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U.S. firms fueling Afghan insurgency by not paying bills, says official

Several Afghan companies working on contracts for U.S. and NATO military bases have accused American middlemen of reneging on payments for supplies, services.
Image: Haji Layeq
Haji Layeq says an American company failed to pay a construction company he has ties to. Adam Ferguson for The New York Times
/ Source: The New York Times

A number of Afghan construction companies working on contracts for American and NATO military bases in Afghanistan have accused American middlemen of reneging on payments for supplies and services, and in one case of leaving the country owing Afghan companies hundreds of thousands, even millions, of dollars.

The failure of American companies to pay for contracted work has left hundreds of Afghan workers unpaid in southern Afghanistan, and dozens of factories and small businesses so deep in debt that Afghan and foreign officials fear the fallout will undermine the United States-led counterinsurgency effort to win the support of the Afghan people.

While there have been many accusations of corruption on the part of Afghan officials over recent years, there has been less heard about misconduct of the foreign companies working in Afghanistan, not least because Afghans have no organized system of recourse.

Yet the few cases of misconduct by foreign companies that have come to light may be just the “tip of the iceberg,” said a military official with the International Security Assistance Force in Afghanistan. It concerns not only American companies, he added.

“Without being too dramatic, American contractors are contributing to fueling the insurgency,” said the official, who could speak only on the condition of anonymity in keeping with the policy of his organization.

“Families, relatives, friends, village and tribal elders will all know that ISAF does not pay for the work,” the official added. “So one can understand why they may say, ‘We should get these Western soldiers out of here,’ and thus support the insurgency.”

Concrete barriers
In one case the official was familiar with, three Afghan businessmen said they had completed work for an American firm, Bennett-Fouch Associates LLC, of Michigan, but had not been paid. All of them and the official said they knew of other companies in the same position after doing work for the company.

One of the businessmen, Jalaluddin Saeed, said he was owed $1.5 million by Bennett-Fouch for four contracts to provide concrete barriers for American and NATO military bases last year. He said his life was now in danger and he had had to leave his home city of Kandahar and move his family to avoid his many angry creditors.

Two other smaller companies showed contracts and purchase orders signed by foreign employees of Bennett-Fouch for work last year for which they said they also had not been paid.

Officials at the American Embassy and in the United States-led coalition force said they could not comment on specific cases.

Several e-mail messages and telephone calls to Sarah Lee, the president of Bennett-Fouch, the company offices and other employees were not answered, and Ms. Lee did not return three messages left on the voice mail of her number in the United States.

Bad paperwork?
Lt. Col. Michael T. Lawhorn, a senior military public affairs officer in Afghanistan, said previous reports of Afghan companies not being paid for contracted work had turned out to be problems of incomplete or improperly filed paperwork.

Officials with the Afghan companies said they believed that they had been cheated. Two foreigners working in southern Afghanistan who were familiar with Bennett-Fouch said its managers had left Afghanistan owing Afghan companies up to $5 million.

One who spoke on the condition of anonymity said the company was using money owed to subcontractors to set up a sister company, K5 Global; the military official said Bennett-Fouch ran into trouble after a concrete and asphalt batching plant it bought in Afghanistan failed because of poor construction.

“The subcontractors out here are very unlikely to be able to hire an attorney in the U.S., and thus the chances of seeing any payment is really zero,” the ISAF military official said.

As the United States military contingent in Afghanistan rises to nearly 100,000 troops, millions of dollars are being spent to expand the military bases and build extra forward operating bases, as well as training centers, bases and outposts for the expanding Afghan Army and police forces.

The bulk of the construction work is handled by American companies who frequently subcontract to one or more layers of smaller companies.

Bennett-Fouch, according to its Web site, was set up in 2002 and works in Iraq and Afghanistan, providing services to foreign companies in construction, oil, logistics and communications.

The company began working in Afghanistan in 2008 and was awarded contracts in excess of $33 million with the United States military, often directly. Sometimes it worked as a subcontractor.

The American firm DynCorp International had subcontracted “limited work in Gardez and Kabul” to Bennett-Fouch in 2009, and had paid it for its work on those projects, Ashley Burke, director of communications for DynCorp, wrote in an e-mail message.

One foreigner familiar with Bennett-Fouch in Afghanistan said he started hearing that there were problems with subcontractors not getting paid in the fall of 2009.

'Did not receive a cent'
An Afghan company called the Ahmadi Group Construction and Logistics Services began building a police training center in Gardez, southeast of Kabul, for Bennett-Fouch on Nov. 2, 2009.

By mid-December the foreign managers of Bennett-Fouch all left the country for the Christmas holidays, without paying for the work, said the company’s finance director, Abdul Ghafoor. “We did not receive a cent for $642,000 of work,” he said.

He pursued Bennett-Fouch through e-mail messages and Ms. Lee, the president, wrote in an e-mail message dated April 14, 2010, that the company would pay once it had been paid by its own client. Mr. Ghafoor said he did not believe her story since the prime contractor had told them they had paid Bennett-Fouch. “She was just buying time,” he said.

By June, the Ahmadi Group had still not been paid, and it is now close to bankruptcy after borrowing money to pay its biggest creditors. “For a small company, it is a big amount,” he said.

Another Afghan subcontractor, the Nasar Zabuly Construction Company, found itself in a similar position after supplying truckloads of crushed gravel for Bennett-Fouch to forward operating bases around Zabul Province last year.

This March the Afghan workers returned from a break for the Afghan New Year and found that Bennett-Fouch had closed its offices, emptied its bank account and left the country, said one of the company shareholders, Hajji Layeq.

Trust lost
The company is owed over $300,000 by Bennett-Fouch and itself owes large sums to 100 truck drivers, gravel companies and a security company, he said. “We cannot trust Americans anymore, because if a new company comes to work here who will be a guarantor for the new company?” Mr. Layeq said.

Mr. Saeed, whose company, Afghanistan in Development, is based in Kandahar, said he realized that there were problems in March when he found that Ms. Lee was delaying payment on contracts, even though the United States contracting center at Kandahar air base told him that she had been reimbursed for the work.

The United States military could not confirm specifics of the case, but in e-mail correspondence shown to The New York Times by Mr. Saeed, Ms. Lee accused him of going behind her back in checking with the contracting office.

She left the country a month after he confronted her and she has since ceased all e-mail contact, he said. Her other company, K5 Global, owes him $160,000, Mr. Saeed said.

United States forces are responsible for only those contracts made directly with the prime contractor and have no means of enforcing the rights of subcontractors, said Colonel Lawhorn, the ISAF spokesman.

Nevertheless, the Defense Department has a system of checks to try to ensure that the contractors used are “reputable” and will work with the American Embassy and United States agencies to investigate any suspicion of wrongdoing, he said.

“We are definitely concerned with the impact our activities have on our Afghan relationships,” Colonel Lawhorn said.

The Afghans, who were pro-American and ready to risk threats from the Taliban to do business with American firms, said they were disappointed when the United States Embassy and United States military told them they could not help. “People are thinking the Americans are failing in everything,” Mr. Layeq said.

This story, "," first appeared in The New York Times.