US Spent $85 Million On ‘Uninhabitable’ Afghan 5-Star Hotel, Apartments

Ethan Barton | Managing Editor

A federal agency bankrolled an $85 million project to construct two buildings in Afghanistan that resulted in “uninhabitable … abandoned empty shells,” a government watchdog wrote in a letter made public Thursday.

The Overseas Private Investment Corporation (OPIC) loaned $85 million for a hotel and an apartment building across the street from the U.S. Embassy in Kabul, but neither facility was completed and now appear to be abandoned, Special Inspector General for Afghanistan Reconstruction (SIGAR) John Sopko said in a letter to OPIC President and CEO Elizabeth Littlefield.

“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,” Sopko said. The “U.S. Embassy is now forced to provide security for the site at additional cost to U.S. taxpayers.”

Jordanian citizen Fathi Taher and the U.S. company General Systems International LLC proposed the apartment building and the 209-room, five-star hotel. Both projects have been abandoned for about three years. (RELATED: Only Three Students Actually Attend A Giant, US-Funded Afghan Girls School)

OPIC’s poor oversight over the project likely caused the potential fraud and the buildings’ abandonment.

“OPIC did not regularly visit the sites or have an on-site monitoring presence at either construction project,” Sopko wrote. “As a result, the $85 million in loans is gone.”

“The failure to manage and oversee these loans properly may indicate systemic problems in the management and oversight of OPIC loans for other projects in Afghanistan and elsewhere around the world, putting additional millions at risk,” he continued.

OPIC primarily relied on the loan recipient for updates on construction, and hired Gardiner & Theobald to monitor the apartment project, but the Bulgarian company never visited the site.

SIGAR inspections found numerous issues, such as structural cracks, incomplete facilities and incomplete sewer systems, among many more. Model rooms in the apartment complex appeared complete, but actually had no electricity, water or toilets.

“Based on our inspections, it is clear that the assurance made to obtain the final loan disbursement were false and misleading,” Sopko wrote. “[R]epresentations made to OPIC that the [apartment] building could open by August 2013 were blatantly false and unrealistic.”

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Tags : inspectors general investigative group john sopko waste and fraud
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