US GAO Criticizes CSF Aid to Pakistan

The USA’s GAO is now the “Government Accountability Office” instead of the “Government Accounting Office,” but audits are still its focus and core competence. Since 2001, Pakistan has received about $5.56 billion in Coalition Support Funds (CSF) for its efforts to combat terrorism along its border with Afghanistan, or 81% of all global CSF reimbursements. In geo-strategic terms, keeping Pakistan’s military happy must be the priority, conditional on having reason to believe they have the desire and ability to be effective at carrying the fight to al-Qaeda and Taliban strongholds in Pakistan. On the other hand, the GAO’s 2008 report and testimony includes items like:

• More than $200 million for air defense radars submitted and reimbursed under CSF;
  
• Defense reimbursed Pakistan approximately $55 million for maintenance of the Pakistani army’s MI-17 utility and AH-1 Cobra attack helicopter wings in the border area from July 2006 – Feb 2007, while the Pakistani army was not maintaining them, causing poor readiness rates for these critical assets;
  
• An average of more than $19,000 per vehicle per month for Pakistani navy reimbursement claims that appeared to contain duplicative charges for a fleet of fewer than 20 passenger vehicles;
  
• Paying Pakistani navy claimed for boats about half of the time and disallowing others, despite no discernible differences in the level of documentation provided;

Hence the GAO’s June 2008 reports and testimony, which look at the issues in the context of the CSF framework, and expected future requests from Pakistan…

As an auditing organization, GAO’s focus was to check the official process vs. actual activities. In 2003, the Department of Defense Comptroller issued new guidance regarding the Coalition Support Funds program. claims under the program would have to establish:

• The incremental nature of support above and beyond normal operations
  
• Validation that the activities being claimed were valid and actually took place
  
• Copies of invoices or documentation supporting how the costs were calculated.

GAO found that Defense did not consistently apply its existing CSF oversight guidance, and may have reimbursed costs that were not incremental, were not based on actual activity, or were potentially duplicative.

Overall, the CSF program paid over $2 billion in Pakistani reimbursement claims for January 2004 – June 2007 without obtaining sufficient information that would let a 3rd party recalculate these costs. Issues included verification of actual expenditures, fluctuating costs over time for basic items that should have been much more consistent, attention to currency conversion, and the need to formalize the growing role of the Office of the Defense Representative to Pakistan (ODRP) in preparing and evaluating reimbursement claims. Above all, the GAO criticized the fact that Defense often did not adequately document the basis for their decisions to allow or disallow claims.

That ODRP role to validate Pakistani military support and expenses began in September 2006, without any formal guidance or directive from CENTCOM or the Defense Comptroller. As a result of their efforts, however, the number of disallowed CSF expenses submitted by the Pakistani military rose significantly, from 2%+ from Jan 04 – Aug 06, to about 6% from Sept 06 – Feb 07, to 22% for March – June 2007. Their role still hasn’t been formalized, however, even though all parties acknowledge that they are often in the best position to help with verification.

Overall, GAO’s 5 key recommend included:

1. Consistently implement existing criteria to disallow or defer Pakistani claims that do not supply the documentation needed to verify their claims.

2. Define and formalize the roles and responsibilities of the Office of the Defense Representative to Pakistan, to keep them involved going forward and sets out the terms.

3. Work with the government of Pakistan to develop procedures to allow ODRP or other U.S. Representatives to conduct greater oversight of CSF use in Pakistan, including the potential use of on-site inspections.

4. Clarify guidance for Comptroller analysis of cost fluctuations.

5. Develop and apply criteria to evaluate currency exchange rates to ensure that the U.S. Government is not overpaying .

The DoD’s response? From the GAO report:

“Defense generally concurred with our recommendations, and indicated they had updated their CSF guidance to incorporate our recommendations. We plan to review this guidance when it is made available to us. In addition, Defense’s comments noted that our report did not give sufficient weight to (1) Pakistan’s military contributions enabled by CSF; (2) the Department’s adherence to the law; and (3) Pakistan’s accounting standards.”

GAO itself acknowledged that:

“Coalition Support Funds are a critical component of America’s global war on terror, as well as the primary support for Pakistani operations to destroy the terrorist threat and close the terrorist safe haven in Pakistan’s FATA. Following the attacks of September 11, 2001, Congress quickly authorized emergency funding to prevent another attack, and because of the grave and immediate threat at the time, Congress recognized that ensuring accountability for these funds was secondary to protecting the nation from another attack. However, given the large amounts of funding provided to Pakistan since October 2001, and the indications that Pakistan will continue to receive such payments in the future, we believe that Defense should ensure it follows its own guidance and considers what other guidance is needed…”

While that is certainly true, the key barometer is still the relationship with Pakistan’s military and its government, which was widely recognized as extremely corrupt during its last term in office before Gen. Musharraf’s takeover. That relationship’s overall value, in turn, depends on its effectiveness and prospects against al-Qaeda’s strongholds, as well as the country’s overall stability and the security if its nuclear weapons.

No amount of bureaucratic processes and procedures decided ahead of time will be certain to ensure these things, which is why an auditor’s mentality is suited to evaluating some aspects of the relationship’s financial elements, but not the entire picture. The Department of Defense response as filtered through the GAO makes this point very diplomatically, but it needs to be kept in mind as one evaluates the report and its recommendations.

Meanwhile, the ODRP had feedback of its own that GAO passed on:

“ODRP officials said they doubted that ODRP would ever be able to fully verify actual costs in Pakistan. First, the Pakistani military reports costs to ODRP that are already aggregates of many smaller costs that ODRP cannot directly monitor. Furthermore, according to ODRP, electronic record keeping is rare in the Pakistani government, and collation may entail a certain amount of approximation and averaging.”

The GAO’s response? That these things may be true, but a better approach from the USA could still improve overall performance:

“Regarding Pakistan’s accounting for CSF, we acknowledge that there are limitations in any arrangement with another sovereign nation, but we noted that Pakistan provided more detailed documentation to support their claims after a request from the Comptroller in 2006.”

Additional Readings

• GAO (July 19/11, #GAO-11-786R) – Pakistan Assistance: Relatively Little of the $3 Billion in Requested Assistance is Subject to State’s Certification of Pakistan’s Progress on Nonproliferation and Counterterrorism Issues

• GAO (Feb 15/11, #GAO-11-156R) – Accountability for U.S. Equipment Provided to Pakistani Security Forces in the Western Frontier Needs to Be Improved

• Strategy Page (Feb 2/11) – Thieves Who Saved The Taliban. Alleges that helicopter maintenance monies have been stolen, grounding many helicopters and allowing the Taliban to maintain their sanctuary in North Waziristan.

• DAWN (Oct 29/09) – US quietly expedites aid for Pak military operations: NYTimes

• NY Times (Oct 28/09) – U.S. Speeds Aid to Pakistan to Fight Taliban

• Associated Press (Oct 4/09) – Billions in US aid never reached Pakistan army. “Between 2002 and 2008, while al-Qaida regrouped, only $500 million of the $6.6 billion in American aid actually made it to the Pakistani military, two army generals tell The Associated Press.”

• GAO Testimony before Congress’ Committee on Oversight and Government Reform, Subcommittee on National Security and Foreign Affairs (June 24/08, #GAO-08-932T) – “Combating Terrorism: U.S. Oversight of Pakistan Reimbursement”

• GAO Full Report (June 24/08, #GAO-08-806) – “Combating Terrorism: Increased Oversight and Accountability Needed over Pakistan Reimbursement Claims for Coalition Support Funds”

• DID (Feb 12/07) – US Transfers 8 More Attack Helicopters to Pakistan