US recovers millions in misappropriated aid

American soldiers and government employees among those indicted by investigators for siphoning cash through corruption or theft.

In this photo provided by ISAF Regional Command (South), members of Provincial Reconstruction Team Zabul inspect a canal project site, Tuesday, June 14, 2011, in the Zabul Province of Afghanistan. (AP Photo/ U.S. Air Force Staff Sgt. Brian Ferguson)
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WASHINGTON //A US Marine in Iraq sends home US$43,000 (Dh156,000) in stolen cash by hiding it in a footlocker among American flags. A soldier ships thousands more concealed in a toy stuffed animal. An embassy employee tricks the State Department into wiring $240,000 to his foreign bank account.

As the wars in Iraq and Afghanistan wind down, the number of people indicted and convicted by the US for bribery, theft and other reconstruction-related crimes in both countries is rapidly rising, according to two just-released government reports.

"This is a boom industry for us," Stuart Bowen, the special inspector-general for Iraq reconstruction (SIGIR), said in an interview.

"Investigators and auditors had a productive quarter," said a report on the theft of Afghanistan aid by Steven Trent, who holds the same position for Afghanistan. His report covered August through to the end of October.

In the past 13 months, US investigators in Iraq secured the indictments of 22 people on aid-related charges, bringing to 69 the total since the office of the inspector-general was created in 2004. Convictions stand at 57. Hundreds more are under scrutiny in 102 open investigations and those numbers are expected to climb.

The increase derives partly from spin-off investigations, where suspects facing prosecution lead investigators to other suspects, said Jon Novak, the SIGIR's assistant inspector-general for investigations.

"More and more people are ratting out their associates," he said, turning in conspirators who helped launder money after it was stolen, others who were aware of it and others implicated in the crimes.

The inspector-general's office for Afghan reconstruction, created in 2008, reports only nine indictments and seven convictions. They say they're trying to ramp up after years of upheaval and charges the office itself was mismanaged. Mr Trent is the third person to hold the post.

Still, Mr Trent reported that during the past quarter an investigation initiated by his office netted the largest bribery case in Afghanistan's 10-year war. A former Army Reserve captain, Sidharth "Tony" Handa of Charlotte, North Carolina, was jailed and fined for soliciting $1.3 million in bribes from contractors on reconstruction projects.

Most crimes uncovered include bribery, kickbacks and theft. Among those listed in the latest reports are:

Ÿ Gunnery Sergeant Eric Hamilton, who pleaded guilty to conspiracy in a scheme to help Iraqi contractors steal 70 generators meant for Marines. He sent some money home in a footlocker and had more wired.

Ÿ Several US government employees who received kickbacks for steering contracts to local conspirators and providing inside information to people competing for contracts. A former army sergeant, who was not identified, is charged with pocketing more than $12,000 in cash that a contractor never picked up after the money was allegedly stolen by another sergeant and mailed to California inside a stuffed animal.

Ÿ A Jordanian national and US Embassy employee, Osama Esam Saleem Ayesh, convicted in April for stealing almost $240,000 intended to cover shipping and customs charges the State Department incurs when it moves household goods of its employees. The money wound up in Ayesh's bank in Jordan.

Money stolen from reconstruction projects also has been shipped back tucked into letters home and stuffed in a military vest. Tens of thousands of dollars were once sewed into a Santa Claus suit.

Prosecutors have retrieved some of the money. More than $83 million will be returned to the US from Iraqi cases completed in the budget year that ended on September 30, bringing the total recovered over the past seven years to almost $155 million, Mr Bowen's office said.

As well as stolen cash, the total includes court-ordered restitution, fines and proceeds from the sale of merchandise seized from those convicted, including Rolex watches, luxury cars, plasma TVs and houses.

Mr Trent's office recovered $51 million over the past year.

But the amount recovered is believed to be a tiny fraction of what has been stolen in the two war zones. Far more money has been lost through waste and abuse from poor management.

The US has committed $62 billion to rebuilding Iraq and $72 billion for Afghanistan.

The independent Commission on Wartime Contracting estimated in August that up to $60 billion had been lost to waste and fraud in Iraq and Afghanistan. It studied not just reconstruction spending, but $206 billion for logistical support.