Global Policy Forum

Canada Spent $10 Million for Security at Afghan Dam Project

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The Canadian International Development Agency is being scrutinized for its involvement with a controversial Afghan private security firm. According to this report, a major Canadian-led infrastructure project in Afghanistan was contracted to a construction firm which in turn spent $10 million on a security contract with Watan Risk Management. The security firm has allegedly been involved in corrupt practices and some of its guards were involved in an armed stand-off with Canadian observers.  This case illustrates the prevailing lack of transparency in the realm of private security contracts and infrastructure development in conflict zones. While western governments often lament corruption as an obstacle to progress in Afghanistan, they must address the possibility that their practices are exacerbating this problem. 

By Jessica McDiarmid

March 13, 2013 

Canada spent about $10 million on security in Afghanistan at its $50-million Dahla dam project, where private security contractors were linked to allegations of corruption and involved in an armed standoff with Canadian security officials.

One of Canada’s signature projects in Afghanistan, the Dahla dam was guarded in part by Watan Risk Management, a controversial Afghan security firm with alleged ties to crime and corruption. How much they were paid remains secret.

The Canadian International Development Agency contracted the project to SNC-Lavalin, which was responsible for security.

Canadian problems with Watan included an armed standoff in February 2010 that erupted between Watan guards and two Canadian overseers. The Canadian security officials fled Afghanistan shortly afterward.

The U.S. banned contracts with Watan in 2010 as part of efforts to prevent aid money from winding up in the hands of corrupt officials and the Taliban, but SNC-Lavalin maintained its ties into 2011, when it finally severed the relationship. Watan has denied allegations of wrongdoing.

A spokesperson for SNC-Lavalin said details such as what was paid to subcontractors are confidential. CIDA and SNC-Lavalin officials have previously refused to say how much of the budget for the Dahla Dam went to security costs, citing commercial privacy.

Documents obtained by the Star under Access to Information law showed that $8.9 million was budgeted for security as of October 2010. CIDA later said it had paid about $10 million by March last year, when Canada’s four-year role in the project ended.

The money isn’t an exorbitant amount to spend on security in a place like Kandahar, the birthplace of the Taliban that’s often dubbed Afghanistan’s most dangerous province. But critics say the lack of transparency surrounding those costs raise troubling questions about how Canada’s development money is spent.

“This is what my problem with CIDA is, they’re doing things with public funds and they’re not accountable for it,” said Nipa Banerjee, a former head of CIDA’s operations in Afghanistan.

Between 2001 and 2011, CIDA put $1.65 billion into Afghanistan, with another $300 million on the books for 2011 to 2014. CIDA doesn’t disclose how much money overall has gone to pay for security or what firms are hired to provide it.

“As records of projects are kept on an individual basis, the consolidation of the information as requested is not readily available,” spokesperson Amy Mills wrote in an email.

CIDA doesn’t directly hire private security contractors in Afghanistan. Like its American counterpart, USAID, it disperses funds to “implementing partners,” which are responsible for security.

By contrast, however, USAID has published an audit that estimates at least $179 million went to private security costs from October 2006 to June 2009. Costs ranged from 0.5 to 34 per cent of overall project budgets. The average security cost per project was 8.3 per cent, though it noted actual costs could be much higher due to reporting problems.

USAID estimates private security costs can run from 8 to 10 per cent in low-risk areas to as high as 20, 30, or even 50 per cent in “extremely dangerous” locations.

Banerjee, who led CIDA’s work in Afghanistan from 2003 to 2006, said paying for security is a necessity of doing development work in conflict countries. But she also said use of private security contractors ate through development funds and undermined the Afghan government’s authority, because at times they operated outside Afghan law.

“It is really kind of a dilemma,” said Banerjee, now a professor at the University of Ottawa, researching Canada’s development efforts in Afghanistan.

At least two other CIDA-funded projects in Afghanistan budgeted roughly a quarter of their funds for private security, according to the documents obtained by the Star.

The Peace Dividend Trust’s Afghanistan Marketplace project, which CIDA granted $11.7 million, budgeted about $3.4 million — nearly 30 per cent — for security in a project that sought to help Afghan businesses sell goods to international organizations. Its chief investment officer Ainsley Butler declined an interview, saying they don’t discuss security outside the organization.

CANADEM’s Technical Assistance Program put about 22 per cent, or $2.7 million, of the $12.2 million it received from CIDA toward private security. Its Kabul-based project brought in Canadian experts to advise the fledgling Afghan government from 2008 to 2012.

Executive director Paul LaRose-Edwards said Afghanistan had the highest price tag for security in the organization’s history, “bar none.”

The organization tried to keep security costs down, but due diligence in Afghanistan was expensive and organizations funded by CIDA are responsible for security — and liable if something goes wrong.

“We had no way around this,” said LaRose-Edwards.

In Kandahar, Afghan officials have complained that millions were wasted on security firms and other costs at the Dahla dam, while the Canadians failed to raise the dam wall. Ottawa has responded that it successfully fulfilled its task of repairing the irrigation system attached to the dam. The U.S. Army Corps of Engineers has carried on the project.

Following a 2010 presidential decree, the state-owned, for-profit Afghan Public Protection Force is taking over from private security companies.

NDP foreign affairs critic Paul Dewar wants a post-mortem on how Canada’s development funds have been spent.

“This is something that if Canadians knew the amounts we’re spending and the way it was being done, they would be quite upset,” said Dewar.

The office of Julian Fantino, minister responsible for CIDA, referred specific questions regarding security costs in Afghanistan to CIDA media relations. An emailed statement quoted Fantino saying Canada’s efforts in Afghanistan delivered “tangible results.”


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