Oversight of two failed government-funded projects in Afghanistan may have led investigators to uncovering large scale fraud.
A luxury hotel in Kabul near the US Embassy and an adjacent apartment complex—both half-finished; both now abandoned—appear to be at the center of the scheme, according to a report released on Thursday by the Special Inspector General of Afghanistan (SIGAR).
The projects were backed by the Overseas Private Investment Corporation (OPIC) to the tune of $85 million.
Both projects were spearheaded by Fathi Taher, a Jordanian businessman. The hotel—slated to be a five-star Marriott—was sponsored by General Systems International, a US consulting firm. OPIC approved $58 million for the 209-room hotel in 2007.
The $27 million apartment project, sponsored by a firm called “Apus Apartments LLC,” was endorsed by OPIC in 2010.
Construction on the two buildings ground to a halt in 2013.
“Both the hotel and the apartment building now appear to be abandoned empty shells, and both loans are in default, possibly as the result of fraud,” SIGAR John Sopko said in a letter this week to OPIC President Elizabeth Littlefield. OPIC is a federal agency that finances development projects abroad to further US interests.
The special watchdog said that an on-site inspection made by its team demonstrates “assurances made to obtain the final loan disbursement were false and misleading.” SIGAR noted that OPIC itself didn’t bother doing any on-site verification.
“OPIC had to rely almost exclusively on representations made by the loan recipients regarding the status of the projects how the disbursed loan proceeds were spent,” the inspector general said.
In the case of the apartment project, OPIC hired an independent oversight agency based in Bulgaria, Gardiner & Theobald, to oversee matters.
“Ironically, Gardiner & Theobald never visited the apartment project site,” SIGAR stated.
The watchdog recommended that OPIC “take immediate action to recoup the loan funds from the recipients.” SIGAR also stated it would collaborate on oversight issues raised in its investigation with its counterpart at the US Agency for International Development.
