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Afghans say US firms cheat them

System stacks deck for American contractors

Afghan worker Abdul Tawab said his former boss, Bryan Rhodes, left Afghanistan last fall without paying local vendors. Tawab, who helped line up workers, said he has faced threats. Afghan worker Abdul Tawab said his former boss, Bryan Rhodes, left Afghanistan last fall without paying local vendors. Tawab, who helped line up workers, said he has faced threats. (Mikhail Galustov for The Boston Globe)
By Farah Stockman
Globe Staff / July 10, 2011

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KANDAHAR, Afghanistan - Bryan Rhodes’s newly minted business scored a US-funded contract last year to help build a power plant in Kandahar, perhaps the most dangerous and crucial city in the American war effort.

Rhodes hired Afghans to do the work, and his company, IBS, was paid about a half-million dollars when they were done, according to the prime contractor on the project.

Then Rhodes left the country. Now his Afghan workers and vendors say that he owes them hundreds of thousands of dollars in unpaid bills and that he has stopped all communication with them.

For Afghans, the problem is all too common. While much US criticism has been leveled at Afghan officials for the country’s seemingly systemic corruption, officials from both countries acknowledge that fraud and mismanagement by American companies also threatens the US mission here. And Afghans who risk their lives by braving Taliban threats to help in the US effort seethe as they walk away from the experience empty-handed.

Rhodes is one of dozens of American contractors being investigated by Afghans after accusations of unpaid debts. “There are so many different cases,’’ said Abdul Safi, an Afghan official with the country’s Investment Support Agency, which is responsible for investigating such complaints. Safi contends some $40 million owed to Afghans has been taken out of the country. He said he has received several complaints about Rhodes.

So far, that investigation has been of little consequence to Rhodes: The Globe found him working in Tunisia, on another US-funded project, this one aimed at boosting the capacity of businesses in North Africa.

Rhodes stopped returning e-mails from the Globe after he was questioned about accusations he failed to pay subcontractors in Afghanistan.

His attorney, Keith Hall Barkley, issued a statement late last week acknowledging that Rhodes owes his vendors but denying any financial wrongdoing. He said IBS is itself owed about $3 million from other contractors in Afghanistan and the company “remains committed to using any and all funds collected from these contractors to pay vendors or suppliers in full.’’

The case raises troubling questions about how to stop contractors accused of failure to pay subcontractors from continuing to get US contracts overseas.

Rhodes passed a criminal background check and reported on his resume that his company in Afghanistan closed due to security concerns, said C. Lynn Robson, chief executive of the Institute for Social and Economic Development. That organization runs the State Department-funded Results Oriented Commercial-Organization Capacity Development, which hired Rhodes for his current job. Robson, who knew Rhodes from her own past work in Afghanistan, said she had not been aware of the complaints.

It can take months or even years for the US military to remove a defense contractor from the list of companies eligible for government contracts. US officials said that recommending that a company be disbarred is the only action they can take when they hear complaints, and they acknowledge that gives little comfort to Afghans that have been swindled.

“The US government has no legal recourse against a . . . contractor for failure to pay its subcontractor,’’ said Lieutenant Bashon Mann, a military spokesman.

A spokesman for the office of the Special Inspector General for Afghan Reconstruction, set up to investigate problems in US reconstruction contracts, said his office cannot take action unless the US government itself has been defrauded.

And Safi, the Afghan official, said he can do little about suspects who have already fled the country, since the United States has no bilateral extradition treaty with Afghanistan.

The US military has been advising Afghans who feel cheated by American firms to file suit for breach of contract in a US court. But few have the money or the connections to hire an American lawyer.

Instead, these Afghans are left with debts they can’t pay.

“This is a common problem,’’ said Azmat Fazly of Arian Mutahed Construction Co. He said an American firm paid only $21,000 on a $90,000 contract to supply carpets and furniture for housing trailers on Kandahar Air Base, a hub for the US military.

When he was working on the base, his family had to endure threats from the Taliban. Now, they are facing threats from carpet and furniture-sellers seeking the rest of their money.

At least one such case has made it to US courts. In May, an Afghan contractor hired the prestigious law firm Patton Boggs to sue Bennett & Fouch, a tiny defense contractor that he says owes him $2 million. The lawsuit, filed in a federal court in Texas, alleges that the company’s president, Sarah Lee, also known as Sarah Mitcham, tried to trick him into believing that she had committed suicide in the United States to stop his efforts to collect.

“It’s pretty disappointing that the best that [US Central Command] can do is: go try the US justice system,’’ said Chris Hellmich, lawyer for Jalal-uddin Saeed, the Afghan contractor. “Then they wonder why the counterinsurgency strategy isn’t working as well as it should.’’

The US military has recommended that Bennett & Fouch be disbarred, but Lee is fighting that action.

Lee, who has filed for bankruptcy protection, told the Globe before the lawsuit that she could not afford to pay her subcontractors because her investment in a cement plant on the Kandahar base went awry. She said she fled the country when she was threatened by Afghans to whom she owed money, including relatives of General Abdul Raziq Sherzai. The general, one of the most powerful men in Kandahar, was her business partner in a hotel project.

“They stormed our compound in Kabul,’’ she said. “I had 30 minutes to get out of the country.’’

Rhodes also appears to have left Afghanistan with little warning, after five years in the country. He has worked mainly for the USAID-funded Afghanistan Small and Medium Enterprise Development project, dispensing advice and millions in grants to Afghan businesses.

Before his career took off in Afghanistan, the California native had struggled with debt and creditors back home. In 2000, he filed for bankruptcy protection when he missed payments on his Jeep Wrangler. At the time, he owed thousands in federal taxes, credit card debt, and student loans, according to court records.

Then Rhodes worked as a financial analyst for the real estate industry. After earning a degree in international development, he took a job with Catholic Relief Services in Herat, Afghanistan, supervising 35 employees. In 2006, Development Alternatives International, the USAID contractor, hired him.

In 2009, he founded a company, Innovative Building Systems, which garnered $11 million in sales during its first year and employed 500 workers, according to Rhodes’s resume. One of the contracts involved installing protective concrete barriers around a generator in Kandahar’s Shorandam industrial park, along with other work.

IBS workers finished the job last fall, and IBS was paid about $500,0000, according to Shams Zaman, chief financial officer of Technologists Inc., the project’s prime contractor.

Around November, Rhodes left the country without notification, according to Abdul Tawab, one of Rhodes’s Afghan employees who helped him line up workers and vendors.

Since Rhodes’s departure, Tawab said, he has been mobbed by increasingly angry suppliers, including his uncle and his father-in-law - Tawab had persuaded them to work on the project.

“I do not have sleep because of lots of thinking and worrying about my future,’’ Tawab said in an e-mail. “Bryan put me in a big problem. I could not believe that Bryan would do such things to me, because I was working very hard for him, and put my life in danger for him.’’

Tawab estimates that Rhodes owes as much as $400,000 on the Technologists contract and another contract, in addition to about $3 million to vendors Rhodes hired under another company called Red Sea. Tawab said he did not file a complaint with the Afghan Investment Support Agency because he did not believe the agency could help him since Rhodes had left the country.

But Jonathan May, owner of HRI General Trading, did file a complaint with the agency. May said that he worked with Rhodes on a separate contract in Kandahar and that Rhodes owes him about $225,000 for electrical materials and licensed electricians he supplied.

“They started getting late in paying their bill, and I said, ‘No Bryan, I can’t give you any more materials until I get paid,’ ’’ recalled May, of Lafayette, La. “He begged me, saying ‘I can’t get paid unless I finish the project.’ ’’

May said that Rhodes was working at the time with a man named Roy Carver and that their company, Ecopan, was ultimately fired by the contractor. May said he never received his money. Attempts to reach Carver, who was arrested by Afghan authorities in December over allegations involving Red Sea, were unsuccessful.

May said he did not know whether Rhodes ran into problems because of poor management skills and lack of capital to pay vendors or if he set out deliberately to cheat his suppliers. But May said a number of unscrupulous businessmen operate under different company names to avoid detection and then move on before they can be punished.

“The amount of crooks and people who just have no morals here is amazing,’’ May said. “If you cheat somebody back home, then you get this reputation and then no one will deal with you. You cheat people [here], you just pick up and go somewhere else.’’

Farah Stockman can be reached at fstockman@globe.com. Jeremiah Manion of the Globe staff contributed to this report.

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