Military bans 2 U.S. firms from Afghan contracting

McClatchy NewspapersJanuary 5, 2011 

KABUL, Afghanistan — Nearly a year after two American construction companies abruptly shuttered their operations in Afghanistan and left the country allegedly owing their Afghan partners more than $2 million, the U.S. military announced Wednesday that it's temporarily blacklisting the firms.

Wednesday's action marked the first time that the U.S. military has suspended an American prime contractor in Afghanistan since Army Gen. David Petraeus assumed command of coalition forces in July, according to a U.S. government database that tracks such actions.

The multibillion-dollar international contracting business in Afghanistan is riddled with so much corruption that Petraeus issued special guidelines last fall that call on the U.S. military to better scrutinize where the money is going.

"With insufficient oversight, it is likely that some of those funds will unintentionally fuel corruption, finance insurgent organizations, strengthen criminal patronage networks, and undermine our efforts in Afghanistan," Petraeus wrote at the time.

As part of that effort, the U.S. Central Command announced Wednesday that it's temporarily barring Bennett-Fouch Associates and K5 Global from being considered for U.S. contracts.

The military alleges that Bennett-Fouch and K5 Global pocketed U.S. government money owed to their Afghan subcontractors and fled the country without paying them.

While the action will prevent the firms from bidding on contracts for up to 18 months while the investigation proceeds, it does nothing to help Afghan businessmen who say the companies owe them millions of dollars for work they did building American bases.

"This is meaningless," said Jalaluddin Saeed, president of Associates in Development, an Afghan construction company that produced invoices showing that it's owed more than $1.3 million by the U.S. firms. "They already ran away with the money after committing the crime."

Bennett-Fouch touted itself in Afghanistan as an international construction company with 1,600 employees that was managed by disabled U.S. veterans.

K5 Global, which said it had secured more than $40 million in military contracts, vowed on its website to "become one of the U.S. government's most trusted and reliable contractors."

Afghan business records show that Bennett-Fouch and K5 Global are both owned by Sarah Lee, a 45-year-old U.S. businesswoman whose construction companies have worked for a few years in Iraq and Afghanistan.

The U.S. military said American laws prevented the government from paying subcontractors directly and suggested that the Afghan companies could pursue their claims in U.S. courts.

"It really reflects badly on the U.S. mission in Afghanistan," said Mohammad Shoaib Barakzai, head of the Barak Durani Construction and Logistics Co., which he says is owed more than $150,000. "It's 100 percent the U.S. government's responsibility to take her and hand her over to the Afghan government."

While Lee was sometimes slow to pay her bills, Barakzai said, the problems escalated in the fall of 2009 as rumors began to circulate that Lee was preparing to leave Afghanistan without paying her bills.

In e-mails obtained by McClatchy, Lee repeatedly blamed the U.S. military for not paying her so she could pay the Afghan subcontractors.

"I can never say I am sorry enough for this delay or the impact it has caused you or any of the operations," according to a Jan. 12, 2010, e-mail from Lee's account. "I am more than sure that US Govt will soon realize that the prices will jump exponentially due to the lack of payment in a timely manner from their side."

Suspicious of her claims, Saeed tracked down invoices proving that Lee had been paid by the U.S. military.

Saeed warned Lee that his vendors were threatening to have him arrested or killed if the bills weren't paid.

"You have my solemn word that all debt shall be cleared that is owed to you and I do not have to run from anything," according to a Jan. 29, 2010, e-mail from Lee to Saeed.

Within weeks, Saeed said, Lee's offices in Afghanistan were shuttered.

Lee couldn't be reached Wednesday by phone or e-mail. The U.S. military also said it couldn't reach Lee to discuss the allegations.

Saeed and two other Afghan businessmen who worked with Lee said they unsuccessfully sought help from U.S. military contracting officers, anti-corruption investigators and America's special inspector general in Afghanistan.

In June, two of the contractors said they made a public appeal to U.S. Ambassador Karl Eikenberry during an event in Kabul to highlight the U.S. government's "Afghan First" strategy of promoting Afghan companies.

"He promised us in front of everybody three times — 'I promise. I promise. I promise, I will solve your problem'," said Rafi Ahmadi, president of Ahmadi Group Construction, Logistic and Services, which is owed about $680,000. "But it was just a promise."

Ahmadi and Saeed said they gave an Eikenberry aide a sheaf of documents to back up their claims. But they never heard back from the U.S. Embassy.

A U.S. Embassy official declined Wednesday to discuss the matter.

"Because of Bennett-Fouch we lost a lot of trust in the market," said Barakzai, the subcontractor who works in southern Afghanistan's most volatile areas. "If there is a $1 million project, 100 people work on it. Sarah Lee not only damaged the business of her clients, she hurt the hearts of hundreds of poor Afghans."

At one point, Barakzai was humbled when his tribal elders were forced to intervene and pay $300,000 to one of the businessman's irate unpaid vendors.

Angry over the shame of unresolved dispute, the elders instructed Barakzai to stop working with foreigners. But since so much of his business was with international firms, the Afghan businessman refused.

"I was always saying that foreigners are better in business than Afghans," Barakzai said. "They asked me to not even talk to foreigners again. Don't do business with them."

When rumors started circulating that Lee was preparing to leave Afghanistan, Barakzai began repeatedly to press Bennett-Fouch officials to pay $750,000 his company was owed.

At one point, Barakzai said he threatened a Bennett-Fouch official based at the sprawling Kandahar Air Field in southern Afghanistan on the outskirts of Kandahar City, the major city in the Taliban's spiritual heartland.

"I said, 'If you don't pay me by tomorrow at 4 p.m., I am going to take you to the city," he said. "Go with me. Stay with me. You will be my guest until I get my money."

It took the emergency mediation of one of Kandahar's most influential families — the Sherzais — to resolve the dispute.

In a last-ditch effort to secure his money from Bennett-Fouch, Barakzai said he wrote a Facebook message to Lee and said he was coming to the U.S. to settle the matter.

"Come on over," came the reply from Lee's account. "Got a surprise for you when you get here . . . "

Barazkai said the failed business ventures could have a ripple effect in Afghanistan.

"We've really had good business since the U.S. has come, but that doesn't mean that the companies should take the money they make from Afghan businesses back to their countries," Barakzai said. "We are learning this. If they do corruption, then we can think that we will do the same corruption because we have learned from those that taught us."

(Marisa Taylor contributed to this article.)

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