captions copyright national cable satellite corp. 2008 we can get back to you on those numbers and we can check with some of the information that we can get from the state department and department of defense and get back to you on that. >> thank you. i'd like to see that. and then finally, we have worked with stuart bowen and others in developing legislation that would look at consolidating civilian stabilization management functions into a u.s. office for contingency

operations and not surprisingly, we've not had a lot of great feedback from the state department or defense department. but i'd like to see if you would comment on that concept of having joint contingency operations hike that or other recommended changes in how we can do this better and get beyond some of the traditional tension between dod and the state and usaid and be more effective in particular in terms of accountability measures. >> well, two parts to that. one is the whole contingency operation, that function itself we have seen some of the earlier draft proposed language. we did -- we have sort of raised some caution or concern about

ensuring that some of the functions that are going to be -- that are considered to be rolled in that there are broader contingency operations, for example, inl functions are broader than contingency operations they are doing counternarcotics work around the globe, some of that would have to be taken into consideration. that's one of the issues we may have provided feedback on. in addition when you talk about oversight and accountability, our position there is obviously the gao as part of your investigative arm, we stand ready to meet any of your needs in the contingency operations whether it's iraq, pakistan, afghanistan and we've been doing a significant amount of work in all those areas and stand ready to continue to do the work for the congress. >> thank you very much. i yield back, mr. chairman. >> we have a second round at this point and i'd like to ask a little bit details here about, for example, the bank scandal,

okay? here's a specific. we apparently this bank, the kabul bank went broke and bankrupt, and $825 million were lost in this bank. now, at the same time we have this in deloitte, the major accounting firm there was, american accounting firm, as involved in that operation to try to keep it -- to try to keep it so it wouldn't go broke. and i understand that also united states government used this bank to deposit many of its accounts and they used it as a vehicle for aid, et cetera.

how is it that when we have such a prestigious accounting firm on the premises and we have american government officials directly involved with running accounts through the bank that the bank can just go belly up like this. there's $825 million evaporated. >> mr. chairman, we have not looked at that, but i do know that usaid within the last year or so did some work looking at the contractors that were supporting, you know, technical advisers for that particular bank. >> we did have technical advisers, we must have had technical advisers. >> yes. >> and so how is it that that bank we have american technical

advisers on the scene, how can we just blink our eyes and all of a sudden there is $825 million evaporated? >> well, we have not looked at that specifically, but i could take that back to just the internal controls, again, sir, and having the institutions and the oversight framework for being able to ensure that, you know, procedures are followed, whether it be the banking sector or any other sector. >> and, mr. chairman, if i can sort of chime in on what john was just alluding to. part of the issue is the u.s. and the international community made a commitment to move more towards direct assistance to provide more money for budget and at the same time we were trying to build the afghan government's institutional capacity, financial institutions, interior ministerial defense, all of those things, these things were happening at the same time in an environment where we know that security is a challenge, corruption is a challenge in this country as we know and as well as more importantly the

lack of institutional capacity did not exist. so, the u.s. and the rest of the community has been trying to build that while we're also trying to, you know, pump billions of dollars into the government directly. >> has there been an investigation in to this bank so we know where that money went? there are reports, of course, that president karzai's brother who was heavily involved in this bank has been able to purchase property in dubai, for example. has anyone looked in to that charge? >> as john noted, we have not looked at the -- >> who would look in to it? if it was going to be looked in to, who would look in to it? >> sir, i think typically, like, for gao, we're doing any job and we see some things that look like it might be potentially fraud in particular, we would then turn that over to the ig that's responsible for that program to take the next look. because that is more their core specialty. >> has it been turned over to

them? >> sir, i could not tell you but i don't know whether any of the other witnesses from the executive branch might be able to give you some more insights on that, but i don't have any information on that, sir. >> do you have any information on that, whether or not so the ig is supposed to investigate? >> typically that's the process that we use. >> okay, typically. and in afghanistan that's what we're doing, if something comes up like this, we ask the ig to investigate, but we have $825 million loss which you're unaware whether or not there's been a request for an investigation? >> i would note this was an issue that came up probably a year and a half, two years ago, and there was a hearing before the appropriate committee and this was mentioned during the hearing with the igs present and my understanding there were some investigation that were going to be undertaken but not by the

gao. >> okay. >> the only other thing i'd add, sir, for, you know, investigations, it may not only involve that one particular inspector general that i mentioned. there may be other tools that the federal government investigated and other supports. but i don't know anything in terms of specific detail about the case you raise. >> let me ask you this. do you have a black list of afghan officials and presidential family members who you will not do business with because there's evidence that they have been involved with high-level corruption? >> no, sir. >> there's no blacklist? there's no list of people? >> no list that the gao has. >> hmm. and so for all we know, every -- a large number of people who you're dealing with are people who have engaged in blatant corruption?

>> well, one thing, sir, when you talk about lists, you know, we mentioned in our formal statement as well as in our past work, we identified that there are vetting processes that the dod and usaid in particular have used. to the extent to which they are vetting contractors or grantees before they make the award and they find that they have some issue regardless of what the issue is, that's information that they would have, you know, in their own organization and then the issue -- one of the issues we came up with in our report was making sure that the interagency shares information so that all that information be leveraged if that particular contractor or grantee wants to participate in another federal agency's programs. >> if i can add on here. >> yes, please. >> with respect, again, getting back to the direct assistance issue and the decisions made to move toward direct assistance by the international community and our own government to do more

there, there was a push and there has been a push to provide funding directly to the afghan or the pakistani governments and their firms and local firms for that matter, and as part of that as john noted in his statement, the key to that being successful is to make sure we do preaward risk assessments to determine the vulnerability. and there are situations -- >> that means you would have to have a list and you apparently don't have a list. >> even if they have a list and the list tells you that this organization and institution is corrupt and we have some situations where in pakistan the institution may have been corrupt, they would still decide to go to direct route but they would take mitigating things put in place such as embedding someone in there to make sure there's no mismanagement of funds or to require certain additional controls. those are things that can be done to help safeguard, prevent waste, fraud, and abuse of some of the u.s. funds. >> tell me, have you studied the reconstruction done in japan after world war ii?

you haven't? >> no, sir. >> what countries have you studied reconstruction programs on that were successful? >> that were successful? my professional work at gao i focused on iraq and afghanistan, that's my -- >> so, you've never focuseded on a successful program of restoration. i doubt whether the americans after world war ii permitted japanese companies who were involved in corruption to continue to get contracts with the economy building measures that we were taking then. i doubt that. i don't know for sure, but let me just say that i could understand why the american people will be horrified if they found out how loose we've been with their money. and the fact is, is that this corruption in afghanistan, if the united states isn't willing to take it so seriously that we

blacklist anybody who has been engaged in it, much less put them in jail, if we don't do that, no wonder they don't take it seriously because we're not taking it seriously then. and i think that after all of these years, it is disheartening to hear this late in the game how loose this whole situation is. i want to thank you, and i'm not blaming -- i'm not blaming you guys, but this whole thing. anyway, it looks -- after all of these years to hear this, i'm very disappointed. but thank you very much. and we'll have the next panel, please. >> thank you, mr. chairman. >> thank you, mr. chairman.

>> this is the second part of the house hearing on waste, fraud, and abuse in afghanistan. the u.s. spent $15.3 billion in afghanistan since the 9/11 terrorist attacks. this is about 45 minutes. >> all right. thank you very much. and we'll now proceed with our second panel which is composed of larry sampler jr. a senior deputy assistant to the administrator of office of afghanistan and pakistan affairs of the united states agency for international development. now, that was a mouthful.

he also served as deputy coordinator for reconstructionizationation with a joint at both the state department and u.s. aid. he was a research staff member for the institute of defense analysis with a focus on west bank and gaza, another garden spot. but you are involved in. during the 2002 and 2005 he served as chief of staff for the u.n. assistance missions in afghanistan. prior to that assignment he was a consultant to the afghan government in support of the afghan constitutional jurga after which he was awarded a constitutional medal by president karzai. mr. sampler did his undergraduate work in physics and electrical engineering at georgia tech, has a master's degree in diplomacy from nor

winorwick university and is an army veteran that served with the special forces. you're on the hot seat now. but we appreciate you being here. we appreciate a very serious and frank dialogue with you today, but you may proceed with your opening statement and we'll go from there. >> thank you, mr. chairman. i'll be brief and leave as much time as possible for questions. thank you for the opportunity to testify. i do represent the office of afghanistan and pakistan affairs at usaid, and i would like to begin the way i always do is by thanking the veterans, military, state department, usaid or contractors that served in the past decade in afghanistan. as you rightly noted since the time you were there and i've been there, there was a tremendous amount of sacrifice and i'd like to recognize that both on the part of the international community but also the afghans to the thousands of afghans now who put their lives at risk every day working to make it a better place. it's my responsibility and i take it quite seriously to

address as many of the concerns raised as possible. i also hope in my remarks i can give a few opportunities for people to take pride in what's been accomplished and have some sense of optimism about the way ahead and the things to come. i've worked in afghanistan since 2002. off and on much of that time physically in afghanistan and i know first hand a lot of the challengers that implementers face and i'm happy to share during the questions and answers as appropriate. before i talk directly and specifically about oversight, i'd like to address a few of the successes that the afghans have achieved with the support of the u.s. taxpayers and the agency and the international community. i have to note one of the best unintended consequences of my travel to the region is i get out of the constant news cycles of warrashington and i get to s first hand when things are working and when there are successes and how much progress there has been since 2002. for example, under the taliban there were less than 900,000 people in school.

very few of them if they were girls. currently more than 8 million children are enrolled in school, more than a third of those are girls. and now after a decade of improving schools and improving access to education, we're finding a generation of young men and women graduating from these schools who have much better critical thinking skills. this will make them better citizens and it will make them much more resilient in their opposition to thoughtless or malicious doctrines. in 2002, only 9% of afghans had access to basic health care. today that is over 60% of the population. and by basic health care we mean medical assistance within an hour's walk of where they are. life expectancy at birth now is 20 years higher than it was in 2002. and maternal and infant mortality rates have dropped significantly, drawing international attention to what the afghans have done right in that regard. our work in the energy sector has tripled the number of afghans with access to reliable

electricity, not just supporting but actually enabling economic growth in the country. with usaid's support afghanistan's national power company has increased their revenue collection by 50% every year since 2009. this has reduced the need for a subsidy for this state-owned enterprise from $170 million a year to around $30 million last year. and that's a segue. usaid is focusing efforts on the areas with greatest potential for increasing domestic revenue and sustainable growth and away from areas that require foreign assistance, such as agriculture, extractive industry, energy, trade, and generic capacity building for their government. we are, in fact, reducing new infrastructure projects to focus instead on building the afghan capacity to maintain the infrastructure that they have. we are cementing gains that we've made by women. gains made in the areas of health and education, and we're increasingly focusing on how to involve the private sector both

in afghanistan, among the afghan diaspora and the international business communities in our programs. we're focusing, in other words, on sustainable development. the successes that i talked about have been achieved by constantly improving how we do business in afghanistan, protecting taxpayer resources is a key concern of usaid. over the past two years we've taken several measures to better track our funding, to enhance accountability and to ensure our programs do have the desired i pact in the communities we seek to impact. we've developed an initiative that the gao college referred to. it is actually an extra layer of oversight recognizing that afghanistan is a high-risk environment in a war zone. it involves mechanisms that are more carefully crafted to keep our partners more carefully constraneco constra constrained. it involves stronger financial controls, how we actually parse out the resources and the money. and it involves a closer, more professional oversight of the

projects in the field. ultimately our goal is that afghanistan can monitor and manage programs themselves. so that end we're engaging in financial management training with our afghan partners at all levels both inside and outside of government. we're also supporting efforts to promote a professional afghan civil service and in the long term this will improve accountability and reduce the opportunities for corruption. as part of our goal of afghan management of their own development we're working to concentrate more assistance directly to the afghan government while at the same time tailoring oversight to make sure we have a high degree of accountability. we do not work with the government of afghanistan as a whole. instead we work with specific ministries and we only engage after careful assessments have determined that the ministry has the technical, financial, and administrative systems necessary to responsibly manage our resources. the primary method in these cases is a disbursement of funds on a reimbursable basis.

the ministry does the work. we validate the work has been done and then we provide the funds. finally, as you know, there are multiple independent oversight bodies that review our work including the gao but also sigar and the usaid inspector general. they've done 70 audits of our work since october of 2010 and some of the audits i would note were initiated at our request, usaid asked for them. in fact, the assured assistance for afghanistan project was specifically in response to an audit we requested. we welcome their oversight. we have a good working relationship with all the oversight bodies and we do welcome their insight. finally in conclusion we recognize the sacrifice in blood and treasure by the americans and the afghans alike. we think the challenges call for exercising more care and diligence in how we operate rather than walking away from the vital national security

interests this supports. our mission is still critical and usaid programs are an important contribution towards that goal because we're helping to build a stable, sustainable and secure afghanistan that will not require huge amounts of foreign assistance. mr. chairman, i'm happy to take your questions or to address some of the issues raised by gao at your convenience. >> thank you very much. and i won't say that that was a contradictory set of images being presented, but it was not necessarily totally consistent either between the first and the second panel. but not necessarily contradictory. let me just get into some details with you here. and i appreciate how difficult

your job is. and let me just note that. i'm very pleased that someone of your caliber has taken on such a heavy responsibility and such a difficult task. >> thank you, mr. chairman. >> and i understand that. so, could we take a look at, first of all, how much money -- let me ask you the question. 2002 to the present, ten years, how much money have we spent in american aid to afghanistan? not military aid. >> i have the advantage of having my staff look this up after you asked the gao. >> i was hoping you were going to do that. >> $15.7 billion is what usaid has obligated to our use in afghanistan since 2002. >> say it again now. >> $15.7 billion. >> $15.7 billion. >> and that does not represent all civilian assistance. i'm not cognizant on what usaid

had but it would not approach the amount that usaid has been given. >> when you have money that is coming in you're saying that you actually have tried to give this directly to people within the afghan government who you have determined have specific responsibilities for trying to achieve these specific goals. has the money been, are our tax dollars or the treasury money coming into this, would that have gone through the kabul bank? >> no, mr. chairman. with respect to the kabul bank concerns, no u.s. dollars were associated with kabul bank at all. we didn't even use the electricic transfer fund mechanism of that particular bank. it was not a policy decision per se, there are other banks.

we just had not been doing business with kabul bank. >> but we did have one of our great firms there to make sure that their books were supposedly being kept right. but they were being paid by whom? >> i believe you are referring to deloitte. >> yes. >> who bought without behring point. they had a contract. >> where did that contract come from? >> that was a usaid program. >> a u.s. what program? >> a usaid program. it was about a $95 million program over several years. this piece of it was about 8% of that. so, $7 million roughly that deloitte was using not at kabul bank but at the afghan central bank. the afghan central bank is the institution that is charged with preventing things from things like kabul bank from happening. one of the things in my opinion the institutions in afghanistan are not yet mature enough to

have prevented a quately the kinds of afghan on afghan crime that kabul bank represents. the program was supposed to help build the central bank's ability to supervisor subordinate banks or supervise outlying private banks. >> so, you didn't have anything directly involved with the kabul bank but you did provide a grant to deloitte to do its job which was partially to oversee banks in afghanistan and kabul bank which happened to be the biggest one. >> not precisely. i'm sorry, i don't mean to quibble. it's not a grant. it was a contract. and deloitte was not responsible for doing any oversight themselves. they were trainers. they would not have been able to do oversight because they wouldn't have the language skills, for example, to review dari and all those documents. their job was to serve as mentors to the central bank

examiners working with the government of afghanistan and the central bank examiners would have been the ones who would go out and do the bank investigations and the bank inquiries at the private banks. so, it was not deloitte's responsibility. and in fairness to our own inspector general, usaid asked for an investigation after the kabul bank fiasco. and our inspector general disagreed with us. we said deloitte's responsibilities would not have given them any particular insight into this afghan on afghan crime and our inspector general thought differently, and they said in their report if deloitte was doing what you were telling them to do they would have seen precursors or indications of fraud and they should have reported that to the u.s. government. we took that on board and we actually terminated that program because despite the fact that they weren't directly responsible for this the program lost tremendous credibility because of the press associated with it -- >> i would suggest it was more the $825 million that evaporated

rather than just the press from that. >> no, the bank fiasco, there's no question. deloitte was caught up in the press associated with it. >> was deloitte, then, serving as an ngo, is that what you would say, or just a contract? >> in this case they were a contractor. >> okay. >> to the best of my knowledge i don't think they worked as an ngo. >> so, it was a profit-making contract. >> they were in this one, yes. we've since then based on the ig report issued guidance to all of our contractors that if they detect any indication of fraud, waste or abuse they have a responsibility to report it. and that's across the board in our contracts now. >> in your testimony you're talking about with pride how you've tried to go directly through the afghan government when possible. to achieve the social goals and the development goals that you've set out for yourself.

now, in the afghan government, there are people who have committed crimes. they have been shown to have been involved with, you know, there's the fellas who we just let go all of these taliban prisoners, et cetera, et cetera. do you have a list, a blacklist, of people that you will not give our money to? >> we do, congressman. with respect to direct assistance, we don't give money to individuals. we work with ministries. and we don't even work with the ministries until we have positive -- we've done this initial assessment. if there are shortcomings, we provide technical assistance to compensate for the shortcomings. so there's no check written to the individual or the bank in afghanistan. >> of course. >> but we do have -- >> but the guy at the ministry who takes in the checks and writes the checks for the ministry happens to be the same wh