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Corruption Watch: Looking Back on the Pentagon's $43 Million Gas Station Debacle in 2015


January 31, 2017
Avi Asher-Schapiro / Vice News

Somewhere in Sheberghan, a medium-sized Afghan city in the northern province of Jowzjan, lies a simple gas station with just a handful of pumps. The humble facility, which was supposed to provide cheap natural gas to local Afghan drivers, cost $43 million to build -- and the US Department of Defense footed the bill.

https://news.vice.com/article/the-pentagon-blew-43-million-on-the-worlds-most-expensive-gas-station

How the Pentagon Blew $43 Million on
'The World’s Most Expensive Gas Station'

Avi Asher-Schapiro / Vice News

(November 2, 2015) -- Somewhere in Sheberghan, a medium-sized Afghan city in the northern province of Jowzjan, lies a simple gas station with just a handful of pumps. The humble facility, which was supposed to provide cheap natural gas to local Afghan drivers, cost $43 million to build -- and the US Department of Defense footed the bill.

The station was conceived of and paid for by the Task Force for Business and Stability Operations (TFBSO), a Department of Defense program that has since been disbanded. "We do capitalism," said Paul Brinkley, the program's former head. "We're about helping companies make money."

In the case of the Sheberghan station, "doing capitalism" meant going over budget by $42.5 million to build a little-used gas station. An equivalent facility just across the border in Pakistan cost just $500,000.

Why the project cost so much -- and where that money went -- is still a big mystery. The latest report from the Special Inspector General for Afghan Reconstruction (SIGAR) singled out the facility as an example of profligate Pentagon waste.

"The Department of Defense charged the American taxpayer $43 million for what is likely the world's most expensive gas station," said John Sopko, the head of SIGAR.

According to SIGAR, nobody at the Pentagon wants to talk about the gas station, or the $800 million TFBSO program that has been offline for just over a year. SIGAR has repeatedly asked the Department of Defense to explain why the Sheberghan facility cost $42.5 million more than was required, and the agency is now accusing the Pentagon of stonewalling.

"[The Pentagon] now says it knows nothing about the project," Sopko told VICE News.

The Pentagon, for its part, does not dispute the charges of waste, but said Sopko and his team have full access to the cache of documents associated with the project. "I don't have basis to dispute the dollar figures in the SIGAR report," said a senior Defense Department official, who agreed to speak about the program on the condition of anonymity. He noted that SIGAR can pull the files on the station at any time at a secure "reading room" in Washington, DC.

Meanwhile, the money pit is drawing the attention of lawmakers on both sides of the aisle.

"There's few things in this job that literally make my jaw drop," Missouri Senator Claire McCaskill told VICE News after she saw the SIGAR report. "But of all the examples of wasteful projects in Iraq and Afghanistan . . . this genuinely shocked me. It's hard to imagine a more outrageous waste of money than building an alternative fuel station in a war-torn country that costs more than 8,000 percent more than it should."

'It's hard to imagine a more outrageous waste of money.'

On Monday, McCaskill sent a letter to Defense Secretary Ash Carter asking him to cooperate with the SIGAR investigation to get to the bottom of the waste. She also demanded that the Defense Department make Joseph Catalino, the most recent head of the TFBSO, available for questioning by the Senate Subcommittee on Investigations.

The senior defense official told VICE News that Catalino already spoke to SIGAR during his tenure as head of the Pentagon task force, but that he has little knowledge of the project because it was completed before his tenure.

Chuck Grassley, a Republican senator from Iowa, was also pissed off reading the SIGAR report. "This is shocking in multiple ways," he said after viewing the report. "The cost of an unnecessary gas station in Afghanistan skyrocketed to a ridiculous height. Now, the Department of Defense is blocking access to documents and personnel that would shed light on how the money was spent."

When VICE News asked the Pentagon if it could provide any more details about the funding for the facility, the senior official said such information wasn't immediately available.

What we do know is that the Department of Defense awarded an initial $3 million construction contract to Central Asian Engineering -- a multi-national construction firm that describes itself as doing "the hardest jobs" in "the toughest places" with "the best people."

The company failed to respond to repeated requests from VICE News for comment, and the phone in their DC office did not have an answering machine.

When Central Asian Engineering finished the project in May 2014, it turned over operations to Qashqari Oil and Gas Services, a business that is not registered at all with any Afghan government agency and has no discernable presence in Afghanistan. According to SIGAR, the company's business license has lapsed.

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The Pentagon, SIGAR said, did not perform a feasibility study on the gas station project before it broke ground in 2011.

But defense officials did tell Congress in January 2015 that demand for natural gas filling stations had convinced Qashqari Oil and Gas Services to construct a "sister station" in the nearby city of Mazar-i-Sharif. No such station has yet been built.

One possible reason for this, SIGAR noted, is that the type of natural gas vehicles that would fill up at the station are too expensive for most Afghans to afford.

Converting a car to run on natural gas costs around $800; the average Afghan makes $690 per year. The Pentagon itself paid to have about 120 vehicles converted, and it's possible paying for these vehicle conversations contributed to the bloated bill for the project.

But aside from the $3 million worth of construction contracts, there's no paper trail to explain what happened to the rest of the Pentagon's money.

Since SIGAR and the Pentagon were short on details, VICE News called up the filling station in Sheberghan and asked to speak to the manger. He'd never heard of Central Asian Engineering, or Qashqari Oil and Gas Services.

He said the station is operational and owned by Afghan Gas Company. The manager estimated that the station now serves around 250 natural gas-converted cars in the province of 500,000.

It's unclear how or when the ownership of the station was transferred to Afghan Gas Company. SIGAR was unable to visit the facility because of security concerns, and the Pentagon has not turned over any information related to the transfer of ownership.

"There are methods people use for budget tracking, and budget monitoring, so it's a fair question: why are those tools not being used?" said Rukshana Nanayakkara, the regional outreach director for Transparency International, a leading corruption and waste watchdog group. "Are there other external circumstances? Did you not use those tools because of the complications involved on the ground level?"

In other words, Nanayakkara suspects that the contractors may have paid bribes. Integrity Watch Afghanistan, the country's leading corruption watchdog, estimated that 50-90 percent of foreign aid is siphoned off into somebody's pocket. "You may have to pay intermediaries to have access to certain ground level deals," Nanayakkara explained.

Sayed Ikram Afzali, executive director Integrity Watch, claimed that the Pentagon's task force was known to grease palms. In 2011, Afzali exposed how the TFBSO's chromite mining initiative, a program that spent hundreds of millions of dollars to encourage Afghans to extract and export the valuable minerals, funnelled money into the hands of militiamen in Kunar province.

"TFBSO does not have a good track record in Afghanistan," Afzali said from Kabul. "Their inefficiency is well known to many people. In addition, they have facilitated corruption and misuse."

Afzali speculated that the money for the gas station could have found it's way into the hands of some unsavory characters, which could explain why the Pentagon is so reluctant to get into the details. "Handing over large sums of money to powerful local warlords has been a norm rather than an exception," he said.

In the end, Afzali seems unfazed by the Sheberghan fiasco. "We have heard of even worse stories," he said. "Such as paying millions of dollars for buildings that were built only on paper."

Aleem Agha contributed reporting from Afghanistan

Related: US Aid to Afghanistan Has Largely Been Wasted and Stolen, Report Says

Posted in accordance with Title 17, Section 107, US Code, for noncommercial, educational purposes.

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