Highway Robbery! U.S. Losing Hundreds of Millions To Rampant Afghan Fuel Theft

March 3, 2011 6:55 a.m.

After nearly a decade of mismanagement, theft and fraud, the U.S. military still hasn’t found a way to staunch the flow of what is likely hundreds of millions — if not billions — of dollars in lost fuel in Afghanistan, some of which is sold on the black market and winds up in Taliban hands, a TPM investigation has found.

With political unrest in the Middle East sending oil over $100 per barrel and Congress more intent than ever at cutting government waste, fraud and abuse in tough budgetary times, the Defense Department is under intense pressure to find a way to monitor and track the flow of fuel in and out of its bases in Afghanistan and Iraq.

The extensive corruption associated with disappearing fuel in Afghanistan provides another illustration of the problems associated with the heavy use of private contractors on the battlefield. Earlier this week, the non-partisan Commission for Wartime Contracting reported that the U.S. government has spent $117 billion on private contractors in Iraq and Afghanistan since 2002, and tens of billions of those dollars have been wasted.Rep. Darrell Issa (R-CA), chairman of the Oversight and Government Reform panel, who has vowed to ferret out waste, fraud and abuse in Afghanistan and Iraq, said he recently traveled to Afghanistan and is aware of the problem.

“It’s not like you have a credit card and can track these things like you do at the local pump,” Issa said, estimating that stolen fuel in both Afghanistan and Iraq could well amount to a billion-dollar loss for the DoD.

It’s an area rife with corruption and has been for the last several years, Issa said, and his committee intends to push the DoD to find a better tracking system — and quickly.

The Army Petroleum Center in late November publicly asked defense contractors to come up with a technological solution to the problem of tracking the outflow of fuel held in 10,000- to 210,000-gallon collapsible fabric bladders located on army bases in Afghanistan.

fuel bladder

“The automatic gauging equipment shall be capable of measuring volume in collapsible fabric tanks and downloading real-time volume measurements” in weather conditions in Afghanistan, and of transmitting the measurements to a central receiver via wired technology, according to the public notice placed on wwwfedbizopps.gov.

The announcement, however, is only what is known as a request for information, the DoD’s first step in researching the matter, and does not involve an actual contract to make and supply the tracking systems. Developing flow meters for these fuel bladders, which would measure the volume of liquid passing through them, could be months or even years in the making.

When TPM asked Rep. Jim Moran (D-VA), a longtime member of the defense spending panel, about the fuel losses on Wednesday, Moran was well-versed on the topic, noting that he and other members of the committee had received private briefings by defense officials about the thorny security, logistics and corruption issues posed by the fuel theft.

Over the years, the transport of the fuel into the country at times has involved agreements to siphon a portion to outside parties in order to guarantee safe passage of the trucks, Moran said, and some of that fuel has ended up in enemy hands.

The fuel losses have been continuing for years without the military imposing flow meters on the fuel bladders or tracking mechanisms on the contractors’ trucks even though much of the technology to do so is available, Moran confirmed.

“Everyone in the military acknowledges we could have done more, we could have done better [to stem waste, fraud and abuse],” he said. “This is a case of woulda, coulda, shoulda.”

Just minutes after making the comments, Moran questioned Gen. James Mattis, commander of U.S. Central Command, about the fuel theft and fraud during a military construction spending subcommittee hearing in the House.

“The fuel that we’re bringing in — so much of it is missing, goes on the black market or winds up in the hands of the Taliban,” Moran said.

Mattis readily acknowledged the severity of the problem. Central Command is “significantly involved in figuring out how much fuel we’re losing,” he said.

Task Force Spotlight and Task Force 2010, initiatives set up last year to better regulate and oversee private-contractor operations, are investigating the fuel losses as part of their larger mission of getting a handle on the dangers private contractors have posed in Afghanistan and Iraq.

“They are looking at each contract and trying to make sure we’re not contracting with a bunch of crooks,” Mattis told the House subcommittee Wednesday.

Fuel theft once the trucks and tankers have reached the bases is not nearly as big of a problem as what happens to the trucks before they enter the base and along the distribution lines when the trucks transport the fuel to forward operating bases or other locations, Mattis said

To prevent this, the Army has refined its delivery terms to include payment only upon 100 percent delivery, according to Defense Logistics Agency spokeswoman Michelle McCaskill.

“The fuel doesn’t become government fuel until it is actually received — it still belongs to the contractor,” McCaskill explained. “If fuel is stolen from the truck, we won’t pay for it. The contractor has the responsibility for securing, transporting and safeguarding it.”

McCaskill said she didn’t immediately know when the military implemented this precautionary step or any other safeguards they’ve imposed.

According to a 2009 DoD inspector general’s report to Congress, private-contractor trucks and tankers that year were still loosing fuel before arriving on-base as well as afterward.

“Recently, some of the most significant fuel losses in Southwest Asia were caused by theft either before the tankers reached U.S. military bases or once on base…,” the report said, noting that “poor controls, and in some cases, an absence of controls, directly contributed to problems with fuel accountability.”

The IG estimated the known losses for fuel theft that year alone as in the tens of millions of dollars.

“The DoD IG identified fuel theft in Iraq and Afghanistan, which resulted in six convictions and identified over $40 million in stolen fuel,” the inspector general wrote. “One DoD IG investigation determined that three DoD contractors in Afghanistan accepted bribes from truck drivers in return for falsified documents confirming delivery of fuel.”

The 2010 inspector general’s report to Congress once again identified fuel theft as an ongoing problem.

The timing of the request for information about tracking fuel announced by the DLA in November came just months after a U.S. soldier was caught accepting bribes from private contractors in a scheme allowing the contractor to steal millions of dollars in fuel from the base.

In early January a judge sentenced Stevan Nathan Ringo, a former U.S. Army sergeant, to seven years in prison for accepting $400,000 in bribes from a government contractor in Afghanistan.

Ringo was arrested June 25, and authorities alleged that between December 2009 and February 2010, while Ringo was stationed at Forward Operating Base Shank in Afghanistan’s Logar province, he accepted bribes in return for submitting fraudulent paperwork permitting a contractor to steal about $1.4 million in fuel from the base.

Sources familiar with Army fuel logistics said the military is still using pen and paper to track fuel, instead of an automated system based on a fuel meter, software and wired technology that can communicate delivery and usage to a central office.

“The only thing Staff Sergeant Ringo had to do was bring the trucks in and make sure the trucks get fuel and [get] sent back out the gate,” a codefendant in the case told FBI investigators in an affidavit. “He said that it was easy because our battalion only tracks fuel usage, not trucks.”

As Mattis acknowledged, the problem of missing fuel is far more extensive and widespread than Ringo’s case would imply. The U.S. government suspended the pair of Afghan trucking companies involved in the Ringo case on suspicions they bribed the soldiers and stole the fuel for their own use or for sale on the black market in Afghanistan.

The companies under investigation are Afghan-owned Guzar Mir Bacha Kot Transportation, known as GMT by U.S. official, and one of its subcontractors, Suleiman & Sons.

The fuel loss arrests and suspensions came amid increased scrutiny of an overarching $2.16 billion host-nation trucking contract — split between eight companies to transport 90 percent of DoD goods and material in Afghanistan, including food, water, fuel and ammunition. The companies involved in the Ringo case fell under this contract.

Suleiman & Sons, a smaller company, served as a subcontractor to GMT, has been found guilty of the bribes in Afghan courts. U.S. logistics officials say subcontractors pose a particularly serious threat because very little is known about them.

A House Oversight and Government Reform subcommittee investigation last year revealed that the companies under the host-nation contract often paid private security contractors to ensure safe passage through Afghanistan. The security contractors, in turn, made protection payment to local warlords in exchange for their agreement to prevent attacks.

“In many cases, the investigation discovered, these protection payments made their way into the hands of warlords and, directly or indirectly, the very insurgents that U.S. forces were fighting,” Rep. John Tierney (D-MA), the ranking member of the national security oversight subcommittee, wrote in a January letter to Issa highlighting the problems with the trucking contract.

Last year the subcommittee also spent eight months investigating the military’s jet fuel contracts in Kyrgyzstan, a critical logistical hub supporting U.S. operations in Afghanistan. Held exclusively by two companies since 2003, the contracts provide the majority of the fuel the military uses in support of the war in Afghanistan and became a significant source of allegations of corruption and ultimately fueled a bloody revolution.

The probe and findings focused on the disastrous diplomatic ramifications of the contracts and illuminated “a disturbing lack of oversight by DoD and the State Department, even when the contracts were threatening U.S.-Kyrgyz relations and U.S. strategic objectives,” Tierney wrote Issa.

“Maintaining pressure on DOD officials to resolve its deficiencies by increasing government accountability and transparency will be necessary to protect our nation’s security interests and relations with our allies and partners abroad,” Tierney wrote.

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