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9/11 Millionaires and Mass Corruption: How American Money Helped Break Afghanistan

A person shows US dollars in front of an exchange office that has been closed since August 15 after it was taken over by the Taliban on Aug.

Bilal Guler | Anadolu Agency | Getty Images

WASHINGTON – $ 290 million daily for 7,300 days. This is how much money America has spent on 20 years of war and nation building in Afghanistan, according to Brown University's Costs of War project.

But it took only nine days for the Taliban to capture every provincial capital last month, disband the army and topple the US-backed government.

When Taliban fighters captured Kabul without firing a single shot, President Joe Biden blamed Afghans for failing to defend their country.

United States President Joe Biden responds during a minute's silence for the dead as he remarks on Afghanistan in the East Room of the White House in Washington on August 26, 2021.

Jonathan Ernst | Reuters

"Afghanistan's political leaders have given up and fled the country," he said on August 16. "The Afghan military gave up, sometimes without fighting."

Biden's rhetoric lacked any mention of American guilt for a war that began when US soldiers marched into Afghanistan to take revenge on al-Qaeda for the terrorist attacks that killed 2,977 people on September 11, 2001.

Today the US embassy in Kabul is closed and the American soldiers are gone.

But the hundreds of billions of dollars the United States spent on its war on Afghan soil, for better or for worse, can still be seen across Afghanistan.

Abandoned air bases, half-finished construction projects, and tens of thousands of undetectable guns litter the landscape, all bought with American money.

US dollars also created the "9/11 Millionaires," a tiny class of young, ultra-wealthy Afghans who made their fortunes as contractors for foreign armies.

Some of these millionaires became role models for a new generation of Afghan entrepreneurs and philanthropists.

But many others took advantage of their family ties to government officials or provincial warlords to secure lucrative contracts.

Over time, the US government treaties fueled a system of mass corruption that gripped the country and ultimately doomed its fragile democracy.

"The final point of failure in our efforts was not a riot," said Ryan Crocker, two-time US ambassador to Afghanistan in 2016. "It was the weight of endemic corruption."

Money changers are deeply negotiating the Sarai Shahzadah, Kabul's foreign exchange market, which will reopen on Saturday, September 4, 2021, in Kabul, Afghanistan, for the first time since the Taliban came to power.

Marcus Yam | Los Angeles Times | Getty Images

The United States is responsible for much of the corruption in Afghanistan, according to Crocker, because it inundated the country with billions of dollars that its economy could not sustain.

"You just can't put these sums of money into a very fragile state and a very fragile society and not fuel corruption," said Crocker. "You just can't."

Crocker was one of more than 500 officers the Special Inspector for Reconstruction of Afghanistan interviewed for an internal project called Lessons Learned.

Ryan Crocker, US Ambassador to Afghanistan, speaks to journalists during a press conference in Kabul on September 22, 2011.

Adek berry | AFP | Getty Images

SIGAR was never intended for the public to read the full, candid interviews. But in 2019 a judge ordered their release, and they were compiled and published by The Washington Post.

Read today, Crocker's insight into the dangers huge US government contracts posed to Afghanistan seems to foresee.

But it wasn't always the prevailing opinion.

The 9/11 millionaires

U.S. Army Soldiers from the 101st Airborne Division unload from a Chinook 47 helicopter during a combat mission March 5, 2002 in eastern Afghanistan.

US Army | Getty Images

In the early years of the war in Afghanistan, when American soldiers were still hunting al-Qaeda terrorists and fighting Taliban fighters, the idea of ​​using local Afghan contractors to supply US military bases seemed a good one.

In contrast, in Iraq, most of the supply and logistics work for US troops was carried out by non-Iraqis, typically through contracts with large multinationals.

But in Afghanistan, awarding government contracts to Afghan nationals was seen as an integral part of the overall US counterinsurgency strategy.

It was even codified into an official Pentagon procurement policy known as "Afghan First," which was approved by Congress in 2008.

A civilian contractor washes a mine-proof all-terrain vehicle May 9, 2013 at Bagram Air Force Base, Afghanistan.

Robert Nickelsberg | Getty Images

“Hiring locals brings money to the local economy, provides vocational training, builds support among locals, and can give the US a more nuanced understanding of the local landscape,” wrote the authors of a 2011 congressional report on military procurement.

Some of the Afghans who became millionaires and worked as U.S. contractors began as interpreters for American soldiers, accompanying soldiers on dangerous missions during some of the war's deadliest years.

The loyalty they earned as interpreters would later serve them well in the tough business of arms treaties.

One of them was Fahim Hashimy, who was working as an English teacher in Kabul on September 11, 2001. When American troops arrived in the country, Hashimy was hired as an interpreter. He later founded a small company that supplied military bases with goods and fuel.

Today that company, the Hashimy Group, is a large conglomerate with a television station, manufacturing facilities, real estate investments, trucking and a fledgling airline, all of which are based in Afghanistan.

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Hashimy is a multimillionaire and one of the few wealthy Afghans willing to speak publicly about the corruption in his country.

"The bottom line is corruption is the biggest problem we have," Hashimy told National Public Radio in 2013. "I think corruption not only has a negative impact on businesses, it is also directly related to insecurity," he said.

One of the reasons he likes to own a television station, says Hashimy, is because he has the freedom to call out corruption wherever he saw it.

But under the rule of the Taliban, networks like Hashimy's 1TV are facing an uncertain future. In July, Hashimy told the Wall Street Journal that he was looking for ways to broadcast from outside of Afghanistan.

The last broadcast posted on 1TV's YouTube channel was on August 14, the day before the Taliban captured the capital.

Hashimy's current whereabouts are unclear. CNBC reached out to their company for an interview, but no one replied.

Another 9/11 millionaire who got noticed outside of Afghanistan is Hikmatullah Shadman. Like Hashimy, Shadman was one of the first Afghan interpreters to be hired by American troops at the start of the war.

In 2007, after interpreting for soldiers in and around Kandahar for five years, Shadman rented a truck and began delivering fuel and supplies to the American base. He quickly built a network of truckers and subcontractors who were known for their reliability, according to a New Yorker profile from Shadman.

A boy crouches near a convoy of 30 trucks parked on the side of the road in Quetta on the dusk of November 3, 2001, just before they leave for Kandahar, Afghanistan.

Jimin Lai | AFP | Getty Images

As the troop strength increased, so did Shadman's income. In 2009, Shadman's company billed the Department of Defense $ 45 million. According to bank statements, Shadmans Spedition collected a total of 167 million US dollars from contracts with the US government between 2007 and 2012.

But Shadman's success was tainted. In 2012, the Justice Department charged Shadman with fraud.

The government claimed he paid bribes to U.S. soldiers and Afghan government officials in exchange for his contracts, grossly inflating his costs, and charging the Department of Defense for work that was never done.

There were also allegations that he had transferred funds to a well-known Taliban "money man".

Shadman denied all charges against him, and several of the U.S. soldiers who worked with Shadman in Kandahar appeared publicly in his defense.

A protracted litigation ensued, and when the case was finally settled in 2019, the United States recovered $ 25 million in assets.

Attempts to locate Shadman have been unsuccessful.

But it wasn't just Afghans who abused the American contracting juggernaut in Afghanistan.

One of the top suppliers of fresh food for the US armed forces in Afghanistan was the Netherlands-based Supreme Group BV, which was founded by the American Stephen Orenstein. According to Bloomberg, which included Orenstein in its Billionaire Index in 2013, the company's revenue grew 50-fold in a decade.

In 2009, the Supreme Group hired the outgoing director of the federal agency that was awarding its mandates, the Defense Logistics Agency, as the company's chief executive officer.

A year later, the Defense Logistics Agency gave the Supreme Group a multi-billion dollar contract extension without a bid.

In 2014, the Supreme Group pleaded guilty to allegations of fraud, including creating a fake subcontractor and billing the subcontractor's fees to the government. The company agreed to pay $ 389 million in fines and damages, one of the heaviest fines ever imposed on a defense company.

In the overall context of the US war in Afghanistan, however, the federal proceedings against Orenstein and Shadman were the exception, not the rule.

The vast majority of fraud and corruption cases committed in Afghanistan have gone unreported and with impunity.

The real cost of corruption

According to a Pentagon analysis, 40% of the $ 108 billion the Department of Defense paid to contractors in Afghanistan between 2010-12 ended up in the hands of the Taliban, the violent Islamist terrorist network Haqqani, organized crime, transnational drug traffickers or corrupt Afghan officials .

But veterans of the conflict say statistics like this can obscure what is actually a more complicated and ethically opaque situation.

In a country where streets are often controlled by tribal warlords, transportation of essential and life-saving supplies overland to American soldiers often requires safe passage fees to be paid to the group controlling the streets. In areas of the country controlled by the Taliban, this means paying the Taliban.

Afghan warlord Haji Tor Gani (R), hosts an iftar reception for U.S. military officials from the 2nd Gate Gani's highly secured compound in a village in Zahri district in southern Kandahar province, Afghanistan on Aug. 11, 2011.

Romeo Gacad | AFP | Getty Images

Refusing to pay the warlords who controlled the streets would almost certainly have done serious damage to soldiers and contractors.

"You could be tough about things and say," We're not going to pay anyone, "but I'm telling you you would get hit on the road," Rodney Castleman, an American employee for an Afghan trucking company, said The New Yorker.

Security trumped everything else, and the contractors who delivered the goods intact and on time could bill the government for whatever they wanted.

Some American officials found it more sensible to pay a local strongman to ensure safe passage than to pay an American defense company to bomb their way through the country.

Members of the 82nd Airborne Division carry thousands of dollars in Afghan money found hidden in an undisclosed location in southeastern Afghanistan in an early morning attack on October 1, 2002.

Chris Hondros | Getty Images

Richard Boucher, who served as Assistant Secretary of State for South and Central Asia during President George W. Bush's administration that started the war in October 2001, described two different levels of corruption.

"There is corruption that spreads wealth and takes care of everyone, right down to the widows and orphans," Boucher said in a 2015 interview with SIGAR. "And there is the corruption that is going to my house on the Riviera."

Afghanistan, he said, has a lot more of the former than the latter. The issuance of American money to Afghan contractors ensured that these dollars "disappeared into Afghanistan, not the Beltway".

"It will probably end up getting more money to a villager, maybe through five layers of corrupt officials, but still to a villager," Boucher told the SIGAR team.

But what Boucher failed to take into account was the long-term toll, decades of official corruption fueled by all the American money that ordinary Afghans would take on already uncertain trust in a democratic government.

In 2006, just five years after the US war, the elected government in Kabul had developed "self-organized into a kleptocracy," said retired Army Colonel Chris Kolenda in a 2016 SIGAR interview.

"The kleptocracy grew stronger over time, so the Afghan government's priority was not good governance, but maintaining that kleptocracy," said Kolenda.

Not only Americans saw that. So did senior Afghan government officials.

Kabul, AFGHANISTAN: Afghan President Hamid Karzai (R) receives a large key, representing the keys to military vehicles donated to the Afghan National Army, from the commander of Combined Security Transition Command in Afghanistan Maj. Gen. Robert E. Durbin (L) during a Gun handover ceremony in Kabul, February 01, 2007.

Shah Marai | AFP | Getty Images

In 2010, Dr. Rangin Spanta, the national security advisor to then President Hamid Karzai, US officials: “Corruption is not only a problem for the government system in Afghanistan. It is the system of government. "

Years later, the resurgent Taliban took advantage of this erosion of public trust by offering Afghans what many saw as a better alternative to kleptocracy.

Taliban spokesman Zabihullah Mujahid (C, with scarf) speaks to the media at Kabul airport on August 31, 2021.

Wakil Kohsar | AFP | Getty Images

For all the ways American money traveled through Afghanistan, there was one place it never got: the pockets of the country's poorest citizens.

After two decades of nation building and $ 2.1 trillion, the economic status of ordinary Afghans has changed little. According to the World Bank, Afghanistan was the sixth poorest country in the world in 2020 – a rank that has largely remained unchanged since 2002. The per capita income was only $ 500.

To Crocker, the ugly truth behind America's great reconstruction project in Afghanistan has long been evident.

"Our biggest single project, unfortunately and unintentionally of course, could have been the development of mass corruption," he told SIGAR in 2016.

Five years later, history proved him right.

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