By Karen DeYoung
Washington Post Staff Writer
Monday, March 29, 2010; A01
Hamed Wardak, the soft-spoken Georgetown University-educated son of an Afghan cabinet minister, has a Defense Department contract worth up to $360 million to transport U.S. military goods through some of the most insecure territory in Afghanistan. But his company has no trucks.
Instead, Wardak sits atop a murky pyramid of Afghan subcontractors who provide the vehicles and safeguard their passage. U.S. military officials say they are satisfied with the results, but they concede that they have little knowledge or control over where the money ends up.
According to senior Obama administration officials, some of it may be going to the Taliban, as part of a protection racket in which insurgents and local warlords are paid to allow the trucks unimpeded passage, often sending their own vehicles to accompany the convoys through their areas of control.
The essential question, said an American executive whose company does significant work in Afghanistan, is "whether you'd rather pay $1,000" for Afghans to safely deliver a truck, even if part of the money goes to the insurgents, or pay 10 times that much for security provided by the U.S. military or contractors.
President Obama made a surprise trip to the country Sunday to press President Hamid Karzai to do more to clean up corruption in Afghanistan. Congress has warned repeatedly that U.S. assistance depends on progress in this area.
The likelihood that U.S. money is finding its way to the enemy as well as lining officials' pockets -- charges that Wardak says could be true for other transport contractors but not for his company -- is "one of the many very important things that came to light" during last fall's White House strategy review, an administration official said.
The problem extends beyond military supply transport to Afghan-provided security for reconstruction and other U.S.-funded projects, according to John Brummet, audit chief for the congressionally mandated special inspector general for Afghanistan reconstruction, known as SIGAR.
"If you go to the U.S. Embassy, to USAID, to the Army Corps [of Engineers] and ask if they can assure that their money is not going to the Taliban, they'd be hard-pressed to say," he said.
Prime contractors such as Wardak's NCL Holdings, Brummet said, "say that subs take care of their security," but U.S. officials "do not have visibility on who is providing it." According to SIGAR chief investigator Ray Dinunzio, "there is no database in the U.S. government" that provides reliable subcontractor information.
The U.S.-led coalition command in Afghanistan does not dispute that assessment. Although there is "rigorous" oversight of prime contracts, the command said in a statement, "the relationships between contractors and their subcontractors, as well as between subcontractors and others in their operational communities, are not entirely transparent."
Both Defense Secretary Robert M. Gates and Secretary of State Hillary Rodham Clinton raised the issue in congressional testimony explaining Obama's new strategy. Clinton called "siphoning off contractual money from the international community . . . a major source of funding for the Taliban." Corruption, she said, "frankly . . . is not all an Afghan problem."
Although security for trucks carrying U.S. military supplies around Afghanistan is considered a particularly lucrative source of extortion, the administration has not investigated it or even estimated its scope, according to several officials involved in Afghanistan policy, none of whom was authorized to discuss the issue on the record.
Congressional investigators who have opened a probe into the Defense Department's $2.16 billion Host Nation Trucking (HNT) contract described what one called "willful blindness" on the part of a U.S. military that "likes having its trucks showing up and doesn't want to get into the details of how they got there."Price of doing business?
Virtually everything used by U.S. troops in Afghanistan, from food, water and fuel to arms and ammunition, is imported, most of it overland, through Pakistan or Central Asia.
U.S. military officials say they are well aware that Afghan officials who control the border towns are involved in smuggling and skimming contract money and goods. But the Afghans also facilitate the flow of supplies and provide intelligence. Their criminal activities, although not condoned, are viewed largely as the price of doing business.
Once U.S. supplies enter Afghanistan, most are taken to central distribution points, such as U.S. headquarters at Bagram, north of Kabul, and transferred to a separate fleet of vehicles for distribution to hundreds of military facilities and forward operating bases around the country.
Up to 90 percent of the internal transport is handled by eight firms with a piece of the HNT contract; they include Wardak's NCL Holdings, two other Afghan companies, three based in the Persian Gulf region and two with U.S. principals. Most of them serve largely as facilitators, organizing the local subcontractors who provide vehicles and security.
Gates has said he wants to reduce the number of contractors in Afghanistan, but Gen. Stanley A. McChrystal, the top U.S. and NATO commander there, has praised the logistics deals because of their Afghan participation. "They are supporting operations. It's helping the [Afghan] economy," he said in a speech in December. "In many cases, it's developing different processes that'll help them in the future."
Rep. John F. Tierney (D-Mass.), chairman of the national security subcommittee of the House Committee on Oversight and Government Reform, opened an investigation that month into what he said were "serious allegations . . . that private security providers for U.S. transportation contractors in Afghanistan are regularly paying local warlords and the Taliban for security."
Tierney said many of the allegations were first raised in a November report by the Nation magazine. It described an entrenched system of protection payoffs and the close connections most Afghan contractors have to senior government officials.
In letters to Gates and each of the eight HNT firms, Tierney asked that all documents related to the transport operations and security subcontractors be provided to the subcommittee by mid-January.
"It's a long-standing business practice within Afghanistan to use your control of the security environment in order to extort payment from those who want to operate within your space, whether it's construction of a cellphone tower, a dam, or running trucks," said the House investigator, who spoke on the condition of anonymity because the examination is ongoing.
Over the past three months, the subcommittee has examined hundreds of documents and interviewed numerous Defense Department and Afghan officials, as well as Western expatriates working as program managers for the HNT firms who have become their primary sources.
"We have found nothing that would change that original core narrative" of widespread protection payments, the investigator said.
The subcommittee plans a publicly released report and possibly hearings. Its tentative conclusions, the investigator said, do not definitively point to the Defense Department and HNT prime contractors as direct participants in the scheme. But whistleblowers who have met with investigators, he said, spoke up only after failing to get the attention of both.
There is a difference, the investigator said, between not knowing, "and then having people come and tell you it's happening, and still saying 'I don't know.' "'A wonderful opportunity'
"We welcome this investigation," said Wardak, the son of Afghan Defense Minister Abdul Rahim Wardak, in an interview at the bare-bones office NCL maintains in McLean. "We think this is a wonderful opportunity to point out that we have the highest ethical standards and the best processes in place. We want to be the premier gold standard of the logistics contract in Afghanistan."
Wardak, 34, left Afghanistan with his family at age 3 and returned only after the ouster of the Taiban in 2001. He said he shares McChrystal's goal of developing Afghan capabilities. His main value to the United States, he said, is the ability to "combine the best Western practices of management and internal financial controls" with "local knowledge and relationships with civil society leaders."
His rise has been nothing short of meteoric. Valedictorian of Georgetown's Class of 1997 and a Rhodes Scholar, he worked briefly in mergers and acquisitions at Merrill Lynch before becoming the "private envoy to the United States" of Ashraf Ghani when Ghani served as Karzai's finance minister early last decade.
According to several U.S. officials involved in Afghan policy, Wardak first appeared on the Washington policy scene as a young protege of Zalmay Khalilzad, who served in the Bush administration National Security Council and as U.S. ambassador to Afghanistan, and of Marin Strmecki, a special adviser on Afghanistan to then-Defense Secretary Donald A. Rumsfeld.
"The first time I met him" during the Bush years, said one Obama official who previously worked outside the government on Afghanistan, "he was accompanied by an emissary of Rumsfeld."
After leaving Technologists Inc., an Afghan-owned engineering and consulting firm, to start NCL in 2007, building a team of more than 700 Afghan employees, he quickly landed several relatively minor Defense Department maintenance, linguistics and security contracts. He decided to bid for the HNT contract, Wardak said, when he saw it posted on fedbizops.gov, a government Internet site. He and his father, Wardak said, "don't talk about business matters. We only talk about father-son type of relationship issues."
Although he had little direct transportation expertise, he said, it runs in his family all the way back to when "Afghanistan was an important part of the Silk Road," the interconnected trade routes that historically traversed Central Asia. Ethnic Pashtuns from the Afghan province of the same name, the Wardaks "were not only a warring family, but also a transport family," he said.
Trucks for the missions are supplied by subcontractors, who are also responsible for security, he said. "In certain places that are more dangerous," he said, "our vendor adds more security." To ensure that his convoys are not attacked in dangerous areas, he said, he depends on his "relationships with local tribes," adding that it was "inconceivable" that any protection money was being paid.
Although seldom seen in public in Washington, Wardak has a prominent profile. He contributed $20,000 to the presidential campaigns of Obama and Clinton in 2007 and 2008. He also founded an organization called Campaign for a U.S.-Afghanistan Partnership, which promotes an ongoing U.S. presence in Afghanistan.
On several occasions, he said, NCL has received the Pentagon's highest performance ratings for its work on the HNT contracts, which Army Col. Wayne M. Shanks, public affairs chief for the International Security Assistance Force headquarters in Afghanistan, confirmed.
The assessment is based on "a variety of performance-based criteria," none of which he was at liberty to reveal, Shanks wrote in an e-mail.