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Special inspector's report finds millions in U.S. aid dollars at risk of fraud, waste in Afghanistan

| Thursday, Sept. 5, 2013, 7:48 p.m.

KABUL, Afghanistan — In its latest report sharply criticizing Washington aid programs, the Office of the Special Inspector General for Afghanistan Reconstruction charged on Thursday that millions of American dollars being spent on public health programs are “at risk of waste, fraud and abuse” and that there is “little assurance” the funds are being used as intended.

The report, made available here by officials of the U.S. Agency for International Development, recommended that Washington provide no further funding to Afghanistan's Public Health Ministry for basic services “until program costs are validated as legitimate.” It called for aid officials to address 55 “deficiencies” found in a previous review of the ministry's financial practices before spending any more money.

The criticism was focused on a $236 million USAID program called Partnership Contracts for Health, which provides, among other things, immunizations, prenatal exams, hospital equipment and salaries in 13 Afghan provinces. Most of the services are delivered through local nonprofit groups, reaching hundreds of thousands of people who have little means to pay for them.

USAID officials here, in a hastily arranged briefing for American journalists, strongly rejected the accusations made by the special inspector general, known as SIGAR. They said that no U.S. funds were being provided directly to the ministry and that they had set up a special unit inside the ministry, along with other foreign donors, to monitor all grants and contracts.

“The report provides no evidence that the extensive measures taken by USAID to safeguard taxpayer resources have resulted in high risk of misuse of funds,” William Hammink, the agency's mission director in Kabul, said in a prepared written response. He said that the inspector general had found no evidence of waste, fraud or abuse in the health service program and that recommendations for stronger financial oversight were being carried out.

“We are very careful before we spend a dollar,” said a USAID official here, speaking on the condition of anonymity because of his agency's restrictions on public comments. “We do not provide direct assistance to the ministry, and we do have full assurance on how it is used.”

USAID officials here said they objected to the alarmist tone of the report, which declared that financial management deficiencies at the ministry had “put millions of taxpayer dollars at risk.” They said that they did not know of a single instance in which fraud or abuse had been detected in the health program's finances.

The “deficiencies” listed by the special inspector, the officials said, were problems they flagged in their internal 2012 review and have been working to correct. According to the report, those problems included some salaries being paid in cash, no double-entry accounting system, a lack of external audits, poorly prepared internal auditors and inadequate procedures for various transactions.

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