Recently I spoke with an American diplomat in Pakistan. He said much of our government spending there was being lost to fraud. When I asked about Afghanistan, he simply shook his head in dismay. We lose billions of dollars each year to fraud and mismanagement. Absent an insider (whistleblower), finding and proving fraud in the Middle East is nearly impossible.
We have written about government contract fraud taking place in Afghanistan You can read another one of those Afghanistan stories here. In this post, we discuss a November 14th report from the Special Inspector General for Afghanistan Reconstruction (SIGTAR). In his report, Inspector General John Sopko reported “serious deficiencies in the management and oversight of $85 million in loans made by the Overseas Private Investment Corporation (“OPIC”) for the construction of a hotel and an adjacent apartment building, directly across the street from the U.S. Embassy in Kabul.”
How serious were these “deficiencies”? Sopko says, “the $85 million in loans is gone, the buildings were never completed and are uninhabitable, and the U.S. Embassy is now forced to provide security for the site at additional cost to U.S. taxpayers.”
Because the buildings are abandoned and across from the embassy, American soldiers must now protect the site to keep it from being used by snipers and terrorists.
Even though OPIC fully paid the developer, when the inspector general visited the site there were many problems including structural cracks, demolished walls, incomplete electrical and elevators, unfinished HVAC and missing doors and windows.
So how did this $85 million taxpayer debacle occur?
According to SIGTAR, the government had not visited the construction site for years. Instead of doing their own inspections, the agency relied on progress reports from contractors. The company hired to oversee the building inspection never monitored the project either.
And what does OPIC say about its abysmal failure?
OPIC claims that “operating in conflicts areas such as Afghanistan is inherently difficult.” We certainly agree.
While OPIC shares some of the blame, it appears that it did rely on a private firm to monitor the project. Both the monitor and the foreign construction form should be held responsible for their misconduct. They are the most blameworthy.
Foreign Aid, Government Contractor Fraud and Whistleblower Awards
The federal government spends billions of dollars each year on foreign aid. We also provide billions more in loans. All of this money comes from tax dollars.
A Civil War era law, the federal False Claims Act, allows whistleblowers with inside information about fraud and misconduct involving government programs and funds to collect awards for their information.
Under the False Claims Act, wrongdoers are subject to triple damages and huge civil penalties. Private citizens – whether U.S. citizens or foreign nationals – can prosecute these claims. If the government is successful in recovering money, the whistleblower reporting the misconduct can receive an award of up to 30% of whatever is collected from the wrongdoer. In 2014, the government paid out $435 million in awards. (Our clients received over $100 million!)
Interested in stopping fraud and earning a whistleblower award? Give us a call. All inquiries are protected by the attorney – client privilege and kept completely confidential.
For more information, contact the author of this post, attorney Brian Mahany. Brian can be contacted by email at or by phone at (414) 704-6731 (direct).
MahanyLaw – America’s Whistleblower Lawyers
[We have extensive information about private military contractor fraud and embassy security.]