Auditor Says Scammer Sold USAID $500/Gallon Gas

And a four-figure temperature control device for $220,000.
By Marc Herman ,

USAID Packages are delivered by United States Coast Guard personnel. (PHOTO: PUBLIC DOMAIN)

With financial meltdown dominating the news back in 2008-09, it's not shocking that more mundane financial shenanigans flew under the radar. Among the sideline stories during those years was that of the Special Inspector General for Afghanistan Reconstruction (SIGAR), an independent investigation unit Congress established to figure out where money was leaking out of the American effort to rebuild the country we'd invaded shortly after 9/11. SIGAR has gotten a bit of press recently for a series of critical reports highlighting cases of graft. SIGAR pointed to a particularly piquant one this week, of the hospital built with gasoline bought for $500 a gallon.

It is not known who brokered the fuel deal, except that he or she seems to have gotten away with something approaching a million bucks of American foreign aid funds.

The inspector's office claims that America's foreign aid agency, the United States Agency for International Development (USAID), had made a deal to update an old hospital in the Afghan town of Gardez with a more modern one, at an initial cost of $13.5 million. USAID partnered with the United Nation's International Organization for Migration, which in turn subcontracted an Afghan construction firm, Sayed Bilal Sadath Construction Company, to do the actual building. The contract went out in May 2010 and SBSCC was to have finished the new hospital by 2012. It didn't, so the deadline was extended to this past summer.

SIGAR, which says it has 50 auditors and staff in Afghanistan, had meanwhile looked into how the new hospital would be run, if it ever got finished, and determined that it would be five times as expensive to operate daily than an older facility it would replace. The Afghan medical system couldn't support those costs, the agency argued, so the hospital would fail even if they did finish it. Which they didn't, anyway.

The $13.5 million, however, was still getting spent. It had grown to about $14.6 million by then, though no one appears to know how. An investigation of the bills the Afghan builders were passing on to the IOM officials who had tendered the contract, who in turn passed their bills on to USAID, suggested something was odd. Here's SIGAR's claim:

IOM did not have sufficient internal controls to detect overpayments—of at least $507,000—to Sayed Bilal Sadath Construction Company (SBSCC), which need to be returned to the U.S. government. In one instance, SIGAR found that IOM paid the contractor $300,000 for 600 gallons of diesel fuel—a cost of $500 per gallon. According to IOM officials, the market price in Afghanistan for diesel fuel should not exceed $5.00 per gallon. As a result, with a proper invoice, the fuel charge should not have exceeded $3,000. In another instance, IOM paid $220,000 for an automatic temperature control device that should have cost between $2,000 and $10,000. IOM could not provide us with a vendor invoice for either of these payments. USAID did not discover the overpayments and reimbursed IOM for these unwarranted costs.

Neither IOM nor SBSCC has issued a response yet. It is not known who brokered the fuel deal, except that he or she seems to have gotten away with something approaching a million bucks of American foreign aid funds in exchange for a smallish cache of generator fuel and a fancy-ish thermostat.

The whole report is here. It reads like a lost scene from Catch-22.