UNDP earns 4% on funds funneled through it to pay salaries of Afghan police netting it $20 million a year on a $500 million fund.
12/24/14, "Afghan Leader Tells U.N. Agency to Relinquish Control of Funds, Officials Say," NY Times, Azam Ahmed, Kabul
"In his drive to rid Afghanistan of mismanagement and waste, President Ashraf Ghani has chosen a large and rather unexpected target: the United Nations Development Program.
Expressing
his frustration in recent meetings with aid donors and officials, Mr.
Ghani has demanded that the agency turn over control of a nearly $500
million fund that bankrolls the salaries of Afghanistan’s police officers, according to Afghan and Western officials, and has set a six-month deadline for it to do so.
In private, the officials said, he has called the fund, the Law and Order Trust Fund of Afghanistan, a “cash cow” for the agency, which charges 4 percent to manage the money.
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At that rate, the fund earns more than $20 million a year, money the Afghan government as well as donors are eager to see land in the pockets of police officers on the front line. The president is so frustrated with what he sees as the agency’s resistance to change that he recently threatened to throw the head of the development program out of the country, the officials said.
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At that rate, the fund earns more than $20 million a year, money the Afghan government as well as donors are eager to see land in the pockets of police officers on the front line. The president is so frustrated with what he sees as the agency’s resistance to change that he recently threatened to throw the head of the development program out of the country, the officials said.
Boaz
Paldi, a spokesman for the United Nations Development Program in New
York, said the fate of the fund was still in talks with Afghan officials
and a final agreement was close. He added, “U.N.D.P. has not received
any formal request from the government of Afghanistan pertaining to
staff in its Afghanistan country office.”
The
fact that Mr. Ghani is seemingly upending a long-term relationship with
the central aid organization in his country illustrates the extent to
which relationships at the end of the war are being rewritten. In his
quest to redirect the nation — or, his critics say, consolidate power —
Mr. Ghani has made clear that even storied institutions like the United Nations are not beyond reproach.
Officials
who know Mr. Ghani say his actions are rooted in a deep mistrust of the
agency that dates back to his time as finance minister, and also
reflect a personal distaste for some groups he sees as infringing on
Afghan sovereignty.
The
trust fund has fallen under intense international scrutiny and
criticism in recent years. Internal and external investigations have
raised questions about oversight of the fund, which has handled the
delivery of more than $3 billion in security aid since 2002. Some
governments have even suspended payments to the program out of
frustration with its management.
The
most recent disagreement started in October, when Mr. Ghani asked the
agency to come up with a plan to shift ownership to the Afghan Interior
Ministry. Staff members for the trust fund and an Afghan deputy interior
minister were assigned to draft a plan. But last week, when Mr. Ghani
came to review the proposal, he found that instead of outlining a plan
to phase out United Nations authority, it suggested a three-year
extension, according to two Western officials briefed on the meeting.
Mr.
Ghani fired the Interior Ministry official, Haider Baseer, on the spot.
He then turned his ire to the United Nations staff members.
“When
a president of a sovereign country asks you to come up with an exit
plan and instead you start lobbying, are you partners or competitors?”
he asked the shocked group, according to a person in the room at the
time.
He
then suggested to those present that the top United Nations official in
Afghanistan introduce a new director for the program there, essentially
indicating that the current director, who had only just arrived, was no
longer welcome, the person said.
The
president’s spokesman, Nazifullah Salarzai, said Mr. Ghani’s request to
place the funds directly under Afghan control was a goal all donor
countries have expressed. Continuing to use the United Nations agency as
the administrator, he said, would only delay a necessary transition.
“When
technical assistance continues for 13 years, one of the sides has a
problem,” Mr. Salarzai said. “We are ready to bring whatever reforms are
needed in this case.”
While
Mr. Ghani’s demands have raised the pressure on the United Nations,
most officials say that sending the money directly to the Afghan
government is unlikely to happen within six months.
Despite a broad
desire to see the Afghans take control of the funds directly, building
the capacity to manage such a giant chunk of cash and safeguard it from
corruption will take at least a year, according to conservative
estimates.
“He’s
not wrong to be pushing this, but there’s a reality that his push is
going to come up against,” said one Western official involved in funding
the program who was not authorized to speak publicly on the matter.
Another
option being floated is to incorporate a third party to manage the
money instead of the United Nations Development Program.
“We
are not bound by the U.N.D.P.,” said another senior Western diplomat.
“We are only bound by the need for our taxpayers’ money to be spent
responsibly.”
Afghan
officials, for their part, say they recognize that six months is a
small amount of time to take over a salary payment program for nearly
150,000 police officers spread across dangerous territory. Mostly, they
say, Mr. Ghani is trying to light a fire under an agency of which he has
long been suspicious.
The
move, like many others he has made in his first weeks in office, has
cast Mr. Ghani as a man on a mission: sleeping just a few hours a night
as he aggressively micromanages a host of changes to the government and
traditional routine. He abruptly fired all the remaining cabinet ministers,
for instance, a move some hailed as proactive and others decried as
crass, especially as the government has yet to name replacements. On
Wednesday, he announced that the governor of Herat had been fired.
In
the trust fund dispute, the fact that many international donors have
sided with Mr. Ghani, agreeing that the fund should be transferred the
moment the Afghans are ready, is a convenient confluence of goals,
officials said.
“You
have to take that cue when the host government says it wants to do
something,” said Franz-Michael Mellbin, the European Union ambassador to
Afghanistan. “Maybe the timeline is unrealistic, but the core issue is
that Ghani wants to improve the Ministry of Interior, and we should not
be seen as getting in the way of that ambition.”
“It’s not like the Lotfa fund [Law and order trust fund] has tons of good will with the donor community,” he added."
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"UNDP said it could not investigate
how LOTFA funds were spent" and has "no institutional mandate to conduct
audits."
10/9/14, "UN agency lax over Afghan police fund misspent millions-watchdog," Reuters, Kieran Guilbert
"A
United Nations agency in charge of administering billions of dollars in
aid to Afghan police has come under renewed fire for mismanagement,
including a failure to account for $200 million in deductions from a
fund set up to improve law and order.
The United States has been building up Afghan security forces before withdrawing its combat troops by the end of this year. LOTFA has paid out $1.62 billion since January 1, 2011.
International donors have spent billions of dollars on reconstruction in Afghanistan, but it is ranked one of the most corrupt countries in the world, and major donors are concerned about its lack of progress in fighting graft.
In a series of letters, Sopko said funds had been used to inflate police salaries and make payments to "ghost employees", and wrote of "questionable deductions" that the Afghan Ministry of Interior (MoI) may have taken from police salaries.
"In particular, I requested that UNDP describe how it has accounted for up to $200 million in 'deductions' that the MoI may have taken from the salaries of (police) employees, who are paid with LOFTA funds," Sopko wrote in a letter to UNDP Administrator Helen Clark dated Sept.12 and released this month.
Sopko said he was disturbed to learn that LOTFA may have made direct cash payments to interior ministry and police staff. According to the UNDP's own records, this could have constituted a violation of Afghan law.
The UNDP played down its responsibility for overseeing LOTFA and failed to acknowledge "the problems that continue to plague this programme", the inspector general wrote.
MISSING MILLIONS?
Oversight of payments by the fund is crucial, particularly after a U.S. government audit found the interior ministry could not account for $17.4 million in pension withholdings and $9.9 million in additional payroll deductions in 2013.
LOTFA donors, including the European Union, had expressed significant concerns regarding the need for transparency in the police payroll system, Sopko said.
Given donors' strong interest in greater LOTFA transparency, Sopko wrote he was baffled that the UNDP said it could not investigate how LOTFA funds were spent.
In a written response to Sopko, the UNDP said it had limited responsiblity to oversee LOTFA and no institutional mandate to conduct audits and investigations of the interior ministry.
The UNDP acknowledged that its own internal review had turned up a number of irregularities, including $15 million of "miscoded and ineligible" expenses by the Afghan government.
It had also gone beyond its responsibilities in raising many payroll-related issues with the Afghan government and international partners and taken steps to make systems more efficient, the UNDP said.
The agency acknowledged that "in some cases there were delays in the discovery of the problems." It said it was hiring an international company to conduct a study of the payroll process and provide recommendations to improve the administration of the fund.
The UNDP was not available for further comments.
Overall, the United States has poured some $104 billion into reconstruction efforts in Afghanistan, and Sopko is responsible for monitoring how effectively the money is spent."
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Comment: $104 billion in no-strings US taxpayer cash is always nice.
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