SIGAR HIGH-RISK LIST

HIGH-RISK LIST
HIGH-RISK AREA 2: CORRUPTION
Why it is a High Risk
Corruption continues to be one of the most serious threats to the U.S.-funded Afghanistan
reconstruction effort. As former U.S. Ambassador to Afghanistan Ryan Crocker told
SIGAR in 2016, “The ultimate point of failure for our efforts … wasn’t an insurgency. It was
the weight of endemic corruption.” Ambassador Crocker’s remarks echoed the findings
of a 2014 study issued by DOD’s Joint Staff, which found that “Corruption alienates key
elements of the population, discredits the government and security forces, undermines
international support, subverts state functions and rule of law, robs the state of revenue,
and creates barriers to economic growth.” 59
What SIGAR Found
As SIGAR examined in its 2016 Lessons Learned report, Corruption in Conflict: Lessons
from the U.S. Experience in Afghanistan, corruption was not always at the top of the U.S.
agenda. In fact, some would argue that it still is not given the importance it deserves. Not
until 2009—eight years into the reconstruction effort—did the U.S. government begin to
understand the connections among a vast, interdependent web of corrupt Afghan officials,
criminals, drug traffickers, and insurgents. At that time, the United States took measures to
counter corruption in Afghanistan. 60
Two scandals in 2010 exposed the impotence of these measures. The first was the arrest
of Mohammed Zia Salehi, a key aide to President Karzai, for obstructing an investigation
into a money-transfer firm suspected of moving billions of dollars out of Afghanistan for
crooked Afghan officials, drug traffickers, and insurgents. A wiretap caught Salehi soliciting
a bribe, but President Karzai ordered him released within hours of his arrest. 61
A second, even larger scandal began to unfold in September 2010. Kabul Bank, the largest
bank in Afghanistan at that time, nearly collapsed amidst publicity that the bank was
insolvent. The bank had operated as a massive pyramid scheme: hundreds of millions of
dollars had been fraudulently lent to fictitious companies, with loans rarely paid off. 62
Two of the principal beneficiaries were the then-president’s brother, Mahmoud Karzai, and
the first vice president’s brother, Haseen Fahim. 63 Although 21 individuals were ultimately
convicted in the nearly $1 billion theft from the bank, few of the politically connected
defendants have served jail time or repaid significant portions of their debt. 64
Despite the U.S. government’s increasing outspokenness on the subject, corruption
remains a grave problem. Serious anticorruption questions were raised in November
2015, when senior Afghan government officials announced a business partnership with
Khalilullah Ferozi—sentenced to 10 years in prison for his role in the Kabul Bank fraud—in
an Afghan government township project. President Ashraf Ghani cancelled the partnership
and fired one of his senior officials following widespread public condemnation. 65 However,
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SPECIAL INSPECTOR GENERAL I AFGHANISTAN RECONSTRUCTION