A British company hired to help train Afghan intelligence officers billed the US government for more than $50m (£38.4m) in expenses that included luxury cars and salaries paid to the “significant others” of the company’s top executives, according to a Pentagon audit.
New Century Consulting (NCC) also spent $42,000 on automatic weapons, using cash to get around a prohibition in the contract on purchasing the firearms and showered other personnel with hefty pay and bonuses. Missouri senator Claire McCaskill summarised the audit’s major findings in a letter to the US defence secretary, Jim Mattis, which she released on Wednesday.
McCaskill, the top-ranking Democrat on the homeland security and governmental affairs committee, is demanding to know which Defence Department office was responsible for overseeing the work, what steps are being taken to recover the millions of dollars in disputed payments and whether the US government has considered prohibiting NCC from receiving federal contracts in future. “Whoever approved of this spending should be fired – it’s a slap in the face to Missouri taxpayers and the entire contracting process,” McCaskill said in a statement.
Michael Grunberg, chief executive officer of NCC, said the company strives to follow federal acquisition rules and “other relevant obligations”. He said it “is most unfair and is significantly inaccurate” that the executive assistants were paid inappropriate salaries.
Grunberg said the audit “questioned solely the use and depreciation treatment of vehicles” and that NCC “accounted for no more than three vehicles across the entire business at any one time”.
Grunberg also said the purchase of the weapons was done properly and at the direction of the US-led command overseeing the training and equipping of the Afghan security forces.
Asked to respond to the allegations by the Guardian, Grunberg said it would be “inappropriate for us to comment on an ongoing matter”.
McCaskill’s disclosure of the audit’s key findings is a rare glimpse into the opaque world of battlefield contracting. Contractors are indispensable in Afghanistan, handling security, transportation, construction and more. Yet the Defence Department has faced widespread criticism that it often fails to perform rigorous oversight of the work and how exactly US dollars are spent.
The report is published during a tense debate inside the Trump administration over its future in Afghanistan. Two of Trump’s most senior advisers, chief strategist Steve Bannon and son-in-law Jared Kushner, have been advocating a plan that would have military contractors fight the war there instead of American forces.
The Defense Contract Audit Agency examined NCC’s invoices between fiscal years 2008 and 2013, when it was a subcontractor to another company, Imperatis Corporation. Among the costs passed on to US taxpayers were expenditures for seven high-end cars – Porsches, Alfa Romeos, a Bentley, an Aston Martin and a Land Rover – according to McCaskill’s letter to Mattis. The actual cost of the vehicles is not specified.
“NCC claimed that the vehicles were available to all employees but the vehicles actually were used exclusively by the chief executive officer, chief operating officer, chief financial officer and the significant others of the CEO and CFO,” McCaskill told Mattis. Her letter doesn’t identify who the significant others are.
These “significant others” also were employed by NCC as executive assistants and had an average salary in 2012 of close to $420,000 each even though they worked from home and never travelled to customer locations, according to McCaskill’s letter. She said the company was unable to show that these individuals actually performed any work.
The audit also challenged millions of dollars in compensation for other employees, including the consultants that the company sent to Afghanistan to train the forces there. McCaskill said the consultants were supposed to be paid at a 100% rate when deployed overseas but only at 60% when on leave. But NCC gave its consultants the full rate regardless of where they were.
“These excessive payments cost taxpayers over $15m,” she wrote.
NCC also gave its consultants more than $3.3m in bonuses that they either didn’t earn or that weren’t required by their contracts, according to the senator.
McCaskill said the audit, completed last year, was conducted partly in response to concerns she and Senator Rob Portman (Republican, Ohio) had raised after the special inspector general for Afghanistan reconstruction identified a litany of problems with Imperatis’s billing and record-keeping practices. The Defense Contract Audit Agency does not publicly release its audits.
Imperatis had a contract dating back to 2007 for intelligence training in Iraq. The work shifted to Afghanistan in 2010. Three years later the Army Contracting Command (ACC) awarded NCC a contract of its own to professionalise the intelligence units within the Afghan ministries of defence and interior.
The two companies were paid $522.4m overall, according to contract data compiled by the special inspector general. ACC did not respond to a request for comment.
Imperatis went out of business last year.
Additional reporting by Hannah Summers