Probes started into potential U.S. spending on 'ghost schools' in Afghanistan

Officials in Washington and Kabul are examining whether U.S. funds were spent for schooling in Afghanistan that never occurred

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This stock image of graduating students was posted on the Facebook account of the Afghanistan Technical Vocational Institute on December 14, 2012, with an announcement for graduates to pick up their diplomas.

Afghanistan Technical Vocational Institute/Facebook

Nils Kauffman, who served as an education officer for the U.S. Agency for International Development in Afghanistan, said he noticed irregularities at a vocational training institute the agency was funding during his visits to its campus in downtown Kabul in 2012 and 2013. He recalls being surprised not to see any students in the institute’s laboratories, where volt meters and scientific equipment remained in their original packaging.

Though Kauffman spied students elsewhere, he said he could never get a reliable account of how many were actually enrolled at the school. He also could not verify that the institute had addressed what a 2011 external audit called a host of “deviations” from sound practices, including a lack of accounting software, a cash-based payment system, and $118,000 in spending by the school over a five month period on weapons, international travel, and salary supplements.

Kauffman didn’t have the authority to demand a new, broader audit of the institute, but he reported his concerns to his superiors at USAID. They never acted, he said, and he recalls an official in the agency’s Office of Afghanistan-Pakistan Affairs expressing worry that canceling the institute’s funding would create what the official called “bad press.”

“Every time something came up, they jumped to keep this guy [the institute’s leader] happy, despite the problems, despite the lack of financial transparency,” said Kauffman, who is now a private development consultant based in the San Francisco Bay Area. In fact, USAID continued giving the institute funds, totaling at least $12.3 million through last Sunday, according to USAID spokesman Sam Ostrander.

Kauffman’s experience is only a small part of the controversy suddenly surrounding the long-running U.S. effort to promote the education and training of the largely illiterate population in Afghanistan. More than three-quarters of a billion dollars in U.S. funds have been used to finance the effort, and USAID has repeatedly depicted it as one of its signal accomplishments there.

Last month, Afghanistan’s newly-appointed education minister raised questions about the veracity of that claim when he told his country’s parliament that some aid funds had flowed to so-called “ghost schools, which are only on paper,” according to several Afghan media accounts of the May 27 session. The minister, Assadullah Hanif Balkhi, said that officials in the previous government — in power from 2004 to 2014 — lied about the number of schools to obtain more foreign funds.

“It is a fact that there are no schools in some parts of the country, but all the expenses — including teachers’ salaries — are being paid, and now we will bring reforms to this waste,” Balkhi told the parliament, according to Tolonews, a publisher and broadcaster based in Kabul.

Asked to provide more detail, a spokesman for the ministry, Kabir Haqmal, later told NBC News — the Center for Public Integrity's publication partner for this article — that the matter is still under investigation. In some cases, he said, schools may have been closed due to fighting while “permanent absentees” were kept on the books for years, following a requirement of Afghan law.

“There could be schools that do not exist, but we [are] assessing all our records and so far have not found any such instances,” Haqmal said. “That does not mean there are no ghost schools, but we just do not have that information yet. We are taking this very seriously and will share our finding with public very soon."

The new minister’s claims have provoked the top federal auditor for U.S. reconstruction efforts in Afghanistan, John F. Sopko, to express concern that “U.S. and other donors may have paid for schools that students do not attend and for the salaries of teachers who do not teach.”

In a June 11 letter to acting USAID administrator Alfonso E. Lenhardt, released by Sopko on June 18, Sopko said the allegations about “ghost schools, ghost students, and ghost teachers call for immediate attention,” and asked the agency to explain within two weeks what it is doing to investigate the reliability of its data and the potential misuse of its funds.

Accurate data, Sopko said, “is essential for gauging progress in USAID’s education programs and for making future funding decisions.”

USAID spokesman Ostrander, in an emailed response to questions, said the agency will provide a detailed reply to Sopko by the June 30 deadline. According to a written statement Ostrander provided to the Center for Public Integrity from Larry Sampler, assistant to the USAID administrator for Afghanistan and Pakistan, the agency has already asked the Afghan Education Ministry for more information. USAID currently has a full-time employee assigned to help the ministry improve the reliability of its data, according to Sampler’s statement.

Like all the agency’s projects in Afghanistan, “USAID-implemented education projects adhere to the Agency’s strict practices for monitoring their performance and success,” Sampler wrote.

USAID has repeatedly boasted about its role in raising enrollment rates in Afghanistan, citing Afghanistan Education Ministry data. More than eight million Afghan students were enrolled in 2013, compared to just 900,000 in 2002, according to data that Sopko cited in his most recent quarterly report. He said USAID had acknowledged these figures could not be independently verified, however.

At the Afghanistan Technical Vocational Institute, where Kauffman said he observed irregularities, 4,529 students have so far graduated “with the support of USAID and other sponsors,” Ostrander said. But the institute’s founder and director, Sardar Roshan, reached by cell phone in Kabul, told the Center for Public Integrity that the total number was “close to 7,000.” Ostrander told the Center for Public Integrity he could not explain the discrepancy.

Roshan's tight connections to Washington

Roshan served as Afghanistan’s ambassador to Pakistan from 1992 to 1994, as the country’s minister of education from 1990 to 1992, and as a “rebel commander” liaising between “anticommunist forces and the U.S. government” in the National Islamic Front of Afghanistan during the 1980’s, according to his Linkedin profile.

Roshan denies that the institute has ever misreported its student population, saying the “ghost schools” are in rural provinces, but that his institute in downtown Kabul “could not fake students even if we wanted to.” He says he is highly proud of the institute. “When I’m in the international airport, when I walk into a bank in Kabul, when I look at the provincial governments, I see my graduates in every corner,” he said.

Rajiv Shah, the administrator of USAID from 2010 until February, singled the vocational institute out for special praise in a July 2013 speech at the U.S. Institute of Peace in Washington. “Today, we have more than 8 million children in schools with over 30 percent of who are girls. These investments have resulted in over 30,000 young women finishing secondary school and more than 40,000 young women seeking to earn university degrees today,” Shah said. “I’ve had the chance to meet some of these young women on visits to places like the Afghan Vocational Training Institute, watching them come in from around the country to develop marketable skills so they can triple or quadruple their earning potential upon graduation.”

But Kauffman, the former USAID education officer, was not alone in in voicing concerns about the institute’s achievements. In early 2012 – more than a year before Shah’s speech — USAID’s inspector general had reported there was “little evidence” that the agency’s support of the school, known as the Afghanistan Technical Vocational Institute, had strengthened its “overall technical capacity” or empowered Afghan youth. It said the project that included the institute “lacked clearly defined goals, objectives, and priorities.”

The institute began receiving USAID funds in 2007, according to Roshan and Ostrander. The funds were initially for scholarships, and were paid under USAID’s Afghanistan capacity-building program, Roshan said. But the financing was switched to the agency’s education department in 2010, under a subcontract with Education Development Center, Inc., a Massachusetts-based non-profit organization. Students were supposed to be trained in business management, construction, horticulture, information and communication technology, and automotive repair, according to the USAID webpage about the institute.

After the 2011 audit by accounting firm Grant Thornton’s Afghanistan office, USAID staff twice came to inspect the institute. But Kauffman said the institute obstructed efforts by USAID teams to dig deeper into its records, a claim supported by a copy he provided of USAID’s internal report about its site visits in July and August 2011.

The report states that the inspectors were “unable to meet all technical staff, check the systems, or gather sample documentation,” partly because the staff “were instructed by their headquarters not to disclose any documents” to them. It complained that Roshan and his ex-finance officer only met with them for 50 minutes, and said that as a result they were unable to learn whether the Institute had addressed key concerns the audit raised, including many involving its handling and disbursement of donor funds.

One person was, inappropriately, still responsible for handling petty cash, writing checks, and entering financial data into the computer, the report said.  And the “most important gap” identified by the auditors — the fact that the institute paid its employees’ salaries in cash rather than traceable bank transfers — was still a problem, the inspectors wrote. Multiple reports by Sopko have described this as a frequent practice in Afghanistan.

Roshan denied making any attempt to obstruct the inspection. He told the Center for Public Integrity that many of these problems were resolved by the institute directly after the audit appeared, though he acknowledged that the institute had continued to use a cash-based payment system until 2013. Ostrander similarly said the institute had made progress since undergoing a separate assessment of its business model.

Roshan sent the Center for Public Integrity a lengthy rebuttal to the Grant Thornton audit, accompanied by documents including templates for payment vouchers, time sheets, a 19-page accounting manual, and its personnel policy. He defended the spending on weapons, saying the institute needed shotguns for the protection of its staff and students. The international travel was for his own visits to the U.S., he said. And the salary supplements were “necessary,” he said, to keep American teachers at the institute.

“I admit shortfalls in the finance/procurement systems,” Roshan told the Center for Public Integrity in an emailed statement, but some were “nothing but symptoms of failure of the counterpart/donor to deliver technical and financial assistance” in a timely and consistent manner.

Roshan said further that the issues raised in the audit stemmed from friction between Education Development Center, Inc. and USAID. Indeed, the agency’s 2012 inspector general report said the two entities had disagreed about “key elements of the design” of the larger educational project that Washington was financing, and said that this had hampered progress. “We were just caught in the tug of war,” Roshan said.

Alison Cohen, a spokeswoman for Education Development Center, Inc., said in an emailed statement that her firm “did as it was required,” and USAID found no mismanagement of its funds “on the part of EDC.” She said the firm is “fully committed to achieving the highest level of compliance” with its contracts, a quality recognized by “dozens of federal agencies, state and local governments, and private organizations” that have given it funds.

Finding various ways to keep the funds flowing

A few months after the USAID site visits, the agency stopped funding the institute through Education Development Center and found what Kauffman described as an alternative path: It modified one of its ongoing funding agreements with the United Nations Human Settlements Programme (UN Habitat) to add continuing technical and financial support for the institute.

But UN Habitat leaders raised their own concerns about the institute’s accounting and spending practices, informing USAID staff at an April 2012 meeting that Roshan’s salary and benefits package was $17,600 per month, according to a memo five months later from the director of USAID’s Office of Social Sector Development, Carol Horning, to the agency’s Afghanistan mission director. Annual per capita gross national income in Afghanistan was $1,940 that year, according to World Bank data.

Roshan denied he was paid $17,600 but declined to say what his salary was at the time. He said he had salaries that “were not on an Afghanistan scale” because he was an American citizen, and lived in Maryland for periods during the early 2010s. “I singlehandedly created the institute from scratch,” he said. “I was compensated less than half of what I should have received.” Roshan stepped down as the CEO this year, according to both Roshan and Ostrander, but Roshan said he remains the president until its board selects a new one.

The UN Habitat funding method worked for most of 2012, but on November 19, 2012, as it was drawing to a close, Roshan wrote directly to Shah, suggesting that “urgent funding be continued through an appropriate USAID mechanism for a period of time to avoid an abrupt closure” of the institute, according to an email that Roshan provided the Center for Public Integrity.

Shah responded less than four hours later, according to a second email that Roshan provided the Center for Public Integrity, thanking Roshan for his note and sending a copy to USAID’s assistant administrator for Afghanistan and Pakistan “so we could explore this issue and get back to you.” McKenzie Stough, a spokesperson at Georgetown University, where Shah is now a distinguished fellow at the School of Foreign Service, said that she had conveyed a request for comment to Shah’s personal assistant, but no response was forthcoming.

Eleven days after Roshan’s email exchange with Shah, Afghanistan’s then-education minister Farooq Wardak signed a letter to U.S. Ambassador James B. Cunningham — identical in wording to the email that Roshan had sent Shah.

USAID’s Afghanistan mission director at the time, Ken Yamashita, met with Roshan on December 10, 2012, and proposed that USAID continue supporting the institute but disburse the funds as a part of an overall USAID financial support to the Education Ministry, according to an email from USAID official Kerry Pelzman to several colleagues, which was obtained by the Center for Public Integrity. Yamashita, who is now a regional director at the Peace Corps, told the Center for Public Integrity by email that he did not dispute this account.

Twelve days later, Yamashita met with Wardak to seal the deal, according to a December 29, 2012, letter from him to Wardak. In it, Yamashita thanked him for his “receptivity to inclusion of support for ATVI as part of USAID’s on-budget support to the Ministry of Education,” and promised to let Cunningham know that Wardak’s November letter had “borne fruit.” Cunningham, who is now a senior fellow at the Atlantic Council, did not respond to phoned and emailed requests for comment.

Yamashita’s optimism was premature. Funding for the institute did not end up going through the Education Ministry, according to Kauffman, who said he heard the USAID finance department had objected to providing such general support. But in June 2013, USAID began providing another million dollars in direct funding for the institute, good for the next two years, according to the statement it posted on the Web. That funding expired on June 14, 2015.

Ostrander said the direct grant would not be renewed, but said USAID expects to start funding the institute again soon, this time through The Asia Foundation. The funding is meant to improve administrative functions and — subject to compliance with what Ostrander described as “certain requirements and standards” — cover its operating expenses. Ostrander said he could not immediately tell the Center for Public Integrity how much funding would be transmitted to the institute under the new agreement.

Roshan said however that he expects The Asia Foundation funding to net his institute $300,000 over the next six months. Two spokeswomen for The Asia Foundation did not reply to phoned and emailed requests for comment.

There’s “no way” the institute could continue to exist without international support, Kauffman said.

This story was co-published with NBC News

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