The World Bank is allowing Kabul to use the Afghanistan Reconstruction Trust Fund (ARTF), financed by American taxpayer money estimated in the billions, to pay for “dysfunctional” projects and possibly even “ghost workers,” a U.S. watchdog agency announced Wednesday.

In an audit published Wednesday, the U.S. Inspector General for Afghanistan Reconstruction (SIGAR) identifies the United States as the largest contributor to World Bank-administered ARTF.

Via the U.S. Agency for International Development (USAID), the United States provided an estimated $3 billion of the total $10 billion in direct ARTF assistance to the Afghan government since the war started in October 2001

John Sopko, the chief of the U.S. watchdog agency SIGAR, learned:

SIGAR found that continued limitations on, and lack of transparency into, the World Bank’s and the Afghan government’s monitoring and accounting of ARTF funding puts billions of dollars at risk. Although the World Bank has taken steps since 2011 that are intended to improve its monitoring and accounting of the ARTF using third-party monitors— the Monitoring Agent for the RCW and Supervisory Agent for the IW— limitations to their monitoring remain.

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A senior aide to Afghanistan’s President told us that the structure of the ARTF allows for ill-conceived projects to be funded because there is no repayment obligation and that dysfunctional projects are nearly impossible to eliminate. He also said that there is political pressure to spend ARTF funds, even if the programs and projects being funded are ill-conceived or unneeded, or risk losing future funding.

Sopko notes that the World Bank conceded that it does not link the disbursement of U.S. taxpayer-financed reconstruction funds to Kabul meeting performance-based conditions.

“World Bank officials told us that the ARTF does not use conditionality or other mechanisms that would restrict disbursement of ARTF funding in general, because this would go against the ARTF’s priority to pursue all opportunities for spending available funding on the Afghan government,” SIGAR found.

SIGAR also found that some of the money may be benefiting territory under the control of the Taliban and other jihadist organizations, explaining in the audit report:

USAID and other donors are concerned that ARTF funding is supporting development efforts in Taliban and other insurgent-controlled areas, something the [World Bank] Supervisory Agent has acknowledged in its monitoring reports.

However, in December 2017 … USAID officials told SIGAR they are no longer pursuing the option to preference funds by geographic location [to divert money away from areas known to be under the control of the Taliban or other jihadi groups].

In explaining why it has chosen to ignore the geographic destination of the funds, the World Bank argued that it plans “to deliver adequate supervision of funds to ensure no funds are used to legitimize insurgents.”

USAID officials are reportedly “satisfied” with the World Bank’s proposal.

The Afghanistan-Pakistan region is home to the “highest concentration” of terrorist groups in the world, according to the Pentagon.

As of October 2017, the Taliban alone controlled or contested nearly half of Afghanistan, Sopko reported this year.

SIGAR determined that the U.S.-financed nation-building fund is potentially fueling the endemic corruption that plagues Afghanistan, noting that the money is being used to pay for non-existent or “ghost” workers.

In highlighting the World Bank’s “limitations” in monitoring the ARTF, SIGAR reported:

When approving reimbursements for Afghan government employees’, such as teachers’ salaries, the World Bank does not require the Monitoring Agent to physically verify that the salary recipients exist, despite acknowledging that “the risk of undetected ghost workers [e.g., ghost teachers] increases when the Monitoring Agent is unable to undertake physical verification.”

USAID officials told SIGAR in September 2017 that the Bank cannot provide reasonable assurance that ARTF funding, which covers approximately 40 percent of all Afghan civilian expenditures, is reimbursing only proper government expenditures.

World Bank officials deny that money is being used to pay for “ghost workers,” telling USAID “they are not concerned that [ARTF] funding pays for ineligible expenses, such as ghost teacher salaries, because the funding does not reimburse specific, individual salaries.”