Berlin claims that €50m contribution disappeared into US treasury coffers with 15% 'administrative fee' taken by army

The US military has been charging its allies a 15% handling fee on hundreds of millions of dollars being raised internationally to build up the Afghan army. Germany has threatened to cancel contributions.

According to a protest to the US from Germany's ambassador to Nato this year, Berlin raised questions about the fate of €50m (£42m) it dispensed last year as the biggest contribution to a "trust fund" for the Afghan national army.

In protests in Berlin, Brussels, and Washington last February the German government demanded to know what was happening to the money, why earmarked projects were not going ahead and why the US military was taking 15%.

A cable to Washington from the US mission to Nato sought instructions on how to respond to the protests from Ulrich Brandenburg, the German ambassador to the military alliance.

"He said that money for earmarked projects had not been disbursed, resulting in delayed projects. He also said that the US army corps of engineers was charging a 15% administrative fee. He said that German parliamentarians were beginning to ask questions about how this money has been handled, adding that this could make it difficult for Berlin to provide additional contributions in the future."

Originally set up in 2007 to finance Afghan army kit and infrastructure, the trust fund had risen to more than €123m by the start of this year, according to Nato figures, with another €151m pledged involving 20 countries.

The German contribution was by far the biggest, more than double the second-placed €22m given by the Dutch, although Australia had pledged €150m.

Ivo Daalder, the US ambassador to Nato, told Washington that the German complaint raised "serious political concerns".

"The appearance that the US is charging allies an excessive fee for the use of monies they have donated to the ANA [Afghan national army] trust fund may be difficult to explain away during a parliamentary debate. Brandenburg is probably correct in arguing that issues such as this could make it more difficult to encourage nations to donate to the trust fund."

The US ambassador added that the German protest may be "inaccurate" since the 15% was probably a "contingency" rather than an "administrative" fee.

The German complaint said its €50m was transferred to an account of Shape, Nato's planning headquarters in Belgium, in October last year, with €7m earmarked for three military schools and barracks in Kabul, Mazar-I-Sharif, and Feyzabad.

"As of today no project financing has occurred," the Germans said on 3 February. In violation of the agreement setting up the contribution the money had then gone to the US treasury "including assignment of the US army corps of engineers and an administrative fee of 15%" .

Brandenburg said questions were being asked by German MPs and the Merkel government in Berlin was under pressure to explain what had happened with the money.

"Charging a 15% fee for managing and executing ANA TF, especially when applied to the funding of projects pursued by Germany, will inevitably attract heavy criticism by German audit bodies and parliamentary commissions."

The German protest voiced "concern about the fact that any further delay in allocating funds to the prioritised German projects and executing the remainder of funds donated by Germany must substantially impair prospects for any further German contributions to the ANA TF."