KANDAHAR, Afghanistan, June 22, 2010 -- The United States military is helping fund both sides of the war in Afghanistan, knowingly financing a mafia-like collection of warlords and some of the very insurgents American troops are battling, according to Afghan and American officials and a new Congressional study released today.

The military has turned to private trucking companies to transport the vast majority of materiel it needs to fight the war -- everything from bullets to Gatorade, gas to sandbags -- and in turn, the companies are using American money to pay, among others, the Taliban to try to guarantee the trucks' safe passage, the reports charge.

Trucking executives and investigators from the House Subcommittee on National Security say the United States military knew it was helping fund the people it was fighting but did nothing about it, choosing to satisfy short-term delivery requirements and ignore fears that payments to the enemy help perpetuate Afghanistan's long-term security problems.

The study's findings are reinforced by half a dozen interviews conducted in the last few months by ABC News with executives from trucking and security companies, both Afghan and American. Two American trucking executives, speaking on the condition of anonymity, say the payment structure goes beyond that depicted by the House report, detailing an intricate system whereby the American military is handing over billions of dollars to companies that bribe insurgents, warlords, road bandits and even corrupt Afghan police and soldiers to hold their fire as the trucks roll past dangerous stretches of highway.

In one case, a security company is paying a local commander who funnels American money directly to the Quetta Shura, the Taliban leadership council based in Pakistan, according to officials in Pakistan. The commander denied the allegation. On a recent day when the commander was told he had lost the security contract, a half dozen trucks were burned on the road between Kabul and Kandahar. The violence stopped a few days later when the contract was given back to him.

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"These guys have the power to turn on the violence and turn it off," said one of the American trucking executives. "Our firm knowingly pays thieves to ensure the safety of our cargo."

"Basically it's a protection extortion racket," Rep. John Tierney (D-MA), who chairs the House subcommittee, said in an interview with ABC News. "Tony Soprano would be proud of it."

The House's 85-page report, titled "Warlord, Inc." was released as doubts about the war crescendo in Washington. Today Gen. Stanley McChrystal, the head of all foreign troops in Afghanistan, was called to the White House over a Rolling Stone article in which his aides get drunk and make fun of a handful of top Obama administration officials, and where he is quoted personally criticizing his civilian bosses.

And this week, the House will debate a supplemental to fund the war for another year, a bill that has revealed deep fissures in the Democratic Party over support for the war.

The report, along with a recent increase in violence, are so serious, the U.S. will have to determine whether to reconsider "the overall strategic approach to our mission in Afghanistan," reads the report's introduction.

Key to Afghan Convoy Safe Passage Is the Paymaster

Every day, on average, more than 200 trucks leave Bagram Air Field, the largest U.S. base in Afghanistan, full of everything the United States needs to fight the war. Bagram is the logistics hub for the now $60 billion a year war, where some 70 percent of the supplies arrive from Pakistan on their way to more than 200 small bases across Afghanistan.

In this landlocked country, the United States has turned to eight private trucking companies to deliver the materiel and split a $2.16 billion Host Nation Trucking contract. To do that, the companies turn to the baddest, meanest, most heavily armed people on some of the most dangerous roads in the world: Highway 1 between Kabul, Kandahar, and Helmand.

One American trucking executive details how the payments work: Each district or province that straddles Highway 1 has a "paymaster," an intermediary between the private security company and those who attack the trucks. The paymaster will collect money from the security company -- "an increasingly large amount," the executive quips -- and distribute it to whoever he needs to, including the Taliban, thieves, corrupt local officials, road bandits. "The lines between those groups are often blurry," the executive says.

Once that happens, the company's trucks are each marked physically with a distinguishing characteristic, and without exception, the trucking company executive says they travel through some of the country's most dangerous roads without incident, often passing through checkpoints run by police who are also getting a cut.

The cost is $1,500 per truck from Bagram to Kandahar, with $1,500 needed for each truck that continues on to Helmand. Given that convoys are often as large as 300 trucks, a single trip might make a security company more than half a million dollars.

"What we usually do is provide funds to a tribal elder, who will then say, this convoy is XYZ, leave it alone. They've paid," the executive says. "No matter how bad things get out there, the trucks always get through… We don't need any security if the payments are made. Nobody f---s with us."

Another American trucking executive describes a slightly different scenario. His company pays one of the largest security companies in the country -- not identified because it could reveal which company the executive works for -- to guarantee safe passage. The payments are roughly the same price, but the security company says it uses them to purchase millions of dollars of guns, ammunition and hundreds of fighters to defend every single convoy.

But fears that the security company was using the money to pay insurgents were reinforced on May 14. After a handful of particularly bad incidents, the security company – along with one other – was prohibited from accompanying any trucks. That same day, according to the second American trucking executive, his company lost 6 trucks. Within a few weeks, the government allowed the companies to resume convoy duties.

The American executive said he was convinced that all along, the security company had been staging attacks against the convoys it was defending in order to convince the trucking company of the need to pay for protection.

Afghan Report Says Lieutenant Colonels Were Aware of Convoy Bribes

The trucking companies are told to deliver the goods, no matter what, according to the Tierney subcommittee and the American trucking executives.

"I have had conversations with contracting officers and have relayed to them that we're having to pay" to guarantee security, the first American trucking company executive said. Their response: "There's nothing we can do."

The House subcommittee uncovered written evidence that military officers ranked as high as lieutenant colonel knew about the likely payments to insurgents, but did nothing.

The report details multiple meetings in which trucking executives described their concerns to military contracting officers about bribes. In interviews with the subcommittee, some of those officers seem to admit that, but describe that the focus was so focused on delivering the supplies, other concerns fell by the wayside.

"One senior Department of Defense official in Afghanistan stated that there have been significant discussions within the Department [of Defense] of the problem of protection payments to local warlords and the Taliban, but no action has been taken" today's report says. "In [the senior official's] view, the contracting officers with responsibility for the contract 'intentionally turn a blind eye to the problem and refuse to look past the prime [contractor] to see how the security subcontractors operate -- hear no evil, see no evil, speak no evil.'"

Part of the reason for that, U.S. officials acknowledge, is the lack of capacity to examine what subcontractors (in this case, the security companies hired by the trucking companies) are doing. The United States military is only now confronting that limitation with a new Task Force 2010, designed to audit large American contracts.

"The numbers are so large now, the problem has become that much more serious, magnifying something that's been there all along," says a U.S. military official. "We have to get into these subcontracting networks and really see who we're empowering and who we're enriching."

The task force will begin to recommend changes to contracts in southern Afghanistan in the next few months, with an eye to possibly changing nation-wide contracts shortly thereafter. U.S. officials admit that they simply haven't been focused on contracting despite the billions of dollars of taxpayer money dedicated to it.

"We don't know the scope of the problem because we don't have the visibility that we need," the official says.

"The Butcher"

The most powerful security commander in Afghanistan is a man named Ruhullah. He agreed to a rare meeting with a reporter, walking in with a gold rolex watch and a slightly squeaky voice. His nickname is The Butcher. On this day, he doesn't act or sound like one.

He arrives in a Land Cruiser trailed by a pickup truck with three gunmen. Their only uniforms are the weapons they carry in their hands: AK-47s. They are barely noticed on the streets of Kabul.

Ruhullah is employed by Watan Risk Management, owned by a cousin and close confidant of President Hamid Karzai. He in turn employs hundreds of guards to defend 3,500 trucks every month – by far the largest share of the security companies working with the Host Nation Trucking contract. He told the subcommittee he spends $1.5 million worth of ammunition -- every month.

Losing the Counterinsurgency Battle

Officials in Pakistan believe that Ruhullah not only funds the local warlords and thieves and road bandits in Afghanistan, but sends a portion of his money to the Quetta Shura – the Taliban leadership council, based in southwest Pakistan.

In an interview, Ruhullah denied any wrongdoing and any payments to anyone. He says simply he is good at his job – fighting force with force.

"I have been in this business for the past 5-6 years and have made a lot of sacrifices. Even to the extent that we had 35 people martyred in a day," at the hand of the Taliban, he says. Even if he wanted to bribe local insurgent groups, he says it would be impossible. "How many groups can we pay money to? If we pay one, then the other won't leave us alone, and so on. We have had no money dealings with them so far and we won't do it in the future. What we would spend on them, we will spend on a fight."

In the end, the subcommittee and the American trucking executives don't only worry that American money is going to fund the Taliban. They are also worried that the contracting system is perpetuating Afghanistan's security problem; the payments to local contractors, they say, encourages instability along the roads and props up the kinds of warlords and local thugs who Afghans came to hate during the civil war of the early 1990s. And they say if Americans are seen to be supporting those people, then the Afghan public will refuse to support the Americans or the government -- whose police and army have been bypassed by the U.S. contracting system.

"If one of the foundational aspects of counter-insurgency is to have a government in Afghanistan that people from that country can trust and put their faith in and believe that it's not corrupt, it doesn't seem to make much sense to me to put that kind of money at risk of feeding corruption and building up powers that are not the government," Tierney says. "When people see police and army people getting paid off and gangsters running around making huge amounts of money while a truck driver might make $200 a month -- but the guy that's armed might make $20 million in a year -- that does not lend itself to people having a great deal of confidence that the system is going to work for them."