Afghan power plant hit by new allegations of impropriety

McClatchy NewspapersFebruary 11, 2010 

WASHINGTON — A $300 million power plant project in Afghanistan that's paid for by American taxpayers and plagued by delays and cost overruns is now under scrutiny because of allegations that a security contract was awarded improperly.

U.S. officials are looking into whether the power plant's security manager, who had a role in awarding the subcontract, had a conflict of interest because he once worked for the winning bidder, London-based Blue Hackle.

Two earlier U.S. government inquiries concluded that that unnecessary construction delays led to $40 million in cost overruns by the plant's two contractors, U.S.-based Black & Veatch and Louis Berger.

A separate government audit recently found that the U.S. has spent more than $732 million to improve Afghanistan's electrical grid since 2002, but delays and rising costs have plagued many of the projects, including the plant, in part because of poor oversight by Washington.

The conflict of interest allegations against the security official are outlined in a complaint filed with Black & Veatch by Hart, a Cyprus company that previously had provided security for the construction site.

It's unclear whether federal investigators have decided to launch a full-blown investigation. The inspector general's office the U.S. Agency for International Development, which can launch either an audit or a criminal inquiry, declined to comment.

In the complaint obtained by McClatchy, Hart contends that Ian Cameron, corporate security manager for Black & Veatch, was involved in selecting his former employer, Blue Hackle, in violation of bidding regulations.

Hart had provided security for the site until December after winning a $5.7 million contract in 2008. When the contract was re-bid in July, Hart competed against Blue Hackle and 10 other companies.

Cameron denied that he took part in the decision to select Blue Hackle, telling McClatchy, "I don't award contracts." He declined to elaborate and directed questions to Black & Veatch corporate headquarters in Overland Park, Kan.

Documents show that Cameron was a member of the committee that reviewed the new bids. He also played an active role in the pre-bid meeting, where companies hear about a contract's requirements before bidding. He presented information about the bid and gave competing companies a guided tour of the site. The documents, however, don't reveal whether Cameron had any say in the final decision.

Hart had a substantial financial edge over its competitors because the company had trained and equipped the existing security guards.

Hart officials accuse Cameron of giving their confidential pricing information to Blue Hackle, an allegation that Cameron wouldn't comment on. Hart didn't have direct proof of its allegations, but claimed to have circumstantial evidence.

In an e-mail obtained by McClatchy, Cameron is shown to have received the pricing information from Hart. Hart said that Cameron asked for it, which the company contends is suspicious and demonstrates that Cameron was in a position to pass the information to his former employer.

Black & Veatch officials told the companies that if they didn't have a representative present at the pre-bid meeting, they might not be allowed to compete, but Blue Hackle didn't attend.

Its absence from the meeting "raises an important question: How did Blue Hackle obtain the information necessary to present a winning bid, and did it do so through secret and unlawful communications with a LBG/B&V employee?" Hart said in its complaint.

Documents show that Cameron maintained contact with his former employers.

In a March 2009 letter, he lobbied the Afghan government on Blue Hackle's behalf, asking the Defense Ministry to allow Blue Hackle employees to use a government firing range to train its employees. In the letter, Cameron described Blue Hackle as a Black & Veatch subcontractor, although the company wasn't hired to provide security for the plant until 10 months later.

A Black & Veatch spokesman said USAID is still investigating the allegations.

"We informed USAID as soon as we were made aware of the issue and have cooperated with USAID's inquiry," said George Minter, a spokesman for Black & Veatch.

Minter said that USAID directed his company to hire Blue Hackle and not to launch an investigation. The directive could signal that the investigation has stalled.

Investigators first interviewed witnesses at least five months ago. The award of the almost $4 million bid initially was put on hold, but Blue Hackle then took over in January. The company will be paid $2.4 million for five months.

In response to questions, USAID officials said in a statement that they take allegations seriously but "decided that there was no basis to continue to withhold consent to subcontract with Blue Hackle resulting in a substantial savings."

"USAID relies upon the prime contractor to ensure that the (subcontractor) supports the goals of the program."

Robert Peasgood, a Blue Hackle director in London who handles media inquiries, didn't respond to repeated requests for comment. Officials with Hart also declined to comment.

No matter what the outcome, the controversy is likely to fuel concerns that USAID isn't keeping close enough tabs on projects in Afghanistan. The plant is part of a $1.4 billion contract awarded by USAID to Black & Veatch and Louis Berger to build many of the energy projects that now are under way in Afghanistan.

Rajiv Shah, the administrator of USAID, who took the helm on Dec. 31, vowed during his confirmation hearing to review the way USAID handles contracting because of the criticism.

USAID officials also said they've made improvements in their oversight of the plant since hearing the criticism.

In the past year, several other security officials have come under scrutiny in Afghanistan.

Scott "Max" Anthony Walker, who worked for Louis Berger and Black and Veatch as a security coordinator until he was fired in June, recently pleaded guilty in connection with charges that he solicited at least $250,000 in kickbacks in exchange for steering a contract.

In a separate case, former Louis Berger security subcontractor Delmar Dwayne Spier and his wife, Barbara, pleaded guilty in September to federal conspiracy and fraud charges related to their scheme to inflate expenses claimed by his company, United States Protection and Investigations. Prosecutors estimate the couple brought in at least $3 million from the scheme.

In yet another incident, guards from ArmorGroup North America, a private security company that had a $189 million contract to protect the U.S. Embassy in Afghanistan, were shown in photos partying drunk and nude.

The Project on Government Oversight, a U.S. government watchdog group, accused supervisors of bringing prostitutes to the guards' quarters and hazing employees by threatening them and urinating on them. Despite the problems, the State Department extended the company's contract for another year through most of 2010.

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