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U.S. Funding to Pakistan Plagued With Problems, GAO Report Says

By Robin Wright
Washington Post Staff Writer
Wednesday, June 25, 2008

The Bush administration has paid Pakistan more than $2 billion without adequate proof that the Pakistani government used the funds for their intended purpose of supporting U.S. counterterrorism efforts, congressional auditors reported yesterday. Their report concluded that more than a third of U.S. funds provided Pakistan since the Sept. 11, 2001, attacks were subject to accounting problems, including duplication and possible fraud.

The Pentagon paid about $20 million for army road construction and $15 million to build bunkers in Pakistan, but there is no evidence that the roads or bunkers were ever constructed, the Government Accountability Office reported. Islamabad also billed Washington $200 million for an air defense radar system that may not have met a U.S. condition: that reimbursement cover combat or logistical costs supporting U.S. military operations against terrorism beyond what a country would spend on its own needs.

"It seems as though the Pakistani military went on a spending spree with American taxpayers' wallets and no one bothered to investigate the charges," said Sen. Tom Harkin (D-Iowa), a member of the Senate Appropriations Committee. "How hard would it have been to confirm that a road we paid $15 million for was ever built? It is appalling that the Defense Department did not send any embassy officials working in Pakistan to verify these enormous costs." Washington should "stop pouring money into a black hole," Harkin said.

Pakistan is the largest recipient of Coalition Support Funds as part of a counterterrorism effort the Bush administration launched in 2001 after the terrorist attacks against New York and Washington. Pakistan has received more than $5.5 billion of the nearly $7 billion distributed to 27 countries over the past six years.

"Apparently, the Bush administration cares so little about the hunt for Osama bin Laden that it is barely paying attention to how the Pakistani military is carrying out the fight," Sen. Robert Menendez (D-N.J.), a member of the Senate Foreign Relations Committee, said in a statement. "It's dangerous to treat the battle against al-Qaeda so casually, and it's unfair to American taxpayers to be so careless with billions of their dollars."

In a response included in the report, the Defense Department said the GAO failed to adequately acknowledge Pakistan's "significant contribution" to fighting terrorism or the "flexibility" required in "contingency environments." Like other recipients of U.S. funds, Pakistan is a sovereign country that may not meet U.S. accounting standards, said the comments submitted by Assistant Secretary of Defense James J. Shinn. The Pentagon has also consistently adhered to the law in overseeing U.S. military aid, the response said. The Defense Department had no further comment yesterday.

But the congressional agency faulted Pentagon oversight between 2004 and 2007, noting that new rules instituted in 2003 did not improve practices. "For a large number of claims, Defense did not obtain sufficient documentation from Pakistan to verify that claimed costs were incremental, actually incurred or correctly calculated," the report concluded.

In one example, the report cited monthly payments averaging $19,000 per vehicle for 20 passenger vehicles used by the Pakistani navy that appeared to contain "duplicative charges," the GAO said. The Pentagon often did not document its basis for evaluating claims and did not check Pakistan's currency conversions, which could have led to overbilling, the report said.

Defense Department representatives at the U.S. Embassy in Pakistan did little to verify Pakistan's billing for a 32-month period between 2004 and mid-2006, with fewer than 3 percent of Islamabad's claims disallowed or deferred by the Pentagon. In September 2006, Pentagon representatives in the Pakistani capital began to question the accounting on 15 to 20 spreadsheets submitted monthly by Pakistan's Defense Ministry -- without receipts -- to the U.S. Embassy.

Among the problems the Pentagon uncovered was the poor readiness of Pakistani helicopters, despite U.S. reimbursement for maintenance, so payment was deferred, the report notes. In February of this year, the Pentagon disallowed or deferred reimbursement for 22 percent of the claims Pakistan had made in a three-month period in 2007. But the report warned that adequate oversight is not assured because the Pentagon has yet to develop guidelines to judge Pakistan's claims.

The report was the subject of a heated hearing yesterday by the House Oversight and Government Reform subcommittee on national security and foreign affairs. "The more I learn about U.S. Coalition Support Funds to Pakistan, the more I am troubled: first, in terms of waste, fraud, and abuse of a huge amount of U.S. taxpayer funds; second, about the program's failure to achieve vital U.S. security objectives; and third, about the program's incompatibility with a long-term strategic partnership between the U.S. and Pakistan," said the subcommittee chairman, John F. Tierney (D-Mass.).

Tierney said the United States must reevaluate the program and reallocate funding to enhance Pakistan's counterinsurgency capabilities and extend the government's control over restive tribal areas along the Afghan border.

The Pakistani Embassy said yesterday that Washington and Islamabad are working to clarify accounting procedures, noting that the United States this week cleared a payment of $373 million to Pakistan for claims from 2007. Ambassador Husain Haqqani said the payment "signals that while criticism relating to past accounting practices continues, so does the realization that this is a critical contribution to help Pakistan in the war against terrorism."

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