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Afghans Hitting U.S. Contractors With Questionable Fees

A U.S. Army soldier stands guard at a new construction site as U.S. engineers inspect an Afghan National Army Forward Operating Base in the Ghazni province of Afghanistan, on May 28, 2013. Photographer: Dibyangshu Sarkar/AFP via Getty Images
A U.S. Army soldier stands guard at a new construction site as U.S. engineers inspect an Afghan National Army Forward Operating Base in the Ghazni province of Afghanistan, on May 28, 2013. Photographer: Dibyangshu Sarkar/AFP via Getty Images

July 1 (Bloomberg) -- U.S. government contractors in Afghanistan are being hit with millions of dollars in “mostly improper” fees and penalties on top of nearly $1 billion in improper tax assessments, according to a U.S. watchdog agency.

The additional payments levied by the Afghan government against U.S. and foreign contractors delivering supplies and performing reconstruction work include customs processing fees, fines for delayed customs documentation and fees for visas, work permits and business licenses, John Sopko, the special inspector general for Afghanistan reconstruction, wrote in a report released today.

The payments are coming from the $93 billion in reconstruction and other non-combat related aid Congress has appropriated since 2002 for Afghan security forces as they take over security, for improving civil governance and for fostering economic development as the U.S. military involvement winds down after 2014.

“A substantial portion of these funds are being spent not to achieve these important goals but, rather, to pay the cost of doing business in Afghanistan,” Sopko said in the report. “These costs deserve the immediate attention of Congress.”

Sopko stopped short of saying the payments represented outright corruption.

Still, the Afghan government, on top of questionable tax levies, “is assessing hundreds of millions of dollars in additional fines, fees and penalties, some of which are also improper, on many of these same companies,” Sopko wrote.

Sopko in May reported that U.S. government contractors supporting Afghan operations have been hit with almost $1 billion in taxes and penalties from the Afghan Ministry of Finance since 2008.

Afghan government collection efforts, some on fees as small as $1,138 per employee on annual visas and work permits, “delay the delivery of cargo to support U.S. troops and cost U.S. taxpayers millions in undue burden,” Sopko wrote in a report addressed to congressional leaders on defense and foreign relations committees.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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