The chairman of a key House oversight panel is calling for an investigation into what he says looks like a $175 million “slush fund” set up by the U.S. Agency for International Development to entice Afghan government officials into embracing Western-style reforms.

USAID officials said they set up the U.S.-Afghan Incentive Fund without objection from lawmakers last year and that the fund has been used in coordination with the World Bank to “drive reforms” in the war-torn nation, whose government was plagued by widespread corruption and bribery long before the U.S.-led invasion began in late 2001.

But Rep. Jason Chaffetz, the Utah Republican who heads the House Oversight and Government Reform subcommittee overseeing the USAID spending in Afghanistan, told The Washington Times that he first learned of the fund during a heated exchange with the agency’s top official in the region last week and immediately thought, “Something here doesn’t smell right.”

The Utah Republican has now formally requested the Special Inspector General for Afghanistan Reconstruction to “investigate USAID ‘incentive funds’ of more than $75 million in 2012 and $100 million in 2014.”

“While USAID has already administered billions of dollars to the Afghan government during the reconstruction effort, I question whether the incentive funding is necessary and effective, or whether it is instead essentially a lobbying expenditure,” Mr. Chaffetz wrote in the letter to SIGAR on Friday, a copy of which was obtained by The Times.

In an interview, Mr. Chaffetz said comments by a top USAID official at an April 3 subcommittee hearing made the incentive fund “sound like a slush fund for manipulating how members of the Afghan parliament act.”

“What is that money, how has it been used, and who did we pay off with it?” the congressman said.

USAID officials suggest Mr. Chaffetz is overreacting. But the situation has struck a chord with Special Inspector General for Afghanistan Reconstruction John F. Sopko, who said over the weekend that he, too, was “concerned based on what I heard at the hearing.”

“I am directing my staff to look into it,” Mr. Sopko said. “We look forward to working closely with [Mr. Chaffetz] on this.”

Rep. John F. Tierney, Massachusetts Democrat and the ranking member of the subcommittee, did not respond to request for comment.

The Chaffetz investigation marks the latest in an escalating congressional scrutiny of USAID’s activities in Afghanistan as its role in the country is debated ahead of the U.S. military pullout later this year. At the center of such scrutiny is the extent to which some $20 billion channeled through USAID toward Afghan reconstruction efforts over the past 12 years has succeeded in propping up a government in Kabul that will be able to sustain itself once the Americans leave.

Many lawmakers appear to be increasingly vexed by the manner in which the agency has accounted for its programs. SIGAR auditors say USAID is involved in a calculated campaign to conceal from Congress and the American public the widespread fraud and corruption within Afghan government ministries that receive agency money.

At issue are dozens of “Afghan ministry capability assessments,” some of which were performed internally by USAID and others that the agency contracted out to the private accounting firms. While SIGAR used the documents as the basis for a scathing audit report in January that outlined the high risk of fraud and abuse across the Afghan ministries, critics say USAID is fighting behind the scenes to prevent the reports’ public release.

“At virtually every turn USAID has sought to withhold from the public information concerning the direct assistance programs discussed in SIGAR’s audit report,” SIGAR General Counsel John G. Arlington wrote in a March 26 letter to USAID’s legal branch.

“When SIGAR first requested copies of the ministry assessments at issue here, USAID stamped them ‘Sensitive But Unclassified’ (SBU), with a legend on the front covers stating that they should not be released ‘outside the Executive Branch,’ i.e., should not be released to Congress or the public,” Mr. Arlington wrote in the letter — the contents of which were first revealed by the Project on Government Oversight, an independent watchdog group in Washington.

Harsh reviews

The assessments are believed to be damning.

According to a redacted copy of one assessment obtained by POGO, the Afghan Ministry of Rural Rehabilitation and Development has never developed a mechanism “for screening of beneficiaries for their possible links with terrorist organizations before signing contracts or providing funds to the suppliers.”

“This is the concern,” Mr. Chaffetz told The Times on Friday. “There’s a lack of oversight.”

USAID officials said the incentive fund has revolved around five separate accounts worth roughly $15 million each, with $100 million more proposed for the coming year, but Mr. Chaffetz said it is not clear how the program fits within Washington’s wider policy prerogatives in Afghanistan.

During an April 3 oversight hearing, Assistant USAID Administrator for Afghanistan and Pakistan Affairs Donald Sampler told lawmakers that the agency began pulling money out of congressionally authorized reconstruction programs last year to create the incentive fund as a tool to “encourage the Afghans to make some politically difficult decisions.”

“In last year’s budget, we used $75 million and this year we incentivized $100 million,” said Mr. Sampler, who suggested that the fund has become a carrot used to lure Afghanistan’s parliament into reforming everything from the nation’s election law to regulations overseeing its mining and petroleum sectors.

Unlike much of the rest of USAID spending in Afghanistan, Mr. Sampler said, the money is “not project-tied,” which means American officials essentially can dangle it before Afghan political players as a quid pro quo for embracing certain reforms. If those players come through with certain U.S.-backed reforms, the money is released and can be used however they see fit.

“It’s a type of funding that the minister of finance is very attracted to,” said Mr. Sampler, who maintained that $15 million was recently released to the Afghans “for having succeeded in getting the election laws on the books in a timely manner and appoint[ing] the different chairmen and the different commissioners.”

“That money went to the minister of finance for a particular program that the minister of finance wanted to fund but that we had not funded heretofore,” Mr. Sampler testified. “So, in other words, he gets to choose programs that are of more interest to him.”

But the fund also has been used to push through human rights reforms. For instance, one measure to outlaw violence against women was “not politically palatable to the parliament in Afghanistan, but is absolutely essential to us that that be done,” Mr. Sampler said. “So we’ve incentivized the passage of that law and the implementation of quarterly reports about violence against women in the provinces.”

Tempering testimony

Asked about Mr. Sampler’s comments Friday, USAID officials appeared eager to tone down the language the official had used during his testimony.

“The funds earned by the Afghan Government for achieving the reform targets are placed into the World Bank’s Afghanistan Reconstruction Trust Fund, which is subject to strict oversight and safeguards,” said Kathleen Campbell, deputy assistant administrator in USAID’s Office of Afghanistan and Pakistan Affairs.

“The incentive funds for civilian aid projects are drawn from existing Afghan assistance programs and do not represent an increase in overall Afghanistan funding,” Mrs. Campbell said in a statement. “The United States committed to tie $175 million to incentive funding to drive reforms within the Afghan government. There has been some progress, but we have already withheld $30 million because the Afghan government has not achieved all of the targeted reforms.”

Mrs. Campbell also defended USAID’s overall efforts in Afghanistan, saying the agency’s work has cost American taxpayers “less than 3 percent” of the cost of the U.S. military effort in the nation, but has “helped the Afghans make dramatic development progress in the past decade, including a 20-year increase in life expectancy and getting 8 million Afghan boys and girls enrolled in school, up from 900,000 boys a decade ago.”

“The incentive funds for Afghanistan require the Afghan government to make reforms that will help sustain the development gains,” she added. “This will contribute to their long-term stability and U.S. national security.”

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