[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
SIGAR REPORT: DOCUMENT DESTRUCTION AND MILLIONS OF DOLLARS UNACCOUNTED
FOR AT THE DEPARTMENT OF DEFENSE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON NATIONAL SECURITY,
HOMELAND DEFENSE AND FOREIGN OPERATIONS
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 13, 2012
__________
Serial No. 112-179
__________
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
VACANCY
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on National Security, Homeland Defense and Foreign
Operations
JASON CHAFFETZ, Utah, Chairman
RAUL R. LABRADOR, Idaho, Vice JOHN F. TIERNEY, Massachusetts,
Chairman Ranking Minority Member
DAN BURTON, Indiana BRUCE L. BRALEY, Iowa
JOHN L. MICA, Florida PETER WELCH, Vermont
TODD RUSSELL PLATTS, Pennsylvania JOHN A. YARMUTH, Kentucky
MICHAEL R. TURNER, Ohio STEPHEN F. LYNCH, Massachusetts
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
BLAKE FARENTHOLD, Texas
C O N T E N T S
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Page
Hearing held on September 13, 2012............................... 1
WITNESS
Mr. John F. Sopko, Special Inspector General, Afghanistan
Reconstruction
Written Statement............................................ 7
Oral Statement............................................... 10
APPENDIX
The Honorable John F. Tierney, Member of Congress from the State
of Massachusetts, Opening Statement............................ 32
SIGAR REPORT: DOCUMENT DESTRUCTION AND MILLIONS OF DOLLARS UNACCOUNTED
FOR AT THE DEPARTMENT OF DEFENSE
----------
Thursday, September 13, 2012,
House of Representatives,
Committee on Oversight and Government Reform,
Subcommittee on National Security, Homeland Defense, and
Foreign Operations,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:05 a.m. in
room 2247, Rayburn House Office Building, the Honorable Jason
Chaffetz [chairman of the subcommittee], presiding.
Present: Representatives Chaffetz, Labrador, Farenthold,
Tierney and Lynch.
Staff Present: Thomas A. Alexander, Majority Senior
Counsel; Sharon Casey, Majority Senior Assistant Clerk;
Mitchell S. Kominsky, Majority Counsel; Beverly Britton Fraser,
Minority Counsel; Devon Hill, Minority Staff Assistant; Dave
Rapallo, Minority Staff Director; Rory Sheehan, Minority New
Media Press Secretary; Cecelia Thomas, Minority Counsel; and
Carlos Uriarte, Minority Counsel.
Mr. Chaffetz. The Committee will come to order.
I would like to begin this hearing by stating the Oversight
Committee Mission Statement.
We exist to secure two fundamental principles. First,
Americans have the right to know that the money Washington
takes from them is well spent. Second, Americans deserve an
efficient, effective government that works for them.
Our duty on the Oversight and Government Reform Committee
is to protect these rights. Our solemn responsibility is to
hold government accountable to taxpayers because taxpayers have
a right to know what they are getting from the government.
We will work tirelessly in partnership with citizen
watchdogs to deliver the facts to the American people and bring
genuine reform to the Federal bureaucracy. This is the mission
of the Oversight and Government Reform Committee.
I want to welcome everyone to this hearing, the SIGAR
Report: Document Destruction and Millions of Dollars
Unaccounted for at the Department of Defense.
Today's proceedings will continue the subcommittee's
efforts to oversee the billions of taxpayer dollars spent in
support of military and civilian operations in Afghanistan. On
Monday, the Special Inspector General for Afghan Reconstruction
released a report entitled, ``Interim Report on Afghan National
Army Petroleum, Oil and Lubricants.''
This report provided the Secretary of Defense with an
update of an audit concerning the Afghan National Army's
logistics capability for petroleum, oil and lubricants, also
known as POL. POL are the most valuable commodities in the
Afghan society. Combined Security Transition Command-
Afghanistan, led by the United States military, is responsible
for training and equipping the Afghan National Army.
This effort is funded by the U.S. taxpayer through the
Afghan Security Force Fund, ASFF. From fiscal years 2007 to
2012, CSTC-A has provided approximately $1.1 billion in ASSF
funding to purchase petroleum, oil or lubricants for the Afghan
National Army. In fiscal year, 2013, the U.S. Government will
purchase roughly $343 million more in POL. CSTC-A provides
these commodities based on what it believes the Afghan National
Army will need.
In February of this year, SIGAR began conducting this audit
program. SIGAR is Special Inspector General for Afghanistan
Reconstruction. Its overall objective was to assess U.S efforts
to develop ANA's capability to acquire, distribute and account
for POL supplies to its forces. SIGAR's findings are extremely
troubling.
According to the interim report, CSTC-A does not have
accurate or supportable information on how much of the U.S.
funds are needed for ANA fuel, where and how the fuel is
actually used and how much fuel has been lost or stolen, some
of the basic metrics we would need in order to understand the
situation. Thus, the extent to which ANA fuel is stocked,
consumed or lost at any given time remains unknown.
SIGAR also found that ``no single office within the U.S. or
Afghan Government has complete records on ANA fuel purchased,
ordered, delivered or consumed.'' In fact, no records for fuel
purchases exist prior to March 2011 because ``ANA fuel
financial records totaling nearly $475 million from fiscal year
2007 to February 2011 had been shredded in violation of
Department of Defense and Department of Army policies.'' This
is totally unacceptable and fits a pattern of behavior from the
Defense Department.
As a subcommittee, we are also concerned with the pattern
of abuse of documents and the lack of documents coming out of
the Pentagon in general. For instance, on January 2, 2011,
Colonel Amrein sent an email to Colonels Carozza and Andersen
regarding a tasker to send information to the IG on Afghan
General Yaftali's suspected pilfering of Dawood Hospital
supplies.
In that email, Colonel Amrein stated that ``Brigadier
General Patton reviewed the summary and documentary evidence we
intended to provide. He made changes and told us to reduce
documentary evidence that we provide.''
In the NATO Training Mission Afghanistan photo policy on
September 12, 2011, a policy was issued instructing people to
destroy documents they had regarding the abuses of what was
happening at the National Military Hospital known as Dawood.
We had Colonel Geller's memorandum for the record that was
requested. He submitted a 25 page memorandum for the record.
Instead of providing that document to the committee, the
Department of Defense created a separate chart editing out some
key parts before it presented it to the United States Congress.
Colonel Geller was also prevented from speaking to the media.
The committee is also looking at the Palantir System where
the Department of Defense--and it is just stunning here--
destroyed and replaced an independent assessment of an
intelligence assessment tool, also known as Palantir, used and
preferred by many soldiers in the field. We will continue to
investigate that. That will probably constitute its own hearing
in the future.
Nevertheless, we have a pattern here. This is not just one
sole instance. In this particular situation where we have the
Inspector General trying to do an audit or a situation where
they want to spend more money by the hundreds of millions of
dollars and to find those documents had been shredded or lost
and there is no accountability. I recognize that in the fog of
war there are difficult situations, but this is totally
unacceptable.
Despite the lack of records and justification for fuel
purchases, the Department of Defense proposes to increase
funding. From fiscal year 2014 to fiscal year 2018, it plans to
provide $555 million worth of POL per year. Instead of
purchasing it for the Afghan National Army, this Administration
plans to give two-thirds of that amount in cash directly to the
Afghan Government. They might as well wire it directly to
Dubai. This is an absolute atrocity that this government is
going to take American taxpayer dollars and just wire it
directly to the Afghan Government.
We can't even control the money. We don't even know how
much we are spending and what is going on. And now this
government wants to send it directly to the Afghan Government?
Again, send it to Dubai and don't even bother.
In the name of capacity building, the Afghans will be
allowed to purchase POL for themselves. With that, the Afghan
Government will be responsible for overseeing the expenditure
of roughly $2.8 billion of our taxpayer dollars, this to a
government that I believe is perhaps the most corrupt
government on the face of the planet.
This begs one simple question. If the United States
Government cannot track and verify these expenditures, then can
we honestly expect the Afghan Government to do better?
Yesterday, this subcommittee held a hearing to examine the
mismanagement, theft and human suffering at the Dawood National
Military Hospital in Afghanistan. For years, the Afghan
officials pilfered nearly $175 million worth of cash and
medical supplies. Legitimate pharmaceuticals were replaced with
counterfeits, wounded Afghan soldiers were made to suffer and
in some cases, died without proper medical care. This was a
U.S. taxpayer funded program operated by the Afghan Government.
This Administration must rethink its so-called ``forward
strategy.''
I don't make this up. It is pretty stunning to me. This is
not related to the campaign but if you look at the documents
coming out of, for instance, USAID right now, it is USAID
forward. I cannot believe that a forward thinking government, a
forward planning government would do such things as ``to
achieve capacity building objectives and using host country
systems where it makes sense.''
In other words, let's just send them the money directly and
bypass the accountability. We need more oversight, not less
oversight. We can't even control the money ourselves and we are
going to wire by the hundreds of millions of dollars, money to
the Afghan Government. That is part of the reason we are here
today.
We are here today to discuss mechanisms needed to ensure
accountability and to start looking for answers such as who
ordered the destruction of these documents and how we can
improve the internal controls. Without improvements, the ANA,
POL funds will be even more vulnerable to theft and waste.
I want to thank Mr. Sopko for being here on fairly short
notice. They issued this report on Monday and we wanted to get
on top of it as quickly as possible. We look forward to his
testimony.
I would like to now recognize the Ranking Member, the
gentleman from Massachusetts, Mr. Tierney, for his opening
statement.
Mr. Tierney. Thank you, Mr. Chairman.
Thank you, Mr. Sopko for being here today and for your
report.
We have just marked the 11th anniversary of September 11.
During nearly all that time, United States soldiers have been
on the ground in Afghanistan. We entered the conflict for what
was believed to be righteous reasons and our brave men and
women in uniform have largely accomplished the mission of
ridding Afghanistan of Al Qaeda and the international
terrorists who threatened our homeland.
I would like to take the opportunity to honor their
sacrifices and state that I am amongst many who are proud of
their service.
This subcommittee has long been concerned with the issues
of corruption and mismanagement of United States taxpayer
dollars in Afghanistan for the obvious reason of the impact it
has on the safety and security of our military forces and
civilians in-theater but also with respect to the United States
taxpayer dollars.
Under my chairmanship, this subcommittee conducted multiple
investigations into allegations of corruption in the United
States contract related to the war in Afghanistan. In a bi-
partisan manner, we investigated jet fuel contracts in
Kurdistan and a host nation trucking contract in Afghanistan.
Our investigation of the trucking contract found the
contractors were making protection payments to our enemies with
U.S. taxpayer dollars.
I commend Chairman Chaffetz for calling this hearing today
to examine the problem of contracting corruption continuing in
Afghanistan. The Special Inspector General for Afghanistan
Reconstruction conducted an audit of the Afghan National Army's
logistics capability for petroleum, oil and lubricants. While
conducting this audit, it was found an astounding lack of
internal controls of records of fuel purchases, deliveries and
consumption existed.
SIGAR found that the Department of Defense's Training
Mission lacked a valid method for estimating fuel needs on
which to base the funding requests as well as lacked complete
records on the Afghan National Army's fuel transactions.
Ultimately, this means the fuel and the funds used to purchase
it are highly vulnerable to theft and waste.
Against this background, it is highly worrisome that the
training mission intends to transfer to the Afghan Government
direct control of the logistics and U.S. taxpayer funds for
fuel on January 1, 2013. I believe that before this transfer
takes place, NATO and the Department of Defense must work
together to immediately establish clear guidelines to ensure
this money is not misused. It is imperative that these
egregious issues be fixed before hundreds of millions of
dollars go directly into the hands of the Afghan Government.
When the Chairman speaks of the quote that he was reading
about money not going to the locals where it makes sense, from
what I can see, it clearly does not make sense, at least
certainly not at this period of time. We have to be careful and
make sure that not unless and until it makes sense should that
transfer take place.
I appreciate Mr. Sopko's testimony and the leadership he
brings to SIGAR. I look forward to the discussion today and I
thank you, Mr. Chairman, once again.
Mr. Chaffetz. Thank you. I thank the gentleman for truly
approaching this in a bipartisan way. We want what is right for
the country. This is not a partisan issue and I think you will
see us very united on this issue. I do appreciate that.
Does any other member have an opening statement? The
gentleman from Massachusetts.
Mr. Lynch. Thank you, Mr. Chairman and the Ranking Member.
I appreciate your holding this hearing.
I want to thank you for focusing your attention on this. I
realize this is about the fifth hearing that this subcommittee
has had on oversight in Afghanistan funding. This committee,
along with the full committee, has worked tirelessly to ensure
oversight and accountability of U.S. taxpayer dollars being
spent in Afghanistan. While it is a task we wish was not
needed, the reality is that corruption in Afghanistan is
rampant and endemic.
The subject of today's hearing demonstrates that there is
still much more work to be done. Based on the Special Inspector
General's interim report, the Combined Security Transition
Command-Afghanistan is not yet in a position to ensure that the
Afghan National Army will be able to take over future
procurement of petroleum, oil and lubricants, POL.
The report's findings are very disturbing. As the Chairman
noted and the Ranking Member noted, nearly $475 million in fuel
payments with no records, no documents, documents that have
been shredded and a lack of accurate methodology for estimating
ANA fuel requirements has been uncovered by the Special
Inspector General. I agree with the Special Inspector General
that the deficiencies must be addressed quickly and correctly,
especially as the ANA is slated to take charge of these
purchases in 2013.
As the Coalition continues to transfer responsibility for
security and operations to the Afghans, we must be certain that
procedures and institutions are in place to ensure that U.S.
taxpayer money is not expended where Afghan resources are
available, number one, and if and when U.S. resources are
necessary, to make sure that those resources are expended
properly.
I would like to thank Inspector General Sopko for your
efforts to bring accountability to the continuing mission in
Afghanistan and for taking the time to come and testify before
this committee. I look forward to hearing your testimony on
this matter and other investigations your office is conducting.
I want to reinforce a couple points the Chairman and
Ranking Member have amplified. That is that nothing in our
experience thus far in Afghanistan would lead us to believe
that direct funding--just sending a check, sending resources
directly to Afghan ministries--is in the best interest of the
United States or the American taxpayer.
Secondly, it is a case of no good deed goes unpunished. We
are trying to help the Afghan people. Meanwhile, there are
agents within their government that are robbing us blind. I
just think we have to reassess--I realize the President some
time ago set a timetable for the end of 2014 for withdrawal but
I think in light of the continuing circumstances of corruption,
the delay in the training exercises that are ongoing there, I
think it is right and proper for us to reassess that timetable.
Actually, I believe that if our mission is for training the
Afghan National Army and getting these systems in place, we
don't need a massive military presence to accomplish that. I
think it is entirely right and appropriate that we reassess and
look at the possibility of getting out at the end of 2013
instead of 2014.
With the green on blue so-called attacks that we are seeing
where ANA personnel are attacking their NATO, largely U.S.
trainers, I think there is every reason for us to reassess our
timetable and look to the opportunity to get out of Afghanistan
sooner. They are either going to take charge of this operation
and run their country with the highest hopes for democratic
ideals or they are not.
This ball is in their court and they have to step up. I
don't see them stepping up and I don't think us staying one
more year and losing more American lives is going to change
their level of commitment. Indeed, I think if we emphasize that
we are not staying around, it might act as a stronger incentive
for them to step up and do the right thing.
Mr. Chairman and Ranking Member, I appreciate your courtesy
and indulgence. I yield back the balance of my time.
Mr. Chaffetz. Thank you.
Members will have seven days to submit opening statements
for the record.
I will now recognize our panel.
Mr. John F. Sopko is the Special Inspector General for
Afghan Reconstruction. He was appointed by President Obama and
was confirmed July 2, 2012. He spent more than 20 years on
Capitol Hill, including as Chief Counsel for Oversight
Investigations for the House Committee on Energy and Commerce,
chaired by Representative John Dingell.
He has a distinguished career and I appreciate your taking
on this most difficult assignment. I know you are supported by
a staff that is patriotic and committed to the betterment of
this country. It is a difficult situation to say the least but
we appreciate you and your staff and those that have joined you
here today and those back at the office and certainly in
Afghanistan for the great work that the do. I appreciate you
being here.
Pursuant to committee rules, all witnesses will be sworn in
before they testify. Please rise and raise your right hand.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
[Witness responds in the affirmative.]
Mr. Chaffetz. Thank you. You may be seated.
Let the record reflect that the witness answered in the
affirmative.
Mr. Sopko, we would like to turn over some time to you for
an opening statement which will be followed by questions from
members on the panel.
Thank you.
STATEMENT OF JOHN F. SOPKO, SPECIAL INSPECTOR GENERAL,
AFGHANISTAN RECONSTRUCTION
Mr. Sopko. Thank you very much, Mr. Chairman Chaffetz,
Ranking Member Tierney and the other members of the
subcommittee.
I am pleased to be here today to discuss U.S. efforts to
help the Afghan National Army procure, deliver and account for
fuel, which includes petroleum, oil and lubricants provided to
its forces.
For fiscal years 2007 to 2012, U.S. funding for Afghan Army
fuel totaled almost $1.1 billion. Because fuel is a valuable
commodity that is vulnerable to theft and because helping the
Afghan Army develop a supportable and sustainable logistics
capability is an essential part of transferring security
responsibilities to the Afghan Army, SIGAR initiated an audit
of efforts by the Combined Security Transition Command-
Afghanistan, commonly referred to as CSTC-A, to develop the
Afghan Army's capability to supply fuel to its forces.
Based on our ongoing audit work, we have serious concerns
about this program and CSTC-A's method for estimating fuel
needs on which to base funding requests. We are also concerned
that CSTC-A has incomplete records of fuel purchased for,
delivered to and consumed by the Afghan Army.
In fact, CSTC-A was unable to provide us records on nearly
$475 million in fuel payments because, according to CSTC-A
officials, those records had been shredded. Let me explain a
bit about how the fuel ordering and delivery process is
generally designed to work, as shown in this first chart with
fuel procurement and distribution. I believe you do have an
electronic record of that chart.
In that chart, you will see that Afghan Army units at the
bottom are supposed to submit a fuel request to the fuel depot
which is Request No. 14 that we discuss in my longer statement.
The depot is supposed to fill that order and when needed,
request fuel through the Afghan Logistics Command to maintain
its supply. The Afghan Logistics Command approves the depot's
request and is supposed to submit it to CSTC-A. CSTC-A is then
supposed to review the order and submit it to one of four fuel
contractors to deliver to the designated Afghan Army location.
Once the fuel is delivered, the Afghan Army unit completes
a receiving report showing the amount and quality of fuel
received and submit that form to both the Logistics Command and
CSTC-A. CSTC-A then will use this form along with the original
fuel order, delivery ticket and other supporting records
provided by the fuel delivery contractor to approve payment.
That is what is supposed to happen.
CSTC-A's ability to accurately protect itself from fraud
and theft, as well as develop Afghan fuel logistics capability,
depends on the effective implementation of these required
processes to validate the accuracy of data related to fuel
orders, receipts, payments and ultimately, overall Afghan Army
fuel requirements.
Unfortunately, SIGAR's auditors have found that the process
I just described is seriously broken. CSTC-A does not know the
actual fuel funding levels needed to meet Afghan Army mission
requirements.
As you can see in the second chart, CSTC-A's current method
for estimating the amount of fuel the Afghan Army needs does
not include basic information that any household here in the
United States or a small business would want such as, how many
vehicles are there that require fuel. That would be an obvious
question to ask. How many generators are there that require
fuel? How much fuel does each generator require? How many
Afghan Army fuel storage locations are there? How much fuel can
be stored at each location and ultimately, how much fuel has
been consumed at each of the Afghan Army locations?
We are also concerned that our audit found that there is no
single office in the United States Army, Defense Department or
the Afghan Ministry of Defense that has complete records on
Army fuel ordered, purchased, delivered or consumed. Moreover,
as mentioned by the Chairman in his opening, we found that
CSTC-A did not have any records of fuel purchased and payment
information prior to March 2011 because they had been
mysteriously shredded.
For the time period that they claim they had records, which
is March 2011 to March 2012, CSTC-A could not provide more than
half of the documents we requested and CSTC-A continued to pay
vendors without independent verification of the quantity and
quality of fuel delivered. As a matter of fact, we only
received four complete sets of documents when we requested all
the material from CSTC-A.
These problems must be resolved quickly because CSTC-A
plans to begin transferring responsibility for the procurement,
tracking, delivery and accounting of fuel to the Afghan
Government beginning January 2013, less than four months from
now. At that time, CSTC-A intends to begin paying for the
Afghan Army's fuel through direct contributions to the Afghan
Government. In addition, CSTC-A has proposed to increase annual
funding for Afghan fuel for fiscal years 2014 to 2018 by $212
million per year. We believe there is no basis for that
increase.
To address the serious problems we identified, we issued
this interim audit report and made two recommendations to the
Commanding General of CSTC-A. First, reduce the fiscal 2013 and
planned 2014 budget requests for fuel from the fiscal 2012
amount of $306 million and maintain that level until a better
process for determining requirements is developed and secondly,
to develop, approve and implement a comprehensive action plan
to improve fuel accountability.
I also took the following steps. I first alerted the senior
leadership at DOD and the commanders in the field about the
destruction of documents and emphasized the importance of
maintaining all financial records which are required by law.
Second, I referred this matter to my investigative directorate
which is conducting an inquiry right now to determine who
destroyed the documents and for what reason. Thirdly, I just
launched a new audit to assess CSTC-A's efforts to develop the
ability of the Afghan National Police to procure, deliver and
account for fuel for its forces.
Although CSTC-A agreed with our second recommendation that
it needs to improve its process, it disagreed with our first
recommendation and still intends to increase fuel funding for
the Afghan Army and make direct contributions to the Afghan
Ministry of Defense starting in January 2013.
We continue to believe this is a mistake. It would be
imprudent for CSTC-A to increase estimated fuel requirements
and to proceed with writing a blank check to the Afghan
Government without first ensuring it is obtaining and using
basic information such as actual fuel consumption and usage
data. To do so would be doubling down on a very, very risky
bet.
In summary, no single commodity is as important to the
reconstruction effort in Afghanistan as fuel. No commodity is
at such risk of being stolen or wasted as fuel. In Afghanistan,
fuel is like gold. As the United States withdraws and transfers
security responsibility to Afghan forces, U.S.-funded fuel will
become even more vulnerable to waste, fraud and abuse through
corruption and theft.
It is imperative that U.S. military and civilian
authorities improve their efforts to protect the U.S.
taxpayers' continuing investment and to ensure that the Afghan
Army is capable of assuming their responsibilities in the
future.
I want to thank the Chairman and Ranking Member for holding
this hearing and giving us the opportunity to discuss these
findings. We believe they warrant immediate attention.
Thank you and I am happy to answer any questions you may
have.
[Prepared statement of Mr. Sopko follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Chaffetz. Thank you.
I will now recognize myself for five minutes.
The best estimate is that the documents were shredded
sometime between October 2010 and March 2011. Do I have that
right?
Mr. Sopko. What we know is that when we first found out, a
fuel ordering officer advised us that some former fuel ordering
officers had destroyed the records. The time period would be
October 2006 to March 2011.
Mr. Chaffetz. The Commanding General of CSTC-A between
November 2009 and November 2011 was I believe Lt. General
Caldwell, correct?
Mr. Sopko. I believe you are correct, sir.
Mr. Chaffetz. This is a pattern of destruction of documents
under his command that I find personally to be of deep concern
and something we should continue to look at.
There certainly had to be some sort of electronic records.
In this day and age, in the years of the 2000's there had to be
some sort of electronic record, was there not?
Mr. Sopko. Mr. Chairman, as I mentioned, we learned about
this in April 12 and I believe the auditors kept looking for
these records. We assumed there had to be some record saved in
electronic format. It wasn't until I believe late June or July
that finally CSTC-A told us that if you haven't gotten it, you
are not going to get it. We couldn't find any electronic
records.
There may be electronic records of the actual payment. We
know how much we paid but that doesn't tell us anything else.
That just tells us how much we may have lost.
Mr. Chaffetz. Tell me about debarment. Certainly there are
some bad actors in this category of fuel consumption. Has
anybody been debarred? How is that process working?
Mr. Sopko. We have a very aggressive--without sounding like
I am tooting my horn--I think one of the more aggressive
suspension and debarment programs, particularly in that field.
The area in Afghanistan, of course, is where we are looking. We
have referred 242 companies and individuals for suspension and
debarment.
Unfortunately, a number of the companies and individuals
that we have identified as subject to debarment and suspension
have not been suspended and debarred by the Army. Despite the
fact that we have provided thousands of pages of analysis,
witness statements and submitted documents as part of multiple
debarment proceedings of fuel contractors, we are basically
forced to prove a negative.
By that, I mean, Mr. Chairman, we have signed affidavits,
we have statements from U.S. officers and employees who are
saying that the records with their signatures are false, that
they did not sign those documents, but the Army is saying,
unless you prove the fuel didn't actually go to the military
base to the Afghans, we are not going to suspend and debar.
Mr. Chaffetz. Are any of these suspected terrorists or
known terrorists?
Mr. Sopko. Mr. Chairman, that is a very good question. We
have identified 42 companies and individuals who have been
listed by either the Department of Commerce on their entities
list, which is published in the Code of Federal Regulations,
and at least eight of those who have been publicly listed
pursuant to Section 841 of the National Defense Authorization
Act which deals with contracting with the enemy, those
individuals have been publicly identified, we have brought
their names and the names of those companies to the Army and
they haven't been debarred.
We view this as ridiculous. They should be debarred
immediately. They are listed by the United States Government as
terrorists but at the same time, they are able to contract with
the United States Government right now in Afghanistan.
Mr. Chaffetz. So of these hundreds of people and entities
that you have identified as qualified for debarment, do you
have any idea what percentage have actually been accomplished?
Why is the Army not doing this? What is their justification for
that?
Mr. Sopko. Well, they just line us up in the queue with
everyone else. In the queue now for the Army, it takes about a
year.
Mr. Chaffetz. Do they have some intern sitting in some
cubicle somewhere that doesn't have enough time to get this
done or what is the problem?
Mr. Sopko. My concern, Mr. Chairman, is that they don't
appreciate I think what you appreciate and what I do that time
is of the essence. If we are going to make a difference and
stop bad people from contracting with the U.S. Government, from
stopping terrorists from contracting with the U.S. Government,
now is the time, not two years or three years from now.
I have told my staff since I started, the next two years,
if we are going to make a difference for the U.S. Government,
for the U.S. taxpayer, we have to redouble our efforts. I am
not absolutely certain that everyone has that message. It is
business as usual in a lot of government agencies.
I know there are people such as General Allen, General
Longo and the people in Task Force 2010 out in the field who
realize now is the time, time is of the essence. I am not
commenting on them but I think there are too many people here
in Washington who think this is business as usual. It is not
business as usual. We are in a war and if we are going to do
something, we have to do it now.
Mr. Chaffetz. Thank you. My time has expired but given that
we have been there for more than ten years and we haven't
gotten this part right yet, with all due respect to General
Allen and the great patriot that he is, if they didn't take
this seriously and can't get these people on a list, and it
takes years to get it done, it is just an atrocity. I
appreciate you highlighting it.
There is someone here who has done a lot of work on this
particular topic and has been a champion in trying to get this
thing fixed. I appreciate his part in this. Now, I recognize
the gentleman from Massachusetts, Mr. Tierney.
Mr. Tierney. Thank you, Mr. Chairman.
Thank you, Mr. Sopko.
This is outrageous to say the least, but it is not new to
us. When we looked into the contract, the oil coming through
Kyrgyzstan one of the things we found out was that the
Department of Defense didn't even really know who they were
contracting with. They had a corporation but didn't know the
principals, they didn't know the stockholders, didn't know the
directors and I am afraid we are looking at more of that here.
Let me first deal with the shredding issue. We need
resolution of that. You already have an investigation that is
going on. You said 2009 through 2011, General Caldwell was in
charge. Who was in charge from 2007 to 2009?
Mr. Sopko. I don't have the name of the general at that
time. I can check. Let me see if my staff has it. We can get
back to you with that information.
Mr. Tierney. The question is, was this an ongoing
destruction of documents during that 2007 to 2011 period or did
it all happen at one time?
Mr. Sopko. That is what we are trying to determine. We are
also trying to determine who did it and was it ordered.
Mr. Tierney. Was it policy or was it a personal decision?
That is what we need to know.
Mr. Sopko. We don't know that yet.
Mr. Tierney. Those are things we have to find out.
Mr. Sopko. Absolutely.
Mr. Tierney. Who destroyed it, was it done as a matter of
policy or some personal decision? What is the status of the
investigation, is it just beginning?
Mr. Sopko. It is just beginning, sir.
Mr. Tierney. The second thing is I think we are all
hesitant to start turning over millions and millions of dollars
to the Afghan National Army if they don't have a process of
accountability. The Chairman and I are going to talk about what
we do between now and the end of next week to stop something
going in January.
I agree with you, why are we giving them extra money if
they can't justify the need for it? What I am hearing from you
is they have not shown us any justification for that
substantial increase, is that correct?
Mr. Sopko. That is correct.
Mr. Tierney. So it is some $212 million per year they want
to give additionally without any documentation or
substantiation?
Mr. Sopko. That is correct. I would say, Mr. Tierney, it is
basically garbage in and garbage out. It is not based on
anything credible. The current numbers--and we are even giving
them that current number of $306 million because they don't
know how much is being used but definitely not going to the out
years and increasing it.
Mr. Tierney. So $306 million hasn't been justified either?
Mr. Sopko. That is correct, sir, because they are basing it
on order data, what they order as the basis for usage. They
don't have consumption data. It is basically like your teenager
goes out and uses the car and says I need $60 to fill up the
gas tank and I need another $100, $200 and nobody checks the
gas tank.
Mr. Tierney. We have seen this before. We have to act
between now and January on that. The preconditions should be
exactly what before we start releasing money to the ANA to
distribute? We should have some system in place and you
outlined the system over here but should we not have some
period of time in which they are actually performing to that
system before we feel comfortable that they have the capacity,
independent of the United States, to actually carry out the
system and implement it properly and also need records to show
the actual numbers before we give them the $306 million?
Mr. Sopko. That is correct, Congressman. The thing you have
to realize is CSTC-A is a U.S. and NATO organization. We are
finding is, not only aren't the Afghans living up to their own
rules and procedures, but CSTC-A isn't. How can we hold the
Afghans, and assume the Afghans can do it, if CSTC-A doesn't
even do it?
Mr. Tierney. We had problems with CSTC-A with regard to the
training of the Afghan National Army and whether or not they
were doing the job that should have been done there. We had
issues with them with respect to the tracking of weapons. We
had weapons coming into the airport and no tracking between
getting unloaded from the plane getting to the warehouse, no
tracking between the warehouse and getting the trucks that were
delivering, no record of the trucks delivering to the final
point of return and weapons were showing up in all sorts of
places. CSTC-A, unfortunately, has a longstanding issue of
accountability.
I guess my question to you is what is reasonable to expect
can be done between now and January 2013 or is just a fool's
errand that we ought not start delivering directly at all and
find some other system until we can get enough of a record and
enough proof of their capacity to perform?
Mr. Sopko. I am not certain that CSTC-A can remedy the
problems in this short a time frame. They are making some
attempts, but as we say in the audit, they still are not basing
and grounding this on common sense. You have to have the
records, you have to check what consumption is, and you have to
check that the fuel is going to where it is being ordered. This
is just reason and common sense. I am not absolutely certain
they can do it.
Mr. Tierney. As you read it, the directive to do all this
by January 2013 is just something the Army has set as a date or
is it some regulation that is, in fact, in place?
Mr. Sopko. It is our understanding, and I will check with
my staff who are probably more knowledgeable about this, but it
is our understanding that is the stated policy and it will
occur, not just for CSTC-A, not just for petroleum, oil and
fuel, it is going to be with a number of programs.
Mr. Tierney. The Department of Defense policy, you are
saying?
Mr. Sopko. That is my understanding. It is DOD planning
policy.
Mr. Tierney. Thank you very much.
Mr. Chairman, thank you. You have been liberal with the
time.
Mr. Chaffetz. The gentleman yields back.
I now recognize the gentleman from Massachusetts, Mr.
Lynch, for five minutes.
Mr. Lynch. Thank you, Mr. Chairman.
Mr. Sopko, I want to thank you for your work on this. Can I
ask you, in terms of what we are paying for fuel in Afghanistan
through the vendor process, what are we paying a gallon for
gas?
Mr. Sopko. I believe we are paying $4 per gallon, but
again, I will double check--approximately $4 per gallon.
Mr. Lynch. Supposedly at the pump, right at the point of
purchase?
Mr. Sopko. Yes.
Mr. Lynch. I understand the challenges that CSTC-A has.
From our previous trips and we have all made numerous trips to
Afghanistan, the recruits that we are getting in training,
candidates for training, are largely illiterate, they don't
know how to count so we are actually going through a program
now where we put these trainees and put them through a program
that takes them through a third grade level U.S.
What troubles me greatly is that the people who are
supposed to be teaching the Afghans, as you pointed out, CSTC-
A, the proper methodology for accounting for the fuel, paying
for it and running the system, CSTC-A is not using the system
that we should be trying to teach these trainees, these
candidates, these people running the operation who are supposed
to be running it themselves beginning in 2013. There is a real
gap in our mission.
As I understand, most of the prior accounting is just a
paper process. Is there any ability adopt to our own system or
through DCAA, the Defense Contracting Auditing Agency, a system
that might be able to put in place before January?
Mr. Sopko. I don't believe so, sir. It is a paper process.
I have seen the tickets. They are just like your old tickets. I
remember working in the steel mills when I was a kid and there
were these little tickets when you bought something and there
would be four or five copies. You pull one off, you give it to
the driver; the driver takes it, he pulls another off and fills
it in.
I think to institute in three months an electronic process
would be extremely difficult. As you alluded, the problem is we
should be leading by example and CSTC-A isn't following their
own rules. They are allowing the purchases to go directly to
CSTC-A. They are supposed to go through that process. There are
supposed to be forms. There should be a package together before
CSTC-A makes the payment but they are not.
Mr. Lynch. We had similar problems with the banking system.
It got so bad because of the theft largely by folks related to
Hamid Karzai and related to the first Vice President, and they
basically robbed Kabul Bank. It came to a point where we had to
redirect our payments to vendors away from the Afghan banks so
that they wouldn't be stealing our money. This is a lot of the
same problem.
Yesterday at the hearing, I said corruption to Afghanistan
is like wet is to water. We have some serious problems here and
we can't let this continue. We can't let this go forward in
January. We can't just send them a check because we know they
are going to steal it, we know they are overcharging us. I was
reading in this report that they are even ordering fuel for
trailers that don't have engines, that don't use fuel. They are
basing their fuel consumption on trailers that don't use fuel.
That troubles me greatly.
Again, we are trying to do the right thing. The American
people have been very supportive of this operation. I think
they are rightfully running out of patience. I am just trying
to figure a way to minimize our losses and bring some
accountability to this process. It does boggle the mind that we
have been there 10 years, 10 years, and we don't have a system
in place to verify how much fuel they are using and whether or
not they are using the resources we are giving them for that
purpose.
It is disgraceful. We cannot afford this. We never could
afford this but we certainly cannot afford it now. I think at
some point, we are going to have to get over there and look
into this more deeply, part of the committee, over in
Afghanistan.
How many auditors do you have on the ground through your
operation?
Mr. Sopko. We have 49 positions totally and that includes
criminal investigators and auditors and we have approximately
25. Since I came onboard, I have asked for approval from the
State Department to increase the number by 8. You know, since
you have been there, there is limited space but we feel if we
are going to make a difference, we have to emphasize the next
two years, so we are going to increase the total number to
about 57 or 58 people.
Mr. Lynch. My last question, in closing, we have the
vehicle requirements but don't we have some power plants that
are consuming large amounts of fuel? It would seem with a fixed
facility as opposed to vehicles moving around and you can't
really track consumption on that end as well as you can with a
fixed facility, can we at least put people in place at these
power plants so that we can audit their fuel consumption?
Mr. Sopko. We do have some people in place, the auditors
found, but the problem again is we are not collecting the data.
Mr. Lynch. It should be possible because 92 percent of the
country has no electricity. Basically, it is 8 percent of the
population right in and around Kabul that has electricity for
some part of the day. We should be able to go in there and
audit those limited facilities that are actually producing
electricity.
Mr. Sopko. These facilities that are producing electricity
are basically producing electricity for a military base. They
are large diesel power generators.
I wanted to clarify one thing. When you made reference to
the trailers, that came up not so much in the ordering issue
but when we asked CSTC-A to justify their budget. They gave us
information and when we looked behind the information they gave
us, they were counting trailers and other equipment that had no
engines to justify it.
We said that doesn't fly. It was more in that context. We
have not confirmed actual fuel going to non-working engines,
but we don't know where the fuel goes. All we really know is
what we pay the vendor.
Mr. Lynch. I have exceeded my time. I appreciate your
indulgence, Mr. Chairman. I yield back.
Mr. Chaffetz. The gentleman yields back.
I recognize myself for five minutes.
You mentioned in your report that the U.S. military is
spending $20 million for firewood. Is there any justification
for $20 million in Afghan firewood?
Mr. Sopko. Mr. Chairman, that was one of the more
interesting comments my auditor told me. You are absolutely
correct, CSTC-A's paying approximately $20 million a year for
firewood. When my auditors asked for documentation of what we
spent on firewood, basically, we were told ``we don't have the
records; we just spend the money.'' That is the CSTC-A
attitude.
That is a lot of firewood. Somebody joked that is like
buying every stick of lumber in Maine. Again, it is an
attitude, we just pay, and that is what is shocking.
Mr. Chaffetz. Obviously there is some bribery going on
here. We would be naive to think there wasn't. Do you have any
sense of how that happens, what the going rate is? How much are
these people being paid off?
Mr. Sopko. Again, it is difficult for us to do criminal
investigations in this arena because there are no records. It
is going to be even more difficult if we just cut a blank
check. In other programs that we have looked at, in programs
related to some of the post nation trucking cases that I
referred to that Mr. Tierney and you investigated before, we
have records, we have done criminal investigations. We actually
have 25 fuel-related investigations currently underway which
has resulted in a number of indictments.
The going rate we are seeing is about $5,000 per truck to
make trucks disappear. We have one case in which approximately
200-some trucks just disappeared. By that, I mean somebody made
up the records--there are actually paper records--just made
them up, they were paid $5,000, so it is about $1,000 a gallon.
The trucks went out the door never to be seen again.
That is over 1,000,000 gallons in fuel and nobody noticed
it until we opened the criminal investigation. I must say we
have very strong support from the military in this matter. They
have been very helpful and we have been working jointly with
them and Task Force 2010 on these types of cases but those were
cases where we actually have records. We don't have records
over at CSTC-A.
Mr. Chaffetz. Can't we just go down to OfficeMax and buy a
few laptops, get a little software and be out the door by three
o'clock? I have to tell you, I really appreciate after ten
years and for CSTC-A, for the Pentagon to suggest that we
should increase spending to $555 million per year and from 2014
to 2018, $2.8 billion they want to increase the funding and
send the bulk of this directly to the Afghan Government with
less control, less oversight, less accountability, it is
absolutely stunning, the total lack of regard for the resources
and the money the American people are spending.
Then to spend $20 million on firewood with no
accountability, I really appreciate you bringing this to our
attention. We, in Congress, have to step up and do something
about this because this is totally unacceptable.
I have no further questions but I would be happy to yield
to the gentleman from Massachusetts?
Mr. Tierney. I suspect that we are beating a dead horse at
this stage. You have made a very compelling and clear case and
I thank you for that.
I guess we need to define what the role of the Afghan
National Army is versus the role of CSTC-A's situation on that.
Is the role of the contractors prominent in this documentation?
They basically document the amount they pick up and the amount
they deliver or where do they fit into this?
Mr. Sopko. They are supposed to but since we don't have the
records, we don't know. We have some records that we have seen
and it again shows they picked up so much fuel. What made us
suspicious--again, I am a former federal prosecutor and got my
start looking at corrupt unions in Ohio where records
disappeared all the time or were bogus records. I did banking
investigations, but what you see here is sometimes these are
pristine records. They are typed out. There is no spillage.
Everything is perfect. That raises some concern and the fact
that in most cases there are no records.
Mr. Tierney. We don't know the amount that wasn't
delivered, we don't know the amount that was delivered but in
insufficient amounts and what left the depot and we don't know
the grade or quality, whether it was doctored, altered, watered
down or anything else? We are unable to indicate all that?
Mr. Sopko. The key point is we don't know what was
consumed, so how do we know what we should be buying?
Mr. Tierney. The attitude of we don't have the records, we
just spend the money, that permeates unfortunately too much of
what is going on, not just in CSTC-A but I think in the whole
operation over there and how we intend to protect our troops
and get to an end result of this with the level of corruption
where the people from Afghanistan can't even trust their own
leadership on that or distinguish between what is happening to
them at the hands of insurgents and other characters and their
own government is not helping our operation at all.
Thank you, Mr. Sopko. I suspect we may be talking to your
office because I have started conversations with the Chairman
about something maybe we could do between now and the end of
this session to stop this from being implemented the way it
looks like it is heading.
Mr. Sopko. We are happy to work with you and the Chairman
and any other members on this issue or other issues.
Mr. Tierney. Thank you.
Mr. Chaffetz. The gentleman from Massachusetts, Mr. Lynch,
is recognized.
Mr. Lynch. Thank you, Mr. Chairman. Again, thank you, Mr.
Sopko.
Have you been invited to testify before Defense
Appropriations?
Mr. Sopko. No, sir. I have only been on the job since July
1.
Mr. Lynch. We might want to cycle you through Defense
Appropriations. If they had the benefit of your counsel, I
think that would be great.
We know none of these records are being established. They
are not being created or they are being shredded. What is the
situation now with CSTC-A based on your contact with them? Have
they changed their behavior at all? Is there a statement of
future compliance? What are they doing?
Mr. Sopko. They are starting, as you see in the report,
their comments, to change. We don't feel it is going fast
enough. We don't think it is focusing on the most critical
records and those are usage records and we don't feel, based
upon our last request for records, in which they could only
provide 50 percent of the records, that everybody is following
the rules and regulations.
I should say they told us, don't worry, those records were
shredded but now we are keeping records. We did a statistical
sample and it came back that 50 percent of the records were
gone and no explanation of what happened. We don't know if
those were destroyed, lost or they didn't collect them.
We may go back in again. We are going to be spending time
looking at how CSTC-A is doing the same program for the police
and we may be able to report back to you on that, but I am not
optimistic.
Mr. Lynch. Okay. We would like to work with you maybe even
so far as to getting over to Afghanistan and doing a walk
through with your folks just to drill down on this a little
bit.
Mr. Sopko. We would love to do that.
Mr. Lynch. Thank you.
I yield back.
Mr. Chaffetz. Thank you.
Are there other categories or other major expenditures that
should also be on our radar? You mentioned the police, but if
are there other big major ticket items, even smaller ticket
items like firewood and others on your radar, I would
appreciate knowing that or if there is something else you would
care to share with us? Otherwise, we will conclude the hearing.
Mr. Sopko. Mr. Chairman, I want to thank you again for
giving me this opportunity to talk about this really important
issue. Since coming onboard, as I said I just started July 1, I
have emphasized after talking to a number of policy people,
that we are going to have to increase our audits and increase
our investigations, we are going to have to do them faster and
be smarter because we have a limited amount of time because of
the security situation in Afghanistan.
Accordingly, we are coordinated with the other IGs and we
are looking at a number of very serious issues. We are going to
be looking at how security is impacting our programs by USAID
and the Defense Department, how we are going to monitor
contracts when there are going to be fewer American troops
there is a big issue for us.
We are also going to do a number of capping reports looking
at broader issues dealing with corruption, counter narcotics
activities as well as looking at the food services that CSTC-A
provides to the Afghan National Security Forces.
Since approximately 50 percent of the reconstruction money
now is going to the Afghan National Security Forces, that
obviously is going to be a key place where we will emphasize
our resources but we are open to suggestions from other
interested parties.
The last thing I want to mention in regard to this is we
discussed suspension and debarment. I don't want to leave the
impression that the generals in the field have authority to
suspend and debar. When I mentioned General Allen or General
Longo, they would love to have the authority to suspend and
debar, but they can't either.
If they find suspicious characters, they have to send it to
Army here in Washington for suspension and debarments. There is
no accusation against the generals and the people in the field.
They are actually with us are probably the best people to know
the bad guys and who we should suspend and debar but they don't
have that authority, nor do we, which is ironic because you
have the National Endowment for the Arts has suspension and
debarment authority but the commander in the field does not.
The Institute of Museum and Library Services--I have a
whole list--they all have suspension and debarment authority.
The Railroad Retirement Board, the National Endowment for
Humanities, the Legal Services Corporation, the National
Archives, they all have suspension and debarment authority but
General Allen doesn't, General Longo doesn't and we don't.
I think it is something to consider particularly in a war.
We are a temporary agency. We are disappearing at the end of
this but a commander in the field should have authority to stop
trading with the enemy and basically say, we are debarring you
but he doesn't have that authority or she doesn't have that
authority.
I would ask you to consider that as you consider this very
important issue on suspension and debarment.
Mr. Chaffetz. Thank you. Now I have a second piece of
legislation I will be introducing.
Great work. We appreciate the service that so many of the
men and women in your organization are doing. It is very
difficult. We all appreciate this and appreciate the report.
At this time, the committee will stand in adjournment.
[Whereupon, at 11:10 a.m., the subcommittee was adjourned.]
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