The inspector general monitoring billions of U.S. spending in war-torn Afghanistan reported on Thursday that $85 million in government-backed loans to construct a hotel and apartment building near the U.S. Embassy in Kabul has vanished, and the construction projects were never completed.
“Both buildings now appear to be abandoned empty shells, and both loans are in default, possibly as the result of fraud,” said John Sopko, the Special Inspector General for Afghanistan Reconstruction (SIGAR), in a letter to Elizabeth Littlefield, the CEO of Overseas Private Investment Corporation (OPIC), a U.S. government institution that coordinates private investments in unstable or developing countries where private banks and insurers are unwilling to go.
The inspector general also said that not only was the investment and construction project a total failure, but the U.S. Embassy is now being forced to provide security for the site, at additional cost to U.S. taxpayers, because the construction site is so close to the embassy building.
According to the letter, SIGAR inspectors found structural cracks in the walls and roof, damaged fireproofing on steel beams and columns, demolished wall section, incomplete wiring, unfinished masonry and a host of other problems. “Because OPIC did not have an on-site supervisory or monitoring presence at either construction project, OPIC had to rely almost exclusively on representations made by the loan recipients regarding the status of the projects and how the disbursed loan proceeds were spent.”
OPIC retained the firm of Gardiner & Theobald, an international construction management company, to monitor the apartment project, though the company apparently never visited the apartment project, according to SIGAR.
“Given that these projects have apparently been abandoned for the last three years, we encourage OPIC to take immediate action to recoup the loan funds from the recipients,” the letter stated.
The proposal for the so-called Marriott Kabul Hotel project was submitted to OPIC in December of 2006 by Fathi Taher, a Jordanian citizen, and his U.S. sponsor, General Systems International. The project called for the construction of “a 209-room, five-star hotel in Afghanistan” that would attract foreign investors and serve as a “gateway for returning Afghan citizens who have spent time outside of their homeland.”