US watchdog calls for accountability over Pakistan Reimbursement claims for war on terrorism
U.S. Government Accountability office (GAO) reported that as of May 2008, Defense paid over $2 billion in Pakistani reimbursement claims for military activities covering January 2004 through June 2007 without obtaining sufficient information that would enable a third party to recalculate these costs. Furthermore, Defense may have reimbursed costs that were not incremental, were not based on actual activity, or were potentially duplicative.
GAO also found that additional oversight controls were needed. For example, there is no guidance for Defense to verify currency conversion rates used by Pakistan, which if performed would enhance Defense’s ability to monitor for potential overbillings.
Following the attacks of September 11, 2001, as the United States focused on toppling the Taliban regime and fighting al Qaeda in Afghanistan, Pakistan’s importance, as per U.S. view, as an ally in the global war on terror increased. According to Defense, Pakistan’s military operations and other contributions to Operation Enduring Freedom in Afghanistan quickly threatened to become unsustainable on its $2.5 billion defense budget. As a result, Defense requested supplemental funding from Congress to provide payments to Pakistan for logistical and military support in connection with Operation Enduring Freedom. In response, Congress passed the Defense Appropriations Act for Fiscal Year 2002, stipulating that the “Defense Emergency Response Fund” could be used by the Secretary of Defense to reimburse coalition partners for logistical and military support to U.S. military operations. This funding became known as Coalition Support Funds.. Coalition Support Funds (CSF), have reimbursed 27 coalition allies for incremental costs ,i.e., costs above and beyond the partner country’s normal operating costs) incurred in direct support of U.S. military operations. Pakistan is the largest recipient of CSF payments, receiving $5.56 billion of $6.88 billion ,i.e, 81 percent of all CSF reimbursements as of May 2008.
In Pakistan, most of the reimbursements through CSF are intended to enable the government of Pakistan to attack terrorist networks in the Federally Administered Tribal Areas (FATA) and stabilize the border areas.
Specific areas of questions are more than $200 million for Pakistan’s air defense radar, approximately $30 million for army road construction and $15 million for bunker construction without evidence that the roads and bunkers had been built; and an average of more than $19,000 per vehicle per month for Pakistani navy reimbursement claims that appeared to contain duplicative charges for a fleet of fewer than 20 passenger vehicles.
At one time Office of the Defense Representative to Pakistan (ODRP) observed poor readiness rates of Pakistani helicopters and recommended deferring payment for helicopter maintenance that had been routinely reimbursed. It was found that Pakistani Army does not maintain its helicopters properly.
To provide Defense with maximum flexibility, Congress passed the Defense Appropriations Act for Fiscal Year 2002, which granted the Secretary of Defense the authority to make CSF payments notwithstanding any other provision of law in such amounts as the Secretary may determine in his discretion, based on documentation determined by the Secretary to adequately account for the logistical and military support provided by partner nations. Any such determination by the Secretary
shall be final and conclusive. The act did, however, require Defense to provide a 15-day notification of upcoming CSF reimbursements. Congress continued to provide funding for Pakistan through Defense without requiring specific accountability controls until 2008. Subsequent legislation required Defense to provide quarterly reports to the House and Senate Committees on Appropriations and the House and Senate Armed Services Committees on the use of funds made available for payments to
Pakistan and other CSF recipients. Despite these revisions to the reporting requirements, Congress has consistently left decision-making on the suitability of documentation to the discretion of the Secretary of Defense.
According to Defense, CSF is critical to ensure Pakistan’s continued support of U.S. efforts to combat terrorism. Defense officials stated that without CSF or a similar mechanism to reimburse Pakistan for support in Operation Enduring Freedom, Pakistan could not afford to deploy military forces along the Pakistan-Afghanistan border to support U.S. military operations in Afghanistan. Defense also indicates that 84 percent of all containerized cargo and approximately 40 percent of all fuel for U.S. and coalition forces operating in Afghanistan passes through Pakistan.
According to Defense officials, CSF has been a major factor in Pakistan’s ongoing cooperation in support of U.S. goals in Pakistan and Afghanistan. Defense has used CSF to reimburse Pakistan for Operation Al Mizan, a major deployment of the Pakistan army in the North West Frontier Province and the Federally Administered Tribal Areas (FATA) that border Afghanistan that began in 2001 and has continued in various phases to this date.
In a February 2002 internal memo, the Comptroller expressed dissatisfaction with Defense’s ability to verify the costs claimed in Pakistan’s December 2001 reimbursement claim. For example, the claim reported a total cost for army airlift without providing information on number of sorties flown, the dates, costs, time frames, purpose, number or types of aircraft flown, or number of man-hours involved. According to the February 2002 memo, the government of Pakistan was unprepared or unable to reconstruct these costs in a verifiable manner in line with standard U.S. government accounting practices and expectations. The United States eventually reimbursed Pakistan $300 million.
