This just in:
KABUL, Afghanistan — Two contractor companies working for the U.S. military in Afghanistan have had their contracting privileges suspended over allegations they failed to pay their Afghan subcontractors, the U.S. Central Command said Wednesday.
Coalition forces said in a statement that several Afghan companies brought allegations of nonpayment against Bennett-Fouch Associates and K5 Global, both of which are owned by the same person, identified as an American woman named Sarah Lee.
“The failure of firms to pay their local national workforce or local national subcontractors adversely affects counterinsurgency strategy,” the coalition said in the statement.
The local companies that brought the allegations provided documents showing that Bennett-Fouch, which was involved in construction contracts at military bases in Afghanistan, had claimed it had not been paid by the U.S. government, the statement said. However, the coalition said that “in reality, the U.S. government had paid Bennett-Fouch for the work on the construction projects.”
The company had closed its local offices and bank accounts in Afghanistan, the coalition statement said.
“Bennett-Fouch’s subcontractors were Afghan companies who depended on the revenue to pay workers and complete projects. U.S. law does not allow the government to pay subcontractors directly,” the statement said, adding that the local companies had been “informed of their opportunity for recourse against the contractors through the U.S. court system.”
The suspension of could last 18 months while the case is being investigated, it said, and the companies could be barred from further contracts depending on the results of the investigation, meaning they would not be able to “conduct business with the U.S. for a period commensurate with the seriousness of the crimes or causes of the debarment, normally not to exceed five years.”
The victims of this rip-off – Afghans who thought they were working for the United States Government – “have been informed of their opportunity for recourse against the the contractors through the U.S. court system”? Whiskey. Tango. Foxtrot. Those opportunities don’t exist. Even assuming they can find and pay lawyers, how are they supposed to get their witnesses in front of a court, when airfare from Kabul probably exceeds the amount at stake for any one victim? And of course the defaulting firms will have been looted by their owner, leaving them judgment-proof.
In a sane world, the U.S. would either indict the owner for defrauding the government or ask Afghanistan to indict the owner for defrauding the subcontactors and extradite her to Afghanistan to stand trial. That would encourage other contractors not to war profiteer by fleecing the people we’re trying to get on our side.
More important, the U.S. would pay the just claims of the sub-contractors – not being excessively particular about documentation – and then sue the fraud operator to recover the money.
CharleyCarp says
"Everybody doesn't like something."
Seriously, making the taxpayer take on the risk of prime contractor default is a can of worms we probably don't want to open. But by all means, the particular agencies ought to be as helpful as they can in any civil actions brought by these subs. Or criminal actions brought by Afghan authorities.
eb says
You seem to be missing the whole point of maintaining a grossly over-sized military in general, and of waging seemingly pointless aggressive wars in particular. Dwight D. Eisenhower tried to warn us…
Dan says
Also what about contracting directly with Afghanis? Is it absolutely necessary that we make Americans rich while trying to win Afghani hearts and minds?
Josh G. says
CharleyCarp: We're talking about military actions, not judicial determinations. There is really no such thing as precedent on the battlefield.
Anderson says
The Afghans may find swifter recourse with the Taliban … assuming of course that the Taliban don't flay them alive for having contracted with the infidels in the first place.
I confess that I'm reading McCullough's soap-opera Rome series, and it doesn't seem like there's much improvement between late-Republican proconsular rule in the provinces then and Afghanistan now.
Bernard Yomtov says
This sounds a lot like a common construction rip-off where the general contractor doesn't pay the subs, and hilarity ensues. The scandal here is that the Central Command did not have ordinary financial controls in place to prevent this sort of thing. It's not that hard.
For that reason, while I take CharleyCarp's point, I disagree with it. The US bears some responsibility here for its apparent negligence.
CharleyCarp says
Josh, we're talking about contracts. Between private parties. Wrt to which there is a well-developed body of law.
I'd have no problem with requiring payment bonds for anyone using local subs in the war zone. The increase cost of prime contracts would probably be worth it.
I'm all sympathy to the notion that we ought to be enhancing legitimacy, not running from responsibility. Maybe independent review of the detentions in Bagram, a serious and substantial claims process for civilian injuries, immediate release of information regarding abuses of the prior administration, prosecution of those who committed and directed crimes, ought to be on the radar.
Bernard, it is exactly that. COs and COTARs have plenty to do to keep up with their current responsibilities. Adding an additional layer (other than something simple and objective, like a bond requirement) is going to strain an already taxed system.
Stuart Levine says
How do you get the witnesses in front of a US court? Take a video deposition, de bene esse. Then simply use the deposition testimony in lieu of the live witness. (BTW, this happens frequently in asbestos product liability cases to preserve the testimony of plaintiffs who will likely be dead before the trial date.)
Buck says
This is a pair of fly-by-nighters. The reports of this malfeasance surfaced six months ago, which explains why the suspension went into effect now–exactly 6 months following the allegations as likely required by procedural rules. But the B-F contractor did not even exist three years earlier, although reports last summer claimed the company was founded in 2002.
http://goo.gl/hrSz0
http://goo.gl/Ycrsb
Another government report claims B-F was supposed to have been responsible for "Renovations to the Tomb of the Unknown Soldier" in Baghdad, to the tune of $1,741K–that's right, 1.7 MILLION dollars. http://goo.gl/JBr91
The subcontractors in Afghanistan have not been paid for more than a year–since fall 2009. The July 2010 stories revealed that the misbehaving contractors have been at least in part responsible for the dwindling attitudes toward the US-led coalition forces.
Switching to K5 Global, it has a domain name behind it: K5global.net. Looking at registry info:
Domain Name………. k5global.net
Creation Date…….. 2008-09-05
Registration Date…. 2008-09-05
Expiry Date………. 2011-09-05
Organisation Name…. sarah lee
Admin Name……….. Admin PrivateRegContact
Admin Address…….. PO Box 61359
Admin Address…….. registered post accepted only
Admin Address…….. Sunnyvale
Admin Address…….. 94088
Admin Address…….. CA
Admin Address…….. US
Admin Email……….
Admin Phone………. +1.5105952002
The admin name listed is, in fact, Sarah Lee. The phone number, which I dialed, is an anonymous voice-mailbox with no indication of which service holds it and for whom. B-F also has a website, but it's "under construction"–which is never a good sign. Some irony from the K5 page: "K5 Global's aim is to become one of the U.S. Government's most trusted and reliable contractors. … The U.S. Army Corps of Engineers (USACE), U.S. Military Units and Agencies, and NATO forces has awarded K5 Global $40 Million in contracts. This continued commitment to customer satisfaction has largely contributed to the present success of the company and will continue in expanding its operations." Unlike the fly-by-nighter B-F, K5 claims a 20-year history. Despite that, all "past projects" listed on the respective page are minor contracts in Iraq–some police barracks and some fire stations, plus one power station and one water-treatment plant. While all B-F contacts are listed in Iraq, K5 contacts are only in Afghanistan:
Ameen Abdelnour
President
ameen@k5global.net
Tel: Afgh: 0093-777-172-271
:0093-788-172-271
Elton McCabe
Vice President
mccabe@k5global.net
Tel: Afgh: 0093 796 634401
I did find other contact info through random B2B pages:
K5 Global
329 Bob Moore Road
Anacoco, LA 71403-2524
Phone: (337) 286-5321
K5 Global, Inc
10271 Fm 139
Joaquin, TX 75954-5667
Phone: (936) 269-3866
It does not seem likely that K5 Global would be an accidental coinage, so these should all be related. The former is listed as "Heavy Construction" with President Charles Larry Lee, the latter is an "unspecified" business with owner Kenneth Kay.
There had been some divergent stories since last July. Among other things,
"Two foreigners working in southern Afghanistan who were familiar with Bennett-Fouch said its managers had left Afghanistan owing Afghan companies up to $5 million. One who spoke on the condition of anonymity said the company was using money owed to subcontractors to set up a sister company, K5 Global; the military official said Bennett-Fouch ran into trouble after a concrete and asphalt batching plant it bought in Afghanistan failed because of poor construction."
If I were trying to make money on the story, I would bet that neither Mr. nor Mrs. Lee nor Mr. Kay exists. The Sunnyvale address is just a cram domain registry and the same goes for the rest of the operation. Neither company has existed either since 2002 or since 1990–it's all fiction, a boiler-room operation. More than likely, the operation was set up between 2005-2006, collected small contracts–on which it might have performed–in 2006-8, then got a multi-million dollar bundle in 2009, hired Afghan subcontractors and disappeared.
Going after them in the US would produce no more results than it would to go after them in Afghanistan. The best recourse is to hire a private agency to track down the impostors, torture them, extract any money they still have, then slit their throats–just the way most business is conducted in Afghanistan.
koreyel says
Whiskey. Tango. Foxtrot?
How about: Privatization. Deregulation. Profiteering.
What's wrong with this story?
CharleyCarp says
One wouldn't be surprised to find an arbitration clause in the subcontracts: enforcement of judgments would be much easier, and the hearing might well be somewhere other than the US.
There'd be a role to play for Uncle even then: making sure that US border/immigration bureaucracy is not a barrier to depositions etc.
Robert Waldmann says
Everybody doesn't like something and someone doesn't like Sarah Lee.
We are sure that Ms Lee really exists and isn't a made up name hiding the identity of the real crook ?
Buck says
@Robert Waldmann–At least in the stories last July, and possibly the ones out more recently, the affected subcontractors claimed to have dealt with a woman who claimed to have been Sarah Lee. There is no guarantee, of course, that this was indeed the woman's name. Under the rules set up for US contracts in Iraq, greasing a few Republican congressional palms would have been sufficient to get a military contract for a corporation that existed on paper only–and not even that, as some contract were extended to non-incorporated entities. With the government money in hand, these contractors then would set out to buy supplies and labor that they had already sold to Uncle Same at an inflated price. Presumably, some of that money also paid for their incorporation. Once the contracts were given in Iraq, however, the contractors would have been entered in a database of military contractors and that would significantly simplify their access to contracts in other venues. So a fictitious corporation with a contract to perform a minor task in Iraq could easily have bid on much more substantial Afghanistan contracts. In a sense, it's a contractual Ponzi scheme. Any female grifter could have walked in into those subcontractor meetings and claimed to have been Sarah Lee. The only place where that identity would have been verified is at the customs station and at the US airport of departure. But neither one of those would have offered the relevant documentation to the subcontractors to confirm the identity–and I am sure they did not ask for the passports. I found LinkedIn page for a former contract writer for B-F, but if you look carefully, it is not clear if this is a real person. I know people who created fictitious "friend" profiles on LinkedIn with the sole person for getting a verbal recommendation from them, to make their own profiles look good. This may very well be one such profile.
Scamming the Pentagon on foreign services contract is easier than getting a job at McDonald's.
paul says
What? Afghanistan is just Iraq writ medium-sized, another opportunity for connected crooks to fleece taxpayers and indigenes alike? I'm shocked, shocked I tell you. So when we're willing to give out pallets of unmarked bills to win hearts and minds, can someone explain to me again the necessity of using a US intermediary for every item of work done at foreign bases?