In September, on a tree-lined street in the most expensive neighborhood in Kabul, dozens of men rolled out of armored vehicles in front of a little-known U.S. security company. Backed up by Blackwater guards, Afghan authorities and Americans from the FBI and the U.S. State Department quickly headed for the offices of United States Protection and Investigations (USPI). Once inside, they arrested four of the Texas-based company's management team and confiscated 15 computers. The two Americans arrested were later released, while the Afghan managers remain in custody.







The September raid was one of the first attempts by President Karzai's government to crack down on private security contractors in Afghanistan. Afghan police say they plan to shut down about 14 contractors, and so far, have closed 10 Afghan and foreign firms.







What made the USPI raid unusual was the U.S. government's role. The State Department and FBI spearheaded the operation and accused the company of defrauding the United States, according to USPI guards in Kabul and Afghan officials who did not want to be named because the investigation is classified.







Ironically, the United States used private security guards from Blackwater -- the same company under scrutiny for the September death of 17 Iraqi civilians -- to carry out the USPI raid. It was Blackwater's actions and virtual impunity that had spurred the Afghan and Iraqi governments to rein in Western security contractors in the first place.







That impunity is of particular concern to Ali Shah Paktiawal, head of criminal investigations with the Kabul police. A crusader against private security companies, he charges that many contractors are corrupt and are operating without an Afghan government license. Some, he said, are using their guns and power to commit murder and other crimes including drug dealing and bank robbery, and to extort money on a daily basis, he said.







"We're going to make sure these companies clean up because they're doing more harm than good in our country right now," Paktiawal said from his busy Kabul office.







One foreign private security contractor, who would only speak off the record, counters that the police crackdown is really a witch-hunt to extort money from Western companies. An Afghan journalist who is researching the issue and cannot publicly comment, points to the fact that many of the companies, such as Afghan-owned Khawar, are back in business. If the right people in the government are bribed, he said, the contractors have no problems re-opening.







According to a high-level contractor who worked for the U.S. embassy in Kabul, the crackdown may be targeting legitimate companies along with rogue and unlicensed operations. Some businesses may have been shut down after high-powered government officials issued false charges arising out of vendettas.







Barnett Rubin, an Afghanistan expert and head of New York University's Center for International Cooperation, said experienced international officials working in Kabul told him that the latest crackdown on security companies is an effort by one criminal group to eliminate its competitors. Apparently, he said, foreign contracts are being offered to "favored Afghan families."







The foreign contractors say they want to be regulated without being gouged. Doug Brooks, founder and president of the U.S.-based International Peace Operations Association (IPOA), a trade group that represents private security contractors, confirms that stance. These companies are happy to register their weapons and obtain licenses from the Afghan government, he says, because it raises their standards and builds efficiency.







"They can handle high [license] fees as long as there's fairness and transparency. But they can't pay bribes because it's against U.S. laws," Brooks said.







Who are the security companies?







In the last six years, public security in Afghanistan has been on a downward spiral. According to the Afghan government and NATO figures, suicide bombings and other violence have killed hundreds of civilians in 2007, with many more injured or driven into internal exile. Western diplomats, NGOs and investors argue that the Afghan military is not ready to protect those involved in the reconstruction effort in Afghanistan. Without private security contractors, the insurgency -- including the Taliban, al Qaeda and other opposition groups -- would win the war for control of the country.







The private forces filling this security gap are funded by some of the nearly $20 billion in U.S. aid money that was allocated for Afghan "reconstruction." To date, there is little security or reconstruction to show for the money spent. An undisclosed amount of the funds for projects assigned to the U.S. Agency for International Development (USAID) and other donor nations appears to have simply gone to security contractors, according to aid project contracts that detail security costs. For almost every project, security is the highest expense.







There has also been little progress in efforts to control the expense of or to monitor the private security industry. Two years ago, the Afghan government hired a Canadian consulting company to help formulate legislation to regulate the companies, but the effort has not generated effective laws. This December the U.S. Congress passed a bi-partisan bill requiring contractors to provide more information on how they are spending aid money. The legislation creates the post of a special inspector general for Afghanistan reconstruction (SIGAR) to monitor American assistance to Afghanistan. President Bush has yet to sign it.







Legislation or no, dependence on private security is a basic fact of life in Afghanistan. There are about 10,000 private security guards -- Afghan and foreign -- in Kabul alone right now, according to figures provided by the Afghan Ministry of Interior. Afghan officials say only 59 companies are registered and licensed, but perhaps 25 more operate illegally. These numbers are estimates, since part of the problem is that no system is in place that accurately counts the companies or publicly verifies their legal status.







Many of the private security companies, including USPI, have hired Afghan guards who fought in previous wars and were supposed to be disarmed. According to the joint United Nations and Afghan disarmament group, there are still 2,000 private militias in the country employing some 120,000 men, many of whom work for private security contractors. The largest companies are either U.S. or British, and include DynCorp, USPI, Armour Group, Saladin and Global Risk Strategy.







USPI in Afghanistan







USPI has risen quickly into the top ranks of Afghanistan's private security contractors. It was founded in 1987 by a husband and wife team: Barbara Spier was a restaurant inspector and her husband Del was a private investigator specializing in insurance fraud in Dallas, Texas. They started with small contracts around the world, but when the Taliban were ousted and the new Western-backed government seized power in 2002, USPI planted itself in Afghanistan and collaborated with former Mujahideen commander Din Mohammed Jorat.







Jorat, a notorious warlord accused of killing the aviation minister in 2002, was head of security in the Ministry of Interior and headed a militia that became part of the Afghan police. His officers were paid a low salary, $70 a month, but offered the opportunity to boost it by working as guards for USPI. They remained Afghan government employees and received a $3 to $5 per diem for USPI's on-the-job training. By claiming to train, rather than actually employing the moonlighting police, the U.S. contractor was able to provide the cheapest security option for its clients in Afghanistan. The scheme effectively turned a large sector of the Afghan police into a private quasi-militia.







In a matter of months, USPI became USAID's second biggest security contractor in Afghanistan (after Virginia-based Dyncorp). USAID awarded the company $36 million for four and a half years to protect infrastructure projects, such as a road-building project awarded to Louis Berger, a New Jersey engineering company. USPI also made money from contracts with other foreign companies and NGOs to protect their offices and staff in Kabul and the provinces. At its peak, the company employed some 4,000 Afghans.







By September 2007, according to one USPI Afghan guard in Kabul, the company's guards no longer worked for the government, and had become direct employees of USPI, which pays their salaries. Jorat, who is no longer head of security at the interior ministry, had opened his own security company, Khawar, and no longer collaborates with USPI, according to the guard.







Meanwhile opposition to the government is growing and the insurgency is targeting foreigners inside the country as well as Afghans who work for the government or foreign military and aid projects.







As both the opposition and USPI operations grew, the company began to assume a lower public profile. Until two years ago, when security in Afghanistan plummeted, USPI signs were omnipresent at booths staffed by their Afghan employees who guarded big Kabul houses filled with expatriate staff. Now the signs are gone but the guards remain.







By mid-December the security situation in Afghanistan had deteriorated so drastically that the Taliban were able to kill 15 USPI Afghan guards on the highway in western Afghanistan where they were protecting Louis Berger engineers.







The rising number of attacks has raised questions about the training, dedication and competence of private security operatives. A high-level security contractor who worked for the U.S. embassy in Kabul said that members of the small team of foreign advisers are paid up to $200,000 a year to work with the Afghan employees, but that most of the local officers received little training and were infamous for collaborating with local warlords and participating in the extortion and harassment of Afghans.







"[They] made deals with the devil and their guys could do anything they want: shakedowns, drug dealing. [They were] thugs who liked mafia-type operation," said the U.S. embassy security contractor. He said USAID was not happy with USPI, but it had spent too much money mobilizing the company to let it go.







"People got killed because of the incompetence of their guys," he added. "Taliban would attack road crews and USPI guys would run and throw away their weapons, and it happened on numerous occasions." The consequence was that civilian construction workers ended up dead and kidnapped, and engineering contractors stopped construction simply because USPI could not protect them.







September Raid







By the time of the September raid on USPI offices, the company's operations were raising red flags. USPI has a notorious history in Afghanistan of operating with a cowboy mentality and collaborating with shady local strongmen. In 2005, a U.S. supervisor for USPI allegedly shot dead his Afghan interpreter and was flown out of the country the next day, according to Afghan officials.







Despite these issues, USPI continued to get contracts because it underbid its competitors for projects and remained the cheapest option, the American contractor said.







Paktiawal, the policeman in charge of criminal investigations in Kabul, was present during the USPI raid and told CorpWatch that the FBI and USAID are both investigating the company. Until the investigation is complete, he said he could not release more details about the charges.







USPI could not be reached for comment, but in October, the Associated Press reported:







"USPI faces accusations of overcharging USAID by billing for employees and vehicles that did not exist, said a U.S. security official with close ties to the company who wasn't authorized to release the information. The overbilling could run into the millions of dollars ... Blackwater held U.S. and Canadian citizens at gunpoint during the raid, said the U.S. official. Blackwater ... helps provide security for the U.S. Embassy."







After the raid, one of USPI's uniformed guards, armed with a knife and an AK-47, patrolled in front of foreign offices in a quiet neighborhood in Kabul. He did not want to be named, but confirmed that there were issues of fraud involved at USPI and that none of the lower-ranking guards were aware of management's dealings.







"We were discouraged from asking anything and so we keep our mouths shut and heads down," he said.







The guard said he supports a big family with the $150 a month that he receives, and was afraid that if the firm were shut down, he would lose his job.







More Crackdowns







Paktiawal says that the Afghan police are only after the corrupt companies and that the recent law enforcement efforts will impose accountability and control over contractors. He cited USPI as an example of one corrupt foreign company that the crackdown is restraining.







But USPI is hardly alone. A senior security contractor working in Kabul told CorpWatch that the Pentagon is investigating criminal misconduct in regard to $6 billion worth of equipment and service contracts to many companies in Afghanistan and Iraq. He said that 72 FBI investigators are probing mostly Pentagon and State Department security contracts in Afghanistan, but the details are highly classified.







Other companies the government has raided include: the British firm Olympic Security Group for operating without a license; the joint Afghan-British contractor, Witan Risk Management; and Afghan companies Watan and Caps, Khawar and Mellat International Security. It is not clear whether these companies remain closed or have re-opened for business.







Meanwhile, the Afghan people face a variety of men with guns on their streets and blame most of the violence on the private security contractors.







Susanne Schmeidl, co-author of a recent report on private security companies in Angola and Afghanistan for Swisspeace, writes that the expatriate guards are often confused with foreign troops by the local populations. "While there is a positive argument to be made that private security company employment keeps former strongmen and their militia off the streets," she told a news conference in Kabul, "the dilemma as to what will happen to these militia when the contract ends needs to be addressed."

This article was made possible by a generous grant from the Hurd Foundation.





AMP Section Name: War & Disaster Profiteering