In internal government documents with potential repercussions for the 2016 presidential election, top officials at the U.S. Agency for International Development repeatedly cited former Secretary of State Hillary Rodham Clinton for setting into motion a policy to waive restrictions on who could receive U.S. aid in Afghanistan, resulting in millions of dollars in U.S. funds going directly into the coffers of Afghan ministries known to be rife with corruption.
References to Mrs. Clinton’s role in the policy first appeared in a November 2012 USAID action memo, which outlined how U.S. officials made a “strategic foreign-assistance decision” two years earlier to provide “at least 50 percent of U.S. Government assistance directly to the” Afghan government.
The decision was “reaffirmed by Secretary of State Clinton” in July 2010, according to the memo, which highlighted her actions as justification for why USAID should waive an internal policy that otherwise would have required the agency to first assess the risk that such “direct assistance” might be lost to fraud, waste or outright theft.
USAID conducted such assessments anyway in recent years and reached sobering conclusions about the overall effects of billions of dollars that the U.S. has spent on nation building in Afghanistan.
Copies of the confidential assessments were obtained and first reported on last week by The Washington Times, which exposed how USAID’s own auditors found the risk of mismanagement, fraud and waste to be “critical” at nearly all the Afghan Cabinet ministries receiving the money.
Mrs. Clinton did not respond to a request for comment.
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But current senior officials at the State Department, which oversees USAID’s activities, dismissed the notion that the reference to her in the agency’s 2012 action memo was anything other than routine.
“It’s absurd to claim that her name being mentioned in this memo is anything but the everyday work of a bureaucracy of which she was the leader,” said Marie Harf, the State Department’s deputy spokeswoman.
The memo was sent through the office of J. Alexander Thier, who at the time was assistant USAID administrator for Afghanistan and Pakistan affairs. It was overlooked by news media when a copy appeared in a January 2014 report by the Special Inspector General for Afghan Reconstruction.
‘Standard bureaucratic memo’
Ms. Harf told The Times on Friday that she was not surprised reporters ignored the document.
“It’s not exactly breaking news that the name of the nation’s top diplomat would be mentioned in a standard bureaucratic memo describing our assistance strategy in Afghanistan — a strategy she helped initiate and which has been reaffirmed multiple times at multiple levels from the President on down,” Ms. Harf said. “It’s also a strategy we continue to proudly implement with very positive results.”
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USAID officials argue that despite the waiver of certain internal policies, the agency has maintained intense scrutiny over the money it releases to the Afghan government. The total amount ever delivered by USAID via the direct assistance program, the officials said, is not in the billions, but just $285 million spread across several Afghan ministries.
One USAID official, who spoke with The Times on the condition of anonymity, said the reason the figure was not considerably higher rested specifically on concerns at the agency over widespread fraud and corruption in the Afghan ministries.
But questions have been raised about whether other top U.S. authorities — particularly at the Defense Department — may have seen the policy actions outlined in USAID’s November 2012 action memo as a justification to open the floodgates of American cash directly to the ministries.
A report by the Government Accountability Office in July 2011 asserted that Washington “more than tripled its awards of direct assistance to Afghanistan” about the time the USAID memo says Mrs. Clinton was pushing the policy.
The GAO report claimed that, despite concerns over whether the funds would be used “as intended,” total direct assistance from the Defense Department to the Afghan Defense and Interior ministries “grew from about $195 million in fiscal year 2009 to about $576 million in fiscal year 2010.”
With regard to USAID, the GAO report said the agency’s “direct assistance” grew from roughly $470 million in 2009 to more than $1.4 billion in 2010.
USAID officials reject the GAO’s characterization of those figures. They said the money was not deposited directly into Afghan government accounts but was channeled through the World Bank-administered Afghanistan Reconstruction Trust Fund.
The Special Inspector General for Afghan Reconstruction, a congressionally mandated watchdog group known in Washington as SIGAR, concluded in a report this year that USAID had pumped roughly $1.7 billion into the trust fund since 2002.
But the money, USAID officials said, is separate from what the agency considers “direct assistance.” The USAID official who spoke on the condition of anonymity said the agency has obligated some “$770 million for assistance directly with Afghan ministries” over the past 12 years, but has only ever “disbursed $283 million.”
“USAID maintains very strict controls over the funds during every step of the process,” the official said. “We set up separate bank accounts and monitor the invoices carefully, hiring outside monitors to verify work is performed to our standards.”
The catch is that USAID’s own confidential assessments conducted in 2012 and 2013 concluded that nearly all Afghan government ministries receiving the money could not be trusted to manage it effectively.
USAID says it shared those assessments with Congress during recent months. But the documents, known in foreign aid circles as Stage II Risk Assessment reports, were closely guarded from the wider American public until The Times obtained copies of them under a Freedom of Information Act request filed with SIGAR.
The assessments focus on seven Afghan government ministries overseeing the nation’s finance, mining, electric utilities, communications, education, health and agriculture. Only in one of the seven cases — the Afghan Ministry of Finance in March 2013 — did USAID’s auditors conclude that the ministry’s systems were “adequate to properly manage and account for” money channeled in from Washington.
But even with that conclusion, USAID identified 26 risks for fraud and waste at the Finance Ministry, including a “critical” risk of the ministry simply “not being able to fulfill its mandate and carry out its operation.”
Despite these reports, USAID gave nearly $29 million directly to the ministry from September 2009 through January 2014, according to a recent SIGAR report, which predicted that USAID would proceed with channeling an additional $7 million to the ministry by September.
Decision to waive rules
Potentially more striking, however, is the manner in which USAID’s scathing ministry assessments point to the actions of Mrs. Clinton as a main justification for why the agency channels money directly to ministries known to have management and accountability problems.
A “Background” section at the opening of each assessment includes similar language to that used in USAID’s November 2012 action memo, asserting that the Obama administration made a “public strategic foreign-assistance decision” in 2010 that was later “reaffirmed” by Mrs. Clinton.
Under normal circumstances, USAID officials wrote in documents, the flow of American funds directly into a foreign government’s coffers “must not be authorized” if there is “clear evidence of vulnerabilities to corruption and the partner country government fails to respond or agree to appropriate risk mitigation remedy measures.”
But, the officials wrote, the Obama administration’s policy and Mrs. Clinton’s reaffirmation of it at a July 2010 conference in Kabul replaced the requirement that USAID adhere to an internal guideline known as ADS 220, which would have demanded that the agency assess risks associated with giving money directly to the Afghans.
In a twist, the officials wrote that despite such policy developments, USAID proceeded to conduct the assessments to “comply with the spirit and purpose” of what otherwise would have been standard agency operating procedure.
During conversations with The Times over the past week, several USAID officials said the whole point of conducting the assessments was to make sure that U.S. money was not carelessly wasted in Afghanistan.
“To put it another way,” one USAID official said on the condition of anonymity, “interpreting the waiver of ADS 220 to mean that USAID simply abandoned its internal controls and took no steps to protect U.S. taxpayer funds is incorrect.”
“If that were the case,” the official said, “the assessments would not exist.”
Clinton’s public words
That still does not explain why the agency made reference to Mrs. Clinton in every one of the assessments.
The situation is more vexing because what USAID officials wrote about Mrs. Clinton — that she “reaffirmed” the administration’s direct assistance policy at a 2010 conference in Kabul — does not totally correspond with a speech the secretary of state made at the time.
Mrs. Clinton made no specific mention of “direct assistance” in her remarks at the Kabul conference. Although she said Washington and its partners were ready to “align our resources behind Afghan goals and Afghan policies,” she stressed that there “are no shortcuts to fighting corruption and improving governance.”
Mrs. Clinton said that as the Afghan government “takes the steps it must to address this challenge, it can count on the United States for support.”
She also said the U.S. role was “to honestly assess the progress we’ve made, identify the gaps between our expectations and our performance, and resolve to close those gaps together through patient, persistent efforts.”
State Department officials said last week that while Mrs. Clinton made no specific reference to “direct assistance,” she did reaffirm Washington’s commitment to the policy by endorsing a communique adopted at the Kabul gathering.
The communique said Washington and other international participants had “restated their strong support for channeling at least 50% of development aid through the Afghan Government’s core budget within two years while the Afghan Government achieves the necessary reforms to strengthen its public finance management systems, reduce corruption, improve budget execution, and increase revenue collection.”
State Department officials said Mrs. Clinton’s endorsement of the communique aligned with the Obama administration’s evolving policy toward Afghanistan at the time. For instance, a State Department strategy document published during the months leading up to the Kabul conference said U.S. officials had “overhauled how we deliver assistance” to reassure Afghans “our commitment is long term.”
“We are,” the strategy document stated, “increasing our direct assistance to select Afghan ministries which we have certified for transparency and accountability.”