Sept. 8, 2010  -- More than one quarter of the translators working alongside American soldiers in Afghanistan failed language proficiency exams but were sent onto the battlefield anyway, according to a former employee of the company that holds contracts worth up to $1.4 billion to supply interpreters to the U.S. Army.

"I determined that someone -- and I didn't know [who] at that time -- was changing the grades from blanks or zeros to passing grades," said Paul Funk, who used to oversee the screening of Afghan linguists for the Columbus, Ohio-based contractor, Mission Essential Personnel. "Many who failed were marked as being passed."

After being asked about the allegations, U.S. Army officials confirmed to ABC News they are investigating the company.

Funk outlined his claims in a whistleblower lawsuit unsealed earlier this year against Mission Essential Personnel, saying the company turned a blind eye to cheating on language exams taken over the phone and hired applicants even though they failed to meet the language standards set by the Army and spelled out in the company's contract. He alleges that 28 percent of the linguists hired between November 2007 and June 2008 failed to meet the government's language requirements. The company has contested those claims in court, and this week rejected them as false in an interview with ABC News.

Civilian translators have for nearly a decade been playing a crucial if unsung role in the Afghanistan war, embedding with troops as they have moved through the countryside, helping soldiers gather information from local villagers, and attempting to spread the message of security, moderation and peace that undergirds the U.S. presence there. Some Afghan veterans have rated the value of a skilled interpreter as equal to that of a working weapon or sturdy body armor.

But a former top screener of translators heading to Afghanistan tells ABC News in an exclusive interview that will air tonight on World News with Diane Sawyer and Nightline that he believes many of the translators currently in the field cannot perform their function.

"There are many cases where soldiers have gone out into the field and have spoken to elders [who] handed messages to the interpreter that a possible ambush three miles up the road would occur. The interpreter cannot read the message and they are attacked," Funk said. "We're talking about soldiers lives here."

Marc Peltier, MEP's chief operating officer, said in an interview with ABC News that he had "no reports from the field" of translators who could not communicate in Dari or Pashto, and said the company has received "100 percent outstanding" ratings from the Army and shared a copy of what he said was an internal company survey that showed 82 percent of its customers were satisfied with the performance of its translators. An attorney accompanying Peltier to the interview said the company would answer Funk's allegations in court, and not in the media.

"We are concerned that ABC is being used to influence the litigation, which the company has moved to dismiss, and on which we expect to prevail," a statement from the company said.

CLICK HERE TO READ THE FULL STATEMENT FROM MEP and CLICK HERE TO READ AN ADDITIONAL STATEMENT FROM MEP

Peltier told ABC News that he found it "troublesome that [Funk] has come to ABC to make these charges." He questioned Funk's financial motives in bringing the suit, and alleged that Funk had "offered to resign and resigned over financial improprieties." Peltier would not elaborate. Funk's lawyer said the alleged improprieties involved a subordinate in Funk's unit, and had nothing to do with his departure.

Despite Peltier's reluctance to discuss the allegations against his company, Mission Essential Personnel executives have spoken very publicly about its ability to fulfill the rapidly growing demands of the U.S. Army for Afghan translators. In a hearing before a congressional committee in July, CEO Chris Taylor testified that within a year of accepting the Afghan contract, his company "was able to achieve a 97 percent fill rate of the government's requirement for linguists. Previous contractors never exceeded 43 percent."

How Mission Essential Personnel was able to find hundreds of willing and translators from among a tiny pool of qualified Americans -- which Peltier put at roughly 3,800 -- was initially something of a mystery to Funk. He said the company struggled to find American citizens who spoke the Afghan languages Dari and Pashto. Ultimately, Funk alleged in his lawsuit that the company resorted to fudging their proficiency test results in order to hit staffing targets that entitled them to more money from the Army.

Funk told ABC News he wrote emails to the then-CEO of Mission Essential describing how job candidates would cheat on oral exams conducted over the phone.

"I told him that it was corrupt. Stand-ins were taking the test. That's comparable to, if you're a lawyer, that's comparable to taking the bar exam over the phone. You need to be face-to-face with that individual. You need to identify them. You need to know who they are and they had stand-ins on the phone taking the test," Funk said. "They had stand-ins on the phone taking the test because there is no way that these people could possibly pass if they can't even get through an interview."

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One of the company's translators working in Afghanistan now confirmed the practice in an interview with ABC News, saying he personally had taken the exam for others who could not have passed it themselves. The employee, who described the practice on the condition he not be identified, called a follow-up written exam "bull."

Peltier said the company has caught applicants cheating, but in those cases the candidates were not hired. In a statement to ABC News, the company said it has "the strongest and most comprehensive language testing and pre-deployment screening of any company providing linguists to Afghanistan." That process includes an initial phone test, a written test administered by an autonomous outside vendor, and an integrity test that occurs by video conference or in person, the company said. The phone tests and written tests are catalogued and saved for review by the military.

Funk said he believes the company's motive for letting unqualified linguists through the screening process is simple.

CLICK HERE TO WATCH AN INTERVIEW WITH PAUL FUNK

"It's simply a matter of dollars," he said. "All the interpreters I have spoken to know … what's going on. It's money. It's money for meeting those requirements."

The result, he said, and American war veterans confirmed, is that many of the interpreters are simply unable to perform the delicate work of interpreting conversations between Americans and Afghans. The problem predates Mission Essential's arrival on the scene in Afghanistan.

Genevieve Chase served as a Pashto-language-trained US Army Sergeant in Afghanistan in 2006 in Bagram and Lashkargah, Helmand Province. She told ABC News it was not unusual to encounter interpreters who were unable to speak Pashto, or had limited English. At times, she said she believes the failure to communicate has put soldiers lives at risk.

"Somewhere along the line somebody is doing something they're not supposed to be doing," Chase said. "It is not difficult to pick out somebody who can't speak Pashto. In fact, for me it was rather simple to isolate those people."

Chase said Army units quickly identified interpreters who could not do their jobs. She recalled odd exchanges where Afghan elders would speak at great length and the interpreter would turn to the American soldiers and translate, "He said, 'Okay.'"

She said it was common for units to simply hand off bad translators to other units, rather than carry the risk of relying on one themselves.

John McHugh, a British journalist who was embedded with American troops, said he spoke enough Pashto to realize the interpreter with his unit was not giving correct translations. He was so alarmed by the disparities he began filming an exchange between an American soldier and an Afghan elder.

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"At one stage you can see in the film where the elder talks about the Taliban coming into the village and the fact that the villagers are helpless to do anything about it. And the translator essentially says, 'the Taliban are behind that hill, if you want to find them, they're over there.' Which wasn't at all what the elder had said," McHugh recounted in an interview.

CLICK HERE TO WATCH THE TRANSLATOR AT WORK

Mission Essential officials said the translator in the footage is not one of their employees.

After the incident McHugh returned to London and hired a translator to go over his tapes.

"We went through a huge amount of the footage and there were massive differences in what was translated and what was actually said," McHugh said. "And I'm not talking about slightly shortening sentences or phrasing in a succinct way. I'm talking about huge amounts of information simply being left out and at times, pure mistranslation."

McHugh said he believes unskilled translators take on the jobs, and the risks associated with them, because they are so lucrative. American citizens serving as translators can be paid annual salaries that top $200,000. Afghan nationals who are hired locally are paid less, but still in amounts that vastly exceed the typical pay for someone in that country.

"They are quite keen to make money," McHugh said. "One of them described himself to me as the rock star of his village, because the money he made was equivalent to a rock star's money."

Trouble with translators has also been observed by Afghanis.

Daod Sultanzoy, a member of the Afghan parliament, told ABC News that he has encountered U.S. Army translators who lack a command of Pashto. The interpreters, he said, "play a very important role that can be positive or negative. And in this case, I've heard and I've seen occasions, that have been reported to me, it has caused the failures of some missions and also the ill-will of the Afghan communities in certain parts."

The Army acknowledged in a statement to ABC News that the change in Afghanistan strategy and the troop buildup over the past year has significantly increased the need for linguists and translators, and that demand has become "enormously challenging, but we continue to try to meet the commander's needs on the ground through use of both military and civilian contracted linguists."

A U.S. Army spokesman said in an emailed statement that the wide variation in languages and dialects makes translating difficult for even the most skilled linguists. As for the assertion that Mission Essential has permitted unskilled translators to embed with Army troops, officials said they could not comment, other than to say that "there is a military investigation underway into alleged fraud."

American veterans like Chase, who founded the advocacy group American Women Veterans, remain deeply concerned about the risks associated with unskilled translators on the battlefield.

Asked what she would say to executives at Mission Essential Personnel, Chase was unequivocal. "I would just ask yourself, 'If that was your daughter, or your son, or you yourself, would you want to work with these people? Would you want to go outside of the wire in Marja, in Helmand province, with an interpreter that doesn't really speak Pashto?' And if you can sleep at night after you think about that," she said, "then keep doing what you're doing."

Funk, a Vietnam-era veteran who is now serving with another contractor in Iraq, told ABC News he could not stomach sending what he believed to be unqualified translators into battle with American soldiers. He said that is why he resigned, and why he initiated the suit against his former employer.

The stakes, he said, could not be higher.

"If you're trying to win the hearts and minds of the population, it's a matter of communication," he said. "If you cannot communicate, if you cannot read and write, if you cannot do these things, you cannot win the war."

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