KABUL, Afghanistan — The United States government is widening its investigation into reports that U.S. aid and development funds in Afghanistan are being diverted to the Taliban, GlobalPost has learned.

A number of U.S. government agencies are investigating corruption related to military and development contracts, including: the Department of Defense Inspector General, the State Department Inspector General; the General Accounting Office and Special Inspector General for Afghan Reconstruction (SIGAR).

The Afghan Threat Finance Cell (ATFC), a grouping of different military and civilian agencies, is the latest group organized to investigate the overall funding to the Taliban and to combat the corruption that is keeping the insurgents’ coffers full.

As GlobalPost first reported in September, USAID’s Office of the Inspector General is probing allegations of a protection racket in which Afghan subcontractors are paying protection money to local Taliban leaders to prevent their projects and employees from being targeted. That investigation is underway, but USAID officials have declined to comment on specifics of the case.

The Afghan Threat Financing Cell began operations in mid-2009. The ATFC is a multi-agency organization currently comprising about 30 specialists on loan from the Department of Drug Enforcement, Department of the Treasury, Department of Justice, Department of Defense’s CENTCOM, the CIA and the FBI.

“Our job is to identify and disrupt sources of funding for the Taliban and other insurgent groups,” said an ATFC spokesman, sipping a tall coffee from the courtyard espresso stand in Kabul’s U.S. Embassy, hunkered behind high blast walls and massive security. He explained the insurgents fund their operations from a number of sources, including opium, Persian Gulf donations and crime. “We also focus on corruption, part of the thrust to protect the Afghans, both from the Taliban and their own government.”

The U.S. Treasury Department assistant secretary for terrorist financing, David Cohen, indicated the ATFC is using a “multi-pronged approach” to disrupt Taliban funding through investigations and capacity-building with Afghan authorities.

This strategy includes scrutinizing the hawala networks, the informal banking system of Afghanistan and much of the Islamic world. Though the vast majority of the banking done through the hawalas is legitimate and essential the economy, insurgents use the system to move massive amounts of cash around the world quickly and inexpensively.

“We’re looking hard at the hawalas,” the ATFC official said. The ATFC’s initial steps include trying to help institute uniform licensing and attempting to identify hawalas involved with insurgent activity. The previous day, the ATFC had helped Afghan authorities bust three hawalas connected to insurgents and drug networks.


With the support of Gen. David Petraeus, ATFC and other embassy attaches are focused on improving Afghanistan’s formal banking system, so development funds can be tracked so as to spot corruption and extortion. Facilitating electronic flow of development funds through the formal banking system also, in the military phrase, “gets cash off the battlefield,” where insurgents can easily tap into the torrent of currency.

Much of the ATFC’s work on corruption is done in conjunction with the government of Afghanistan’s trio of anti-corruption organizations: Afghanistan’s domestic intelligence agency, the Afghan National Directorate for Security, has set up the Major Crimes Task Force (which is being trained by the FBI and DEA) for investigations and arrests. Afghanistan’s Attorney General’s office created the Anti-Corruption Unit for prosecution, and the Anti-Corruption Tribunal, part of the country’s Supreme Court, will try the cases.

Another Afghan government anti-corruption agency, the High Office of Oversight (HOO), was the subject of a December 2009 SIGAR investigative report. HOO was established by President Hamid Karzai in July 2008 to oversee and coordinate governmental anti-corruption efforts. But SIGAR auditors found HOO to be disorganized, understaffed and too poorly equipped and trained to be an effective deterrent to corruption. Noting HOO’s close ties to the corruption-ridden Karzai administration, the report also found the organization “lacks the necessary organizational and budgetary independence to be an effective oversight institution.”

U.S. government officials estimate the insurgents’ annual budget to be in the hundreds of millions of dollars. A U.S. Embassy official asked, “Is it $1 billion? $500 million? The total amount is a tail people are going to chase until the end of time. We know they are raising substantial amounts of money; they can finance their operations. If you take away the Gulf money, they can make it up. If you take away the narco money, they can make it up. It’s like punching jello.”

ATFC, military and embassy officials confirmed the insurgents also use extortion of U.S. development money for their funding, citing supply convoy shakedowns, construction protection rackets, Taliban “taxes” on corrupt officials, pay-offs from NGOs and skims from poorly overseen government projects of the National Solidarity Program.

“The more money that comes in here, the more opportunities, and then there’s a lot more exploitation, more corruption,” the embassy official said. “And there’s a lot more money coming in here.”