Financial Times

Warlords feed on US contracts, say critics

By LawyeredRichard Shilito By Matthew Green in Kandahar

Published: May 11 2010 03:00 | Last updated: May 11 2010 03:00

The US government is facing fresh questions on its oversight of war funding amid mounting evidence that a $2.16bn trucking contract is enriching Afghan warlords linked to the controversial half-brother of President Hamid Karzai.

As the Afghan president arrives in Washington, congressional investigators are looking into whether millions of taxpayers' dollars are being paid to militia commanders to protect convoys ferrying supplies through Kandahar province, where US troops are preparing an offensive.

Critics say the militias form part of a mafia-like network that has bolstered the influence of the president's younger half-brother, Ahmed Wali Karzai, the powerful chairman of Kandahar's provincial council.

Senior US military officers fear these private armies will complicate their strategy to contain the Taliban in Kandahar by bolstering the Afghan army and police and breaking Mr Karzai's grip over the provincial government.

A perception that Ahmed Wali Karzai has concentrated power in the hands of his family's ethnic Pashtun Popalzai tribe has fuelled support for the insurgency. He says he backs US goals in Kandahar and denies links to armed groups.

But in Washington, concerns are growing that inadequate oversight of Afghan expenditure is financing a heavily armed cabal that will jeopardise the broader US strategy of promoting good governance to counter the Taliban.

John F. Tierney, a Democratic member of Congress from Massachusetts, said: "In this case, the US appears to be inadvertently fuelling the very warlordism and corruption that we are pressing President Karzai to curtail."

Mr Tierney chairs the national security and foreign affairs subcommittee, which launched the investigation, partly in response to a Financial Times report on Taliban insurgents extorting money from trucking contractors supplying Isaf, the international force in Afghanistan. Investigators are due to issue a final report next month.

The investigators have focused on eight trucking contractors who share the US military's $2.16bn (€1.7bn, £1.5bn) two-year host nation trucking contract. The companies in-clude NCL Holdings, run by Hamed Wardak, the son of Afghanistan's defence minister, and others founded by US and Gulf investors.

The system relies on an opaque network of sub-contractors who pay Afghan security companies to escort their trucks. Investigators suspect these companies in turn pay tolls to militia leaders with groups of hundreds of gunmen.

Prominent militia commanders in southern Afghanistan include Matiullah Khan and Ruhullah. Al-though some hold ranks in the Afghan security forces, such commanders exercise autonomy and often field better forces than the army or police. Industry insiders say militias run what amount to protection rackets on convoys passing through their territory.

"Five years ago, you could drive from Kabul to Kandahar in a day. Now security companies will take a 300-truck convoy," a western contractor told the FT. "The money goes to the local commander taking his cut for his road. If you don't pay, your trucks are not going to move."

Investigators suspect that commanders controlling long stretches of highway share multi-million-dollar incomes each year by demanding $1,000-$1,200 for each of the trucks, making up to 10,000 trips a month under the contract.

Investigators also suspect that some of the funds from the contract end up in the hands of the Taliban, either through bribes paid by sub-contractors or extortion rackets run by militia leaders colluding with insurgents. Isaf says oversight procedures exist, but ad-mits relationships between sub-contractors and other entities are not transparent.

The militias pose a dilemma for the US military. Senior officers say they plan to work with the Afghan government to impose stricter controls during their planned offensive to secure Kandahar city, but troops admit they need the militia to keep the Taliban out of areas where they are stretched.

At a remote US Army outpost in Shah Wali Kot in northern Kandahar province, officers say Matiullah plays a vital role in escorting supplies on a highway north of the city.

"He's a huge asset," said Major Ryan O'Connor. "He's covering space right now where Isaf and coalition forces do not have a large and constant presence."

Ahmed Wali Karzai says he is helping the interior ministry register militias so they can be brought under Kabul's supervision. He said: "The only thing these people know well is how to fight . . . Let's say you have these 5,000 people loose in Kandahar. What will they do?"

But Carl Forsberg, a researcher at the Institute for the Study of War in Washington, says Mr Karzai relies on militias and security companies benefiting from US contracts to project power in the province.

In a report released last month, Mr Forsberg identified one of the companies that helps Ahmed Wali Karzai extend his influence as Watan Risk Management, an Afghan security company run by members of the Karzai family. The company is a big player in escorting convoys and also guards the $50m Dhala dam, Canada's flagship irrigation project in Kandahar, Canadian officials say. The company declined to comment on the report.

"You have about 30 oligarchs who have built little empires with Isaf money," Mr Forsberg said. "We are ultimately creating a shadow government."