U.N. Fund Scrutinized for Afghan Corruption 
By NATHAN HODGE 
May 10, 2012
WSJ
http://online.wsj.com/article/SB10001424052702304543904577396421507307902.html?mod=googlenews_wsj
KABUL—Allegations of corruption have long swirled around Afghan government and security institutions. Now, such allegations are set to fall on a United Nations body that channels billions of dollars into the country.
An international oversight committee decided Thursday that it would raise concerns about potential mismanagement of the U.N.-administered trust fund that bankrolls Afghanistan's fledgling police force, according to an international official.
The Monitoring and Evaluation Committee, an anticorruption group composed of high-level Afghan and international officials, flagged a pattern of bad behavior within the higher echelons of the program and recommended stricter oversight, the official familiar with the decision said. 
Among the suspicions are that the group overpaid suppliers for office gear, falsified receipts for goods and paid worker salaries for positions that went unfilled, according to documents reviewed by The Wall Street Journal.
The controversy focuses on the Law and Order Trust Fund for Afghanistan, or Lotfa, a fund administered by the U.N. Development Program that covers salaries, benefits and other operating costs for the Afghan National Police. 
Since 2002, the international community has contributed about $2.9 billion to Lotfa, with the U.S. traditionally its largest donor. The fund is expanding as Afghan forces take on increased responsibility for the country's security. The current phase of Lotfa—which runs between January 2011 and March 2013—is budgeted at $1.4 billion.
The Monitoring and Evaluation Committee plans to make public its concerns about the U.N. Development Program's management of the fund in coming days, and its vulnerability to potential waste, fraud and abuse, the international official said. 
UNDP and fund officials said the agency recently concluded a regular annual audit and found no irregularities. Sandeep Kumar, the fund's project manager, said he was unaware of mismanagement or fraud. He added that he encouraged anyone who had problems with Lotfa procurement to come forward. The climate here is an open one, he said.
Several of the reviewed documents suggest questions about spending had been raised inside the agency. 
The matter surrounding Lotfa—which was created in 2002, when the international community deemed Afghanistan as lacking in the administration capacity to oversee a large and complex fund—casts a rare spotlight on alleged corruption in Afghanistan that isn't rooted in local institutions. Any new investigation promises to heighten scrutiny on the international community's shortcomings in the decade-long conflict. 
The Monitoring and Evaluation Committee isn't an enforcement agency. Created last year by the Afghans and international donor community, it has three Afghan and three international members—currently, one each from Nigeria, Slovenia and Indonesia—and is funded by international donors, including the U.K. government. It is supposed to meet four times a year to identify problems and make recommendations to both the Afghan government and the international community on how to combat corruption in the country. It is now meeting in Kabul. 
Prior to the watchdog group's decision this week, individuals familiar with the money flows at Lotfa said they had flagged concerns of overpayments, lax management and no-show workers. 
Several of the reviewed documents suggest questions had been raised inside the agency.
In one internal email dated January 2012, the author alleged that the procedures for hiring contractors to fill positions in Afghanistan's ministry of interior were quite vague. 
The author, whose name was redacted in the reviewed version, identifies by name a Lotfa manager as saying that 40 contractors at the ministry were on the fund's budget at the time. This manager alleged that many of these people do not work and are simply being paid by Lotfa, the author writes. 
In a spreadsheet that summarizes seven fund procurement contracts from 2011, a reviewer flagged several transactions as suspicious. It isn't clear who placed these flags in the documents.
The flags highlight what the reviewer cautions may be inflated or falsified prices paid by the fund for equipment and office supplies. Accompanying an expense item for a set of luxury furniture costing the equivalent of $6,000, the reviewer notes that there is no evidence that the furniture had been purchased. Also flagged was the purchase of a paper shredder for around four times the price quoted by the vendor identified in the purchase order.
Lotfa's total procurement budget in 2011 amounted to $2.2 million.
Mr. Kumar, the project manager, said the fund had invited donors to sit on procurement committees to provide close oversight. Were Lotfa to find indication of wrongdoing, he added, I personally take complete responsibility and we will take action. 
Two U.S. oversight agencies have already raised some questions about the management of the fund. Last year, the Special Inspector General for Afghanistan Reconstruction, a watchdog agency created by the U.S. government to oversee contracting in Afghanistan, criticized how Lotfa tracked its reimbursements of payroll costs for the Afghan National Police, or ANP, recommending additional procedures to boost oversight.
There is limited assurance that only ANP personnel who worked received pay and that Lotfa funds were used to reimburse only eligible ANP costs, the report stated.
Separately, the U.S. Government Accountability Office last year cited weaknesses in the Afghan government's payroll system that might hinder efforts by the U.N. Development Program to ensure that the Afghan Ministry of Interior was using Lotfa funds as intended.