a primary focus on fighting a 
conventional opponent. Pakistan's Frontier Corps has had the 
responsibility to maintain security in the tribal area, is 
under-trained and ill-equipped.''
    The report goes on to suggest that it will take 3 to 5 
years before any counterinsurgency training or equipment 
upgrades are realized in the battlefield.
    My question is: what have we been paying for? And the 
result I think, based on any objective analysis, is wholly 
unacceptable. Your thoughts?
    General Wilkes. Thank you, Congressman.
    The CSF is a reimbursement for operations with the current 
force structure, and we do assess that force structure needs 
training and equipping, and we are looking at that through 
other venues here other than CSF, and it comes partly in the 
security assistance part of the House and some 1206 funding.
    It gets back to this issue that the chairman made with the 
helicopters, how are we assuring that those helicopters are 
going to continue to maintain their fully mission capable rates 
and how do we funnel the money in there to get that properly 
done. I think it is through some of these other programs, a 
strategic development program and security development program 
that we have. We are interested in trying to outfit the 
Frontier Corps to a level where they can do their job; in other 
words, personal equipment type items, vests and weapons, 
communications equipment. I think that the potential for 
training the Army in some of these counterinsurgency techniques 
would be helpful to make them much more effective in the 
region.
    Mr. Higgins. All right. I understand that, but, you know, 
obviously the U.S.'s support for Pakistan is critically 
important to our strategic interests in the region and for our 
own national security, and you said in response to Congressman 
Shays' questioning that we have an insurgency problem. The fact 
that the American funding that is going to provide significant 
financial support to the Pakistani government under these 
Coalition Support Funds in reimbursement, again, doesn't appear 
to be producing any kind of measurable result that is 
consistent with our strategic interests in the area.
    So again I ask the question: where are we going with this 
thing?
    When you look at the opinion of people in Pakistan about 
the U.S.'s efforts there, it seems to confirm, to validate the 
criticism that our strategy thus far has been highly 
ineffective. Trust for American motives have sunk to new lows. 
Three-quarters of Pakistanis say that the real purpose of the 
U.S.-led war on terror is to weaken the Muslim world and 
dominate Pakistan. Pakistanis see the United States as posing 
the greatest threat to their own personal safety. Of 
Pakistanis, 44 percent think that the United States poses the 
greatest threat to their personal safety.
    So when you look at all this oversight, between the 
Department of State, the Department of Defense, and others, it 
would seem to me that the American people should expect a much 
greater outcome with respect to counterinsurgency efforts in 
Pakistan and along the Pakistan-Afghanistan border. This is too 
much money--too much as a percentage of the overall budget to 
fight terrorism throughout the world--to be seemingly wasted in 
an area that is so critically important to our national 
interests.
    General Wilkes. If I could make a couple of observations.
    Mr. Higgins. Yes.
    General Wilkes. One would be that we have gone from 
President Musharraf to a duly elected government now, and it is 
going to take a while for that government to get their capacity 
generated and to be able to govern in the full breadth that we 
would expect. Prime Minister Gullani is very interested in 
doing this. He has the right view on a lot of these things. He 
understands the need to retrain the Army. And they are going to 
have to, I think, attack the first problem first, which is 
getting their political house in order, getting the economics 
squared away, and hopefully, in parallel, try to attack this 
problem of retraining the Army.
    I think it should be a Pakistani initiative to take a look 
at public perceptions, and we have continued to make trips over 
there, and our Ambassador and embassies are engaged with the 
Pakistanis, and we are well aware of the feelings of the 
population, but that government has to get its feet on the 
ground and has to attack this in concert with us, and so we are 
looking for their leadership in those areas.
    Mr. Higgins. Are you confident that this government has the 
capacity to do that?
    General Wilkes. I think this gets back to are we willing to 
invest there or not. I mean, that is a very basic question that 
we have to wrestle with. I think that we have to put our trust 
in them and we have to convince them that we will be there to 
help them through this and to build those relationships that 
are necessary to support this fledgling democracy that we asked 
for, and so we have to nurture it through.
    Mr. Higgins. OK. I have no more questions, Mr. Chairman. 
Thank you.
    Mr. Tierney. Thank you, Mr. Higgins.
    You know, I don't say this to be a wise guy or to go after 
you, General, but you made the comment that the strides to 
democracy recently in Pakistan, and my first reaction to that 
was, No thanks to the United States and the failed policies we 
had there for so long of not backing democracy in Pakistan but 
backing one individual who was, in fact, with the military on 
that. We have given the military and the intelligence services 
in Pakistan a pretty strong position vis-a-vis us, so we have 
all of the tactical needs that we have of their air space, 
traveling across their land, of access to what we are doing in 
Afghanistan, and they have a history now of money without much 
accountability coming to them.
    So it is difficult. If they decide, as it appears they are 
doing now, that the military are the ones that are trying to 
draw an agreement with Batullah Massad and others there, 
sometimes excluding the new government of Pakistan, we have an 
issue here, and it seems to me that we should start doing now 
what we hadn't done before, and that is try to support and 
strengthen the civilian government and strengthen their 
position vis-a-vis the military so that the military has to go 
to them for the financial support on that.
    So I am thinking that maybe we are not going about this the 
right way to use Coalition Support Funds as a way to transfer 
money from the United States to them. Maybe it is too hard to 
account for in that process. Maybe we ought to set it up 
through some other kind of assistance where it empowers and 
strengthens the civilian government, gives them the kind of 
control a civilian government should have over the military so 
the military has to look to them and not go off making deals 
with insurgents and militants unbeknownst to the Pakistani 
government in some cases and certainly contradictory to what 
might be a joint interest in playing down militantism. So that 
is one thing, I think, that we might want to take a look at on 
that.
    Then the question is, If we do give them assistance of some 
sort, how do we measure the results on that? Obviously, we 
haven't done well measuring results on this incremental aspect. 
I would question the incremental aspect on this. Tell me if I 
am way off base on this. The people that we are talking about 
being a concern to the United States and the western countries 
are people that Pakistan should see as an existential threat to 
their own existence; am I right?
    General Wilkes. Yes, sir.
    Mr. Tierney. So I am not sure that this is incremental; 
that what they are doing in terms of trying to get into FATA, 
in the North West Provinces to stop people from going from 
Pakistan into Afghanistan, is just the U.S.'s interest; it is 
their interest, as well, and Afghanistan's interest. So maybe a 
program that reimburses them for alleged incremental costs is 
not the right way to do it, because there aren't incremental 
costs; they are their costs and their interests. Two, it sends 
the wrong message--the message that they are just our lackies 
off doing our work.
    Maybe we should structure something, instead of just 
improving on all the things that Mr. Johnson's team pointed 
out, we ought to look at a different way of how we send aid 
entirely in that direction. I would ask both the State 
Department and the Department of Defense to look at in that 
perspective and come up with some ideas.
    Have either of you or your departments engaged the new 
government of Pakistan about what their ideas are in terms of 
having either a new process for assistance there and a new way 
of determining whether or not it is successful or are there 
results coming, and if it is not, and you are still talking 
about the CSF money or whatever, you engage them about what 
else can be done for transparency and accountability.
    I will start with you, Ambassador Mull, and give the 
general a rest.
    Ambassador Mull. Yes, sir, Mr. Chairman. I completely agree 
with you that it would be a mistake to view our relationship to 
Pakistan just through the lens of providing military 
assistance.
    I might just say right at the outset that we don't view--
and I don't think the law views, either--the Coalition Support 
Funds as a type of assistance. This is really a reimbursement 
for military operating expenses that, first and foremost, 
benefit the United States and, as General Wilkes said, allow us 
to get money in and out of there.
    Mr. Tierney. Except that it has turned out to be some sort 
of assistance because we can't tell whether or not they used 
the money for incremental purposes or not, and the perception 
of American people and the rest of the people, after reading 
Mr. Johnson's report, are going to be, hey, we gave them money, 
it went to the general treasury, something went somewhere, and 
other things that we thought we would get done weren't done.
    Ambassador Mull. Right. I certainly agree with you. I think 
all of us as taxpayers have an interest in common to make sure 
that the money is accounted for, and I think we have all come a 
long way. We probably have a bit further to go. But I 
personally know Ann Patterson, our Ambassador in Pakistan, 
cares very deeply about this and has applied a very sharp eye 
to it, and she will continue to do that.
    Our strategic objectives as to Pakistan aren't just 
developing a base for ourselves----
    Mr. Tierney. I am going to interrupt you a second. We are 
going to get into that in a second on that, but, with respect 
to whether or not you have consulted the government of 
Pakistan, have you had conversations and consultations with 
them?
    Ambassador Mull. Yes, sir. We have regular conversations 
not only with Ambassador Hakani here in town, but Ambassador 
Patterson in Islamabad has regular contact. Interestingly, on 
the security assistance side of things, the new, democratically 
elected government has pretty much affirmed the previous 
government's request. They have really asked for continued 
amounts of the kind of security assistance that we have been 
providing for the past several years now. They also want more 
to help. We have been working carefully with the Congress to 
come up with economic opportunity zones in Pakistan. We are 
looking to expand our assistance in education, health care, and 
all the other things that will diminish the terrorist threat.
    Mr. Tierney. I can understand why they are asking for 
continuation. I am going to share this with you a little bit. 
When we were there and talked to folks over there, they hadn't 
even been read in on what these programs were. Because of our 
concentration on General Musharraf and the military, to almost 
the complete exclusion of any adequate attention to the rest of 
the democratic process, either the core system or the 
legislature, when those elections happened not only did we not 
have good contacts and good relationships with folks; they had 
never been read in on the security programs over there. So of 
course they are going to ask for it. They want the same money, 
at least. They don't want money to dry up, and they want to 
have options on that.
    So if you said to them, do you want us to continue the 
money, yes, of course we want you to continue the money. Don't 
punish us because finally democracy worked and stop giving us 
money that the other people may or may not have misused. But I 
wonder if you have had conversations with them about what the 
options are, that resources can be provided if we work together 
on what the strategic goals are in this region, and maybe do 
something differently than Coalition Support Funds, and we can 
have the objectives reached in some other way.
    I would hope that you would have that conversation with 
Ambassador Hakani and with the other folks over there, the 
Prime Minister and others, on that. Because I think, from what 
our conversations were, they are so glued in it is like, hey, 
don't take money away from us. We haven't been the ones that 
have spent it on that.
    General, what do you think? Have you had conversations with 
the folks, as well?
    General Wilkes. Yes, sir. Our folks, ODRP, CENTCOM, even as 
we travel back and forth--and I was there 2 weeks ago--the 
discussion is largely on, first off, what are they doing now 
with Coalition Support Funds, how do we improve that process, 
but then how do we build the capacity to give them what we 
think they will need to focus on this counterterrorism mission 
set.
    We have, I think, some pretty good thought on that mission, 
the security development plan, and that is a way to help focus, 
but that is lower down the line of the security assistance and 
billing capacity line. You are still going to have to have some 
sort of a format to help reimburse them for their operation and 
maintaining costs when they are actually doing the fight in the 
FATA, because I don't think their budget is going to be able to 
sustain it for a while.
    Mr. Tierney. Perhaps, and perhaps only if they are only 
doing any fighting in FATA or whatever, and therein lies the 
rub.
    General Wilkes. Yes, sir.
    Mr. Tierney. Right now it is the military running the show 
over there. They are the ones that are deciding whether they 
are going to fight or not fight. They are the ones who are 
going to decide whether they are engaging in some sort of so-
called truce or pause or whatever, and they are not really 
clueing in even their own government, let alone ours, so that 
is why, if you keep under this Coalition Support Funding 
mechanism, they say they spent money on helicopters, they say 
they spent money on food for Navy, Air Force, and Army. They 
say they fixed vehicles. They say they had all of this 
logistical stuff. You sent them a check, and we never know if 
it gets there.
    Maybe we ought to look at some funding that says, OK, we 
want the flow of traffic from the Pakistani side to the Afghani 
side to slow and stop eventually, or whatever. We will measure 
what assistance is going to go over by the performance of that 
happening. We don't care if you do it by truce or you do it by 
fighting or you do it by some other mechanism, or whatever, but 
that is how we are going to judge it, not on a reimbursement 
formula where you can tool us around, but on a benchmark where 
you say, all right, this stops, or certainly slowed and moving 
to stopping on that.
    I think that is essential, because it does come in to a 
strategic situation here and we don't have a strategy over 
there. We got distracted in Iraq. We have been jamming around 
over there. We took forces and we took intelligence and we took 
equipment that we needed and everything out of this region of 
the world, and now we are scrambling to get back.
    The question is: if we get back, are we going to continue 
just to tactically hit somebody every time they stick their 
head up? There is whack-a-mole, I think is the game. Is that 
the way we are going to go about this, or are we going to have 
a strategic view? What is our strategy that we are still 
waiting for those objectives to be done?
    I would think our strategy is to stop the al Qaeda types of 
those militant types in their trans-national campaign, which 
their campaign is to stop integration of the Islamic world into 
today's international order. So how are we going to do that? 
You are not going to get any further along by just fighting the 
individual fights. They can do that all day long. They have the 
territorial control, they have the logistics, they have people 
coming from other areas. We have to have some idea long-range 
what we are going to do. If we are going to give assistance to 
Pakistan and Afghanistan, it probably should be training their 
people to take on the mission, their military, their police, to 
get the work done. And we can do the training. International 
forces can help do the training, do the equipping, and do all 
of those things and have some measure as to how the rest of 
that is working on that basis.
    But I would think that would be the way we would be looking 
at it here, and I think--tell me again if I am wrong--we are 
not engaging Iran, Russia, China, the former Russian, now 
individual countries along the northern and eastern area, in 
getting them to understand what the stake is here, getting them 
to understand that we are not going in there to try to have 
some sort of U.S. hedge money in this area and take advantage, 
or whatever, but we all have to work to a stabilization. Unless 
that is part of our strategy incorporating long-term 
conversations with these people, what are we doing? We are 
going to be there for the rest of time.
    Does that sound reasonable to either you, Ambassador Mull, 
or General?
    General Wilkes. Sir, I think it is reasonable. I would 
comment that we are engaging these other nations that you are 
talking about.
    Mr. Tierney. Some of them. You are not engaging Iran on any 
depth. You are not negotiating with Russia in any depth. You 
are not engaging China in any particular depth on this. Some of 
those countries a little bit, some of them none at all, and I 
really question whether you are really sitting down with a 
comprehensive, in-depth consultation as to what are the 
regional interests going to be, what are the roles of Pakistan 
and Afghanistan going to be in the security of that region that 
leaves all of them unthreatened, but all the common concerns 
addressed.
    General Wilkes. Right.
    Mr. Tierney. I think we would come up with a funding 
mechanism on this, gentlemen, that has to take into account all 
of those things, including police. Some of you were here last 
week on that. The police situation, the Rule of Law situation 
doesn't apply just to Afghanistan; it applies to Pakistan.
    General Wilkes. Absolutely.
    Mr. Tierney. And our trips there, whether we talk to the 
business community, whether we talk to political leaders, the 
media, everybody understood that it is not just the idea of 
getting the military up to snuff, because the rubber hits the 
road with the police in these communities getting the best 
intelligence, knowing best how to deal with people whom they 
know and recognize and are respected by on that area. So I 
would hope that our strategy takes that into account, as well 
as the development and all that.
    Mr. Platts, would you like to be recognized?
    Mr. Platts. Thank you, Mr. Chairman. I appreciate your 
hosting this important oversight hearing and working with the 
ranking member. I would echo my support for what I would call 
your performance-based approach for the investment that we are 
making. I think some wise counsel there.
    I do want to followup, and I apologize with being back and 
forth. My fifth hearing today, five different subcommittees, so 
I apologize if I am repetitive. I am going to try not to be.
    First, on a followup on the issue of the increased 
oversight that has occurred since early 2006 and ODRP started, 
I would say, more closely scrutinizing the submissions from the 
government of Pakistan, General Wilkes, it seems like that was 
just an informal change, not something that was formalized. Is 
there anything today that has formalized that additional 
oversight, that we are more closely scrutinizing everything 
submitted to us, or is it still kind of an informal approach of 
the person in that position?
    General Wilkes. No, Congressman. We have had seven 
different interventions plus two DOD IG audits since the 2001 
timeframe in this. The late summer of 2006 we actually had a 
team with our Comptroller and CENTCOM go out to the ODRP, sit 
down and talk with those. That is what precipitated them 
looking at this. It wasn't something that just sprung up on an 
independent--I am sorry. Go ahead, sir.
    Mr. Platts. I understand it has come about because of more 
focus on the issue, but is there a process today that will 
ensure that if the personnel changes in Pakistan and ODRP, that 
whoever follows on is going to approach it in the same fashion.
    General Wilkes. Yes, sir, there is. Let me ask Mr. Roth to 
give you some more details on that.
    Mr. Platts. OK.
    Mr. Roth. And again, sir, our feeling was, in fact, that 
ODRP had worked closely with us in terms of some of their 
increased assessment and some of their increased reviews. That 
all said, we have just recently published some additional 
guidance to the field that will more institutionalize, if you 
will, the relationship that we have with ODRP. We have 
indicated, I think, what there is a need for, and the GAO 
report has actually been somewhat helpful there. Perhaps some 
additional training would be appropriate in this area, as well.
    So we are committed to clarifying the guidance. We already 
have clarified some guidance just here in the last week or so. 
And we are also committed to providing more training. The 
General alluded earlier, our plan is some time late this summer 
that we are actually going to send a team into the theater 
there to try to work with the personnel there in the theater.
    Mr. Platts. Great.
    Mr. Roth. Try to improve that.
    Mr. Platts. Yes. I have had the chance, with Mr. Higgins 
and with Mr. Lynch, in traveling to the theater, actually a 
number of times with Mr. Lynch, and the importance of this 
partnership. If the investment we are making is truly having a 
positive outcome, it is in our best interest to continue it. I 
guess the concern is what are we getting for this investment.
    On the same side of formalizing our approach to 
scrutinizing what is submitted, where do we stand as far as 
getting more cooperation, agreement of greater transparency 
from the government of Pakistan for what they submit so that we 
can better verify that we know what we are paying for, in 
essence? What type of dialog is ongoing or has already occurred 
to achieve that greater transparency?
    Mr. Roth. Again, here, too, and in particular in response 
to some of the findings by GAO, we have made a commitment to 
work with the Pakistanis to see if, in fact, there is some 
additional documentation, some additional detail that they 
could provide us.
    Let me say, that said, I think it is important for us to 
note we do, in fact, today, we feel, get a significant amount 
of detailed documentations from the Pakistanis. They provide to 
us reports, 18 to 20-page claims that provide details into 15 
or 20 different categories that we take a fair amount of time 
to assess. There is a multi-layered review beginning at the 
Embassy in Pakistan, continuing on through the Combattant 
Commander and CENTCOM, and then on to our staff here and the 
Comptroller's staff at the Pentagon to review and assess the 
documentation that the Pakistanis do, in fact, provide us.
    But, that said, again, you can always get more information. 
More information is better than less, and so we have, in fact, 
concurred with the GAO finding and we will look to see if we 
can engage with the government of Pakistan to see if there is 
additional information that can be provided.
    Mr. Platts. Under the more robust review that is ongoing 
since 2006, and looking at the 2007 numbers, where a 22 percent 
rate of rejection, or at least further, can you classify what 
would be the most common team or type of grounds for rejecting 
a claim that was submitted? Was there something that jumped 
out?
    Mr. Roth. Particularly this most recent claim--and I think 
the GAO report goes into that, as well--there is an issue here 
with the radar support. We have deferred payment on the radar 
support. We are taking a look at that. There is not a consensus 
right now in terms of what the radar support provides in terms 
of the U.S. operations or not. So we are looking at that and we 
are trying to do an assessment of that. We are working with our 
policy folks and with the Combattant Commander to see exactly 
what role the radars are.
    Over time, though, over the 7-years we have deferred or 
disallowed approximately 8 percent as an average. As GAO has 
indicated, there was actually a spike in the beginning before 
the review period of 2004 where we were disallowing 
approximately 14 or 15 percent of the claims, and there was a 
period of time where it was about 2 to 3 or 4 percent, and then 
recently here there has been an increase in the amount of 
claims that have been deferred.
    The kinds of things that we have not allowed, we have 
received from Pakistan a total of approximately $6.5 billion in 
claims. We have paid $5.9. That is where the number comes from 
in terms of approximately 8 percent that have not been allowed. 
The kinds of things over time we have not allowed is, for 
example, training. We do not consider training to be an 
incremental cost of supporting the U.S. operations.
    There was a period of time when Pakistan repeatedly asked 
for landing fees at airfields. They asked to be reimbursed for 
landing fees. We did not, in fact, approve the landing fees.
    There was some issue with Navy port services. We have not 
reimbursed for Navy port services.
    There is an issue with the boats. That is still something 
of a contentious issue. We are working through that. We have, 
in fact, allowed payments on the boats and we have disallowed 
payments on the boats. That is a good point that GAO has 
indicated we haven't been as consistent as perhaps we should be 
in that area. We will try to improve that to make sure that we 
are more consistent.
    There was, for example, a contingency fee that the Air 
Force had asked us for, a 10 percent contingency fee for a few 
years, and we did not allow those.
    Those are examples.
    Mr. Platts. Those things that you have identified as not, I 
assume that we have given the government of Pakistan saying we 
will not pay these.
    Mr. Roth. Yes.
    Mr. Platts. They are not acceptable. Is there an effort to 
still submit those types of claims, or once they get the 
message do they accept that, or do they submit them hoping they 
will just slide through?
    Mr. Roth. I don't know if it is a question of whether or 
not they hope they will slide through. All the things that we 
have disallowed the government of Pakistan has accepted our 
judgment on that. In the case, for example, of the landing 
fees, to be honest, they asked for them repeatedly over a 
number of months or perhaps even over a year or two, so they 
kept asking for them and we kept saying no. I am told now in 
the last year or two they no longer ask for those landing fees 
to be reimbursed.
    Mr. Platts. On the reference to the percent of denials, 6 
or 8 percent, dropped to 2 or 3, back up, is there any 
correlation between those changes in what was rejected and 
personnel changes? In other words, a different approach? That 
kind of comes back to my initial question of formalizing the 
approach.
    Mr. Roth. Fair point. Not to my knowledge, but you can't 
take personnel out. Obviously, personnel rotate in the theater. 
People come, people go. We have actually, to the point the 
General has made here a couple of times, we have tried to 
improve our oversight. We have had a number of, as he 
indicated, interventions. We have had two visits from the 
Comptroller's staff. Our own staff has visited in 2004 and in 
2006. We made visits to the theater to try to educate the folks 
that were there and also meet with personnel from the 
government of Pakistan, as well.
    So over time we have actually tried to identify. We had our 
own Inspector General look at the procedures that we had in 
place, and we have tried to follow the findings of our own 
Inspector General. As the General indicated, this past winter 
we asked our DOD IG once again to review our process and our 
procedure, and there is a report that will be imminent here 
within the next few weeks or so from our own Inspector General.
    Mr. Platts. Mr. Johnson, in your review and your summary 
you talk about $2 billion that maybe sufficient information 
wasn't provided, and then other statements about there may have 
been reimbursements for other activities that weren't 
performed. In a broad sense, first, it sounds like one is there 
is clearly a documentation issue here of what we paid for, did 
we get what we paid for, etc. Did you find any extensive 
evidence of outright misappropriation of funds, funding of 
illegal activities, anything that is not documentation related 
but just clearly wrong?
    Mr. Johnson. No, we did not find any indication of that.
    Mr. Platts. OK. One report says that--I think it was in The 
Guardian newspaper--that as much as 70 percent of the $5-plus 
billion, that was misappropriated, not spent how we would 
intend it to be. Anything that you have seen that would seem to 
verify that huge percentage?
    Mr. Johnson. Well, again let me emphasize we looked at the 
time period from January 2004 up to June 2007, and so it was at 
least $2 billion. It could be more. So our time period did not 
focus on the period prior to 2004.
    Mr. Platts. I will conclude here. Thank you, Mr. Chairman.
    And about half of that time period was when we had the 
heightened scrutiny, I guess, or energized scrutiny, as well.
    Mr. Johnson. The latter part of that time period, and that 
was a time period where there was a change in the security 
assistance officer who was put in place at the time, but it was 
also close to the time period when the Comptroller and others 
went out and developed additional guidance.
    Mr. Platts. Thank you. I appreciate each of your 
testimonies, and also each of you for your work and service to 
our Nation.
    Thank you, Mr. Chairman.
    Mr. Tierney. You have been hanging around with Mr. Lynch 
too long.
    Mr. Higgins.
    Mr. Higgins. Thank you, Mr. Chairman.
    This is primarily for Mr. Sebastian and Mr. Johnson. I am 
interested in your view as to the general level of corruption 
since 2001 through Musharraf's rule of the country and the new 
civilian government that is emerging. Are there promising signs 
that internal reform is, in fact, taking place? And how would 
you characterize the level of corruption? Is it sporadic? Is it 
moderate? Is it pervasive?
    Mr. Johnson. Well, Congressman Higgins, corruption was not 
an issue that we focused on in our engagement. We specifically 
looked at the extent to which Defense was implementing its 
guidance that they had put in place.
    Mr. Higgins. Right, but my concern is that level of 
accountability for how these funds are spent has to do with the 
integrity of the bureaucracy that is seeking reimbursement for 
these funds. So I think corruption and lack of accountability 
is, in fact, very valid when you are talking about the 
expenditure of considerable funds in that area for a specific 
purpose.
    Mr. Johnson. Yes. We do note in our report the need for the 
U.S. Government to work closer and work with the Pakistan 
government to provide additional documentation to support the 
billings that we have been provided.
    Mr. Higgins. Mr. Sebastian.
    Mr. Sebastian. I would actually have to concur with Mr. 
Johnson. Again, the focus of our review was simply to validate 
whether Defense was utilizing its guidance in looking at 
support coming in from the Pakistani government to reimburse on 
claims, so the issues that we identified had to do with lack of 
adequate documentation to support those claims, and that really 
is as far as our work went.
    Mr. Higgins. General Wilkes and Mr. Roth, a February 2008 
article in the Washington Post quoted a U.S. official familiar 
with past U.S. payments as saying, ``Padding? Sure, let's be 
honest. We are talking about Pakistan, which has a legacy of 
corruption.'' But if they are billing us $5 billion and it is 
worth only $4 billion, the question is whether it is worth 
nickel and diming if it is such a top national security 
objective.'' Do you agree with these sentiments?
    Mr. Roth. Sir, the only comment I can make and actually 
echo a little bit the GAO comments. We have no evidence that 
any of these bills are in any way impacted by any kind of 
corruption or that type of thing, first of all, in part, 
because we don't have access either to some of the government 
of Pakistan documentation and that type of thing, as well. So 
no, sir, I can't verify or deny the fact of what level of 
corruption there might be.
    Mr. Higgins. I have no more questions, Mr. Chairman. Thank 
you.
    Mr. Tierney. Thank you, Mr. Higgins.
    I would guess that is part of the problem: you don't know 
if it is corruption, if it is waste, if it is fraud, or if it 
is money well-spent. That is the issue.
    Mr. Shays, I have some final questions. If you want to go, 
I would be glad to have you proceed.
    Mr. Shays. I didn't ask the question about corruption 
because it seems to me almost irrelevant. We have been giving 
out money to the Pakistanis without their verifying whether or 
not they have used these funds in a proper way. It just strikes 
me that we might as well have just given them a block grant and 
said here's the money, because in essence until very recently 
we haven't been requiring the kind of adequate verification 
that we need to require. I mean, that is my impression of what 
GAO is saying.
    Mr. Johnson, if you would want to qualify my words I would 
welcome it, but that is what I am getting from you.
    Mr. Johnson. Congressman Shays, you are precisely correct 
in terms of our message that there is a need for greater 
oversight and greater detailed documentation from the Pakistani 
government.
    Mr. Shays. But what I am also struck with is that our 
problem has been with, in many cases, with a former Secretary 
of Defense or his reign and a former leader of the Pakistani 
government, and now we have a new Secretary of Defense and we 
have a new government. The irony would be, when I asked the 
question why we need this program, General, I was re-reading 
your opening statement, and I think your opening statement says 
it pretty clearly. This is a hugely troubled part of the world, 
to which my chairman has spent a lot of time next door. Both 
share the same basic problems.
    I am just wondering if we just shouldn't design a program 
for Pakistan and not say that 27 countries get the dollars when 
it is really so skewed to Pakistan.
    Let me ask that question. I mean, would it just be better 
to recognize that Pakistan has huge problems, it is under-
funded, and just give them money in their general fund, and 
then not get into this issue of the charade of somehow they are 
justifying something that we ultimately are going to pay, at 
least under this program?
    General Wilkes. Well, Congressman, I think we probably 
ought to go back and look at all different avenues and venues. 
Why restrict ourselves? This is such an important part of the 
world that we are going to be involved in for some time, and we 
are heavily invested in Afghanistan. Perhaps a different way to 
view it for Pakistan is appropriate, and we would be willing to 
undertake that review with you and come up with some ideas.
    Mr. Shays. Is one of your messages that this is a 
government that is having a hard time paying for its social 
services, its educational programs, its infrastructure, and its 
military, and it is in the midst of an area where al Qaeda is 
certainly very active? Is that one of your messages?
    Mr. Johnson. Yes, sir. It is a fledgling democracy. It has 
disconnected in its budget. The foreign direct investment has 
decreased. It is a high inflation. They previously had probably 
7 or 8 percent growth. Inflation is starting to come into it. 
The growth rate is down to about flatline.
    So they are having the difficulties with their government 
and, of course, they have admitted that they do have an 
insurgency problem within Pakistan. I think the current 
government is aware of that and trying to tackle those 
problems, but they have a lot of steps they have to go through, 
and they are going to need international support.
    Mr. Shays. I am struck by the fact that, rather than having 
them justify how they would--I don't want to say how they would 
use the dollars, or justify what the dollars can be counted 
against--that we would ask them for outcomes; in other words, 
something that says we make this area or you put more pressure 
on this group, that you start to crack down on certain 
activities and have that be the basis for their getting 
dollars.
    How do you react to that rather than saying, well, we had 
an incremental cost here and we put our troops here, and so on? 
Because you can do all those things, but we may end up with 
nothing to show for it, rather than to suggest to them that we 
would like to pay for certain outcomes.
    General Wilkes. Sir, you would like to be able to measure 
outcomes and have that tied to a funding stream. I would re-
emphasize that it is an independent nation state, and they do 
have an awful lot of pride, and they want to be able to do this 
themselves. The investment that would be helpful, I think, 
would be to help them create a capacity to handle this.
    I think some measured success about no cross-border 
operations into Afghanistan is certainly a viable tenet that we 
ought to put out there. That is one of the requirements that we 
see in the tribal agreements that they are trying to negotiate. 
I think that is at our request to do that, so that certainly is 
a valid request, I think.
    Ambassador Mull. And if I could just add on, I believe, in 
fact, there are outcomes that are measurable and observable as 
a result of the CSF program. Certainly 8 years ago there was no 
deployment of Pakistani security forces in the federally 
administered tribal areas. Today there are over 100,000 troops. 
Eight years ago----
    Mr. Shays. Let me stop you right there. So there are 
100,000 troops, and what are they doing and what benefit do we 
think is occurring from that?
    Ambassador Mull. Well, there are a number of benefits.
    Mr. Shays. First, what are they doing?
    Ambassador Mull. First of all, they are supporting and 
providing security, they are maintaining air bases, they are 
maintaining facilities for us to use, logistical supply routes 
into and out of our own war effort in Afghanistan. They are 
there as a physical security presence to dissuade the area from 
becoming more of a launching area for terrorist activity. There 
is already too much terrorist activity going on there. We might 
disagree with our Pakistani friends about whether or not they 
have the right force mixture there. We believe it requires a 
lot of assistance to improve their counterinsurgency 
capability, which we aim to address not through the CSF 
program, but through our separate security systems program, 
through the 1206 program, with our DOD colleagues, as well as 
other FMF and IMET programs that we are running.
    Mr. Shays. Mr. Johnson, has GAO conducted a study of the 
entire CSF program similar to what you are doing in Pakistan?
    Mr. Johnson. No, we have not, sir.
    Mr. Shays. This is what I think I am gaining from this: I 
don't think that there is any doubt that, in my mind, we wanted 
to get the money out to Pakistan and we have been pretty loose 
in how we have overseen this program because we think that 
Pakistan needs the dollars, and I am struck by the fact that 
you have a program where 80 percent goes to one. It almost 
makes sense to me to have two programs, to take this program, 
the CSF program, and have it go to 26 countries, and have a 
special program for Pakistan.
    I am convinced that the kind of traveling that my chairman 
has done in Pakistan and Afghanistan needs to be increased. 
Some Members go to Afghanistan. I think you, when you go, you 
go to Afghanistan and Pakistan both. Maybe some others do. It 
is really a package deal. That is kind of what I am struck 
with. And there just needs to be a special program.
    We should sit down, I think, with the Pakistanis and say, 
OK, how can we make this program work for you? Let's get rid of 
the charade of having to justify incremental costs and all 
that. You need money. How do we get it to you and make sure it 
is on outcomes that you want and that we are willing to fund. 
That is, Mr. Chairman, kind of where I am coming down. I would 
be interested to know.
    So more trips by Members to the area I think would be in 
order, and I will look forward to joining you on one of those 
trips.
    Mr. Tierney. Thank you, Mr. Shays.
    Mr. Shays, We are joined by our colleague who sits on the 
Appropriations Subcommittee, Foreign Affairs, Mr. Moran. I 
would ask unanimous consent that Mr. Moran from Virginia be 
allowed to participate in this hearing.
    Mr. Shays. No problem.
    Mr. Tierney. Without objection, so ordered.
    General, you indicated, I think, during the course of your 
discussion that you had what you called interventions or 
guidance. You said there were six of them. We only got in our 
request for information one from 2003, so I would ask that if 
there are subsequent other assessments that you would just make 
them available for our committee to review, including anything 
that you have done recently in response to Mr. Johnson's team. 
We would appreciate that, as well. I assume there is a more 
defined role for the ODRP, and regular conduct by them, and 
that would be helpful for us in our review.
    I talked earlier about needing multi-national support for a 
legitimate civilian government in Pakistan, a government that 
can have authority over the military and the ISI and all of 
that. What are we doing at State and Department of Defense to 
actually effect that kind of international support for the 
civilian government so that it can extend its authority over 
the military and the ISI, as we would like the civilian 
government to do? Ambassador Mull first, and then I will go to 
the General.
    Ambassador Mull. Yes. I should say that, coming from the 
Political-Military Bureau I am not a particular expert on our 
relations with Pakistan, but I can tell you generally that we 
have tried to develop a very diversified assistance program 
over the past few years that focuses very heavily on the 
sources of religious extremism, violent extremism, and that 
means by opening up educational opportunities for poorer 
people, for women, for girls, give them educational 
opportunities, to provide more entrepreneurial support to small 
businesses to give them the opportunity through micro-lending 
programs and so forth. We have a lot of food assistance and 
population and refugee assistance programs that we provide, 
because there is a real problem there. And we work very 
carefully with all of our key partners in addressing it.
    I recently had the privilege to accompany Secretary Gates 
to a major conference in Singapore. There he met with 12 of his 
counterparts from all over the world. In every single one of 
those meetings Pakistan came up in terms of talking about how 
we can work together as governments, working with the 
Singaporeans to get them to invest more money and some social 
opportunity and economic----
    Mr. Tierney. Through the civilian government?
    Ambassador Mull. Pardon me?
    Mr. Tierney. Through the Pakistani civilian government, 
empowering them?
    Ambassador Mull. Working with the civilian government. That 
is right.
    Mr. Tierney. Thank you.
    General, specifically then what are we doing to make sure 
that we empower them with respect to their military 
intelligence people?
    General Wilkes. Sir, we are in conjunction with State 
Department, there has been a program ongoing. From the State 
side of the house it is about $750 million that will go through 
2009 to invest in USAID projects, etc., especially in the FATA.
    Mr. Tierney. I am being rude here, I think, but I just want 
to catch you while I think of it. My mind tends to slip more 
than yours does. I am familiar with the program, I think as we 
may be here, but this is one of the programs that the newly 
elected government had not even a scintilla of information on, 
shamefully so, when they got elected. So are we now dealing 
directly with them as opposed to the military, and having them 
make the decisions with respect to all aspects of that, the 
security aspect as well as the developmental aspect?
    General Wilkes. Yes, sir. We are engaging at all levels. 
First off, our Embassy, Ambassador Patterson, is extremely 
engaged in all of this. I just got back with our Undersecretary 
for Policy about 2 weeks ago, and we met with all levels of the 
Government and different ministers, and so we are engaging at 
that level.
    The chairman followed us shortly thereafter, and he made 
similar sets of meetings there.
    We have also engaged on that trip back with NATO, and with 
the Security Council there to talk with their folks, 
encouraging them to begin assistance or to begin making trips 
in that area, as they go through Afghanistan to also add 
Pakistan to their trips.
    So we are at multi levels focusing on this. On the military 
side of it we are trying to re-energize the Tripartite 
Commission between ISEF Commander, bringing in all your NATO 
Coalition partners at the military level in Pakistan, and we 
are also doing it at the regional level with efforts there.
    Mr. Tierney. But with all of that I hope that it is clear 
that you see the civilian government as being the principal 
party on that over the military and the intelligence. I have a 
real concern that unless we do that the military and 
intelligence are going to continue to undermine what is going 
on over there. I am not sure that they have that much of a 
desire to see the militants totally fade away. I still think 
that they think some day we are packing it up and leaving, and 
they want to have this group around to cause trouble in 
Kashmir, cause trouble in Afghanistan if they think India or 
Afghanistan are coming back somehow. The only way to break 
that, I think, is that we empower as much as we can the 
civilian government to have the direction over the military to 
make sure that they are working with us on joint concerns.
    General Wilkes. Mr. Chairman, I think we agree with that. 
It is very important to get the civilian government and their 
capacity and their ministries up and running in order that they 
can perform all the efforts that they need to in governance.
    Mr. Tierney. Thank you.
    And then, finally, Ambassador Mull, when you look at the 
concurrence that is needed by the Department of State on the 
moneys as they are traveling through on that, you have to make 
sure that they are consistent with the national security 
strategy, and that is a published document. I assume you just 
take the latest one and you make an assessment whether or not 
you think it is there. The other is you want to make sure that 
it does not adversely affect the balance of power in the 
region. In order to determine that, do you actually have 
consultations with other countries in the region to get a 
feeling for what their perception is, not what we think our 
good intentions are but what their perception is of cooperation 
between the United States and Pakistan, the United States and 
Afghanistan, and whether or not that is upsetting the balance 
from their view?
    Ambassador Mull. What we do in the Political-Military 
Bureau is work carefully with the regional bureau within the 
State Department that has policy responsibility for that 
particular region. So within the State Department I work very 
closely with Ambassador Richard Boucher, our Assistant 
Secretary for South Central Asia, and in every expense we look 
at, both within this program as well as our broader security 
assistance program, we work very carefully through the foreign 
assistance process to make sure that we are not giving any one 
country a disproportionate advantage or creating one country to 
be more of a threat to the other.
    Mr. Tierney. And do you discuss that fact with those other 
countries?
    Ambassador Mull. Certainly. Well, what we do is rely very 
carefully on our embassies in the field and their assessment. I 
go around. I have political military talks with most of our key 
countries around the world. I am going to India next month, for 
example. I expect an important part of my conversations there 
are going to be how do they view our investment in the 
Pakistani military. I will brief them on what we are doing so 
that they understand it is not a threat, and if they view it as 
a threat then we will take that back and factor it into our 
considerations.
    Mr. Tierney. Of course, the only problem is the one country 
that we don't have those kinds of conversations with, or one of 
the principal countries, would be Iran.
    Ambassador Mull. You are absolutely right, sir.
    Mr. Tierney. Which plays an incredibly important role in 
that region, so we keep getting back to not being as inclusive 
as we probably need to be if we really want to get a strategic 
answer to where we are going forward here and have everybody in 
the international community supporting the same objectives on 
that.
    Mr. moran, do you have any questions?
    Mr. Moran. I do, Mr. Chairman. Thank you. Thanks again. I 
mentioned this at the previous hearing that we had, but I thank 
you for the trip that we took to Afghanistan and Pakistan. It 
was enlightening. We went with members of this subcommittee, 
and Ms. Bennett represented the minority staff very well. But 
what I would like to ask is with regard to the appropriations 
process, Mr. Chairman.
    One of the concerns is that every year now for the last 7 
years almost we have funded the Afghanistan war through an 
emergency supplemental over and above the regular Defense bill. 
Things are going to change next year, whoever is elected. 
Senator Obama has made it clear that he feels that we need to 
conclude the war in Iraq and win the war in Afghanistan. He is 
committed to an ongoing commitment to economic development and 
doing some of the things that you have suggested in 
Afghanistan. But if that is the case, would not it seem that we 
should fund the Afghan effort on an ongoing more consistent and 
predictable basis?
    I would like to ask any of you if the way that we do it 
now, which is kind of spasmodic--we go for 6 to 9 months, then 
we have another supplemental. The Afghan war tags on the 
coattails of the Iraq funding supplemental. Then you get it 
whenever it gets through. This last supplemental has taken 
several months, and now you are going to get your money. But it 
is never built into the budget. It seems to me there is some 
down side to that, and that it is something that needs to 
change.
    I am not sure who to ask, because there are two pieces of 
it. There is the State Department piece and the DOD piece, but 
I would like to elicit some comments, because I don't think 
this is a sustainable--if this is an ongoing financial 
commitment, then we ought to be funding it in a different 
manner than the way we fund it today.
    Mr. Roth. Well, since that is an appropriations question I 
will try to field it, sir. Again, I think we have been fairly 
consistent in saying that how contingencies are funded is a 
matter that is worked out at the administration level with the 
Congress and with the approval of Congress, and to some extent 
we in the Defense Department can work it both ways. As the 
normal default position is, a baseline budget funds basically 
baseline, day-to-day operations. It used to be at a time called 
a so-called peacetime budget. Then any contingencies over and 
above that were normally funded with supplementals.
    But, having said that, once a contingency continues for a 
few years there is at least some consideration should that be 
part of a baseline budget or not. So to your point, sir, I 
would clearly think that would be something that a new 
administration could look at and review and reassess. As far as 
we in the Defense Department, we can make whatever appropriate 
adjustments are necessary.
    Mr. Moran. I understand that. It just doesn't seem to be 
the way to win a war that is as complex as this to go every 
several months and then ask for another piece. It does seem 
that we ought to be able to plan in a more systematic and 
predictable manner.
    The other thing that concerns me is that it has been 
acknowledged that we don't get 100 percent of what we pay for. 
We pay about 100 percent and we get maybe 80 percent of it and 
20 percent of it is a hair cut that goes to the bureaucracy and 
the government leaders. I understand Mr. Higgins asked about 
that, but if we are going to build it into the budget, it seems 
to me one of the reasons that I am so pleased that the chairman 
is having this hearing is he said we have to have hearings on 
this CSF money because clearly it is not getting the kind of 
oversight and accountability that it needs. If we are going to 
build it into the budget, we can't be building in 20 percent 
corruption fee. That is basically what seems to be happening.
    Does anybody want to respond to that?
    Mr. Roth. Sir, my only comment is we obviously don't know 
that for a fact. We do not build a 20 percent contingency fee 
into our budget request. We submit the Coalition Support Fund 
budget along, as you indicated, with our supplemental budget 
for review by our oversight committees, and so we are as open 
and as transparent as we possibly can be with our budget 
request. We detail the countries that will be the potential 
recipients and we also provide, before we make any payment, a 
15-day notification to our oversight committees. So from where 
we sit, we try to be as open and transparent with this fund as 
we possibly can be.
    Mr. Moran. Well, I know that is the official answer, but we 
have the quote here: ``Let's be honest. We are talking about 
Pakistan, which has a legacy of corruption. If we are billing 
$5 billion and it is only worth $4 billion, the question is 
whether it is worth nickel and diming them for a national 
security objective.''
    You know, some people would think $1 billion isn't a nickel 
or a dime, but it is of concern. We saw evidence of that 
certainly when we were in Afghanistan and Pakistan. It is 
probably worse in Afghanistan than it is in Pakistan.
    I suspect that all the appropriate questions have been 
asked, but, in fact, your staff, John, suggested that is an 
area of concern that we haven't gotten into. I think we are 
going to be very anxious to see how we budget for the long term 
in Afghanistan, because that implies a long-term commitment. 
These emergency supplementals, plaintiff really don't know what 
to expect from 1 month to the next. That is not the way to run 
a war, let alone win a war.
    Thank you, Mr. Chairman.
    Mr. Tierney. Thank you, Mr. Moran.
    If my colleagues have no further questions, I want to thank 
everybody on the panel. I want to give you an opportunity if 
any of you want to make a closing statement or feel as though 
something didn't get said that should be said or something was 
misconstrued.
    [No response.]
    Mr. Tierney. Otherwise, let me thank you all for service to 
country and for your time and effort not just today but this 
morning for Ambassador Mull and previous weeks for all of you 
helping us do our job. We appreciate that. The meeting is 
adjourned.
    [Whereupon, at 3:55 p.m., the subcommittee was adjourned.]

                                 
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