Over the past decade, the U.S. military has outsourced its overseas base-support responsibilities to private contractors, which have filled the lowest-paying jobs on military bases with third-country nationals, migrant workers who are neither U.S. citizens nor locals. As of January 2014, there were 37,182 third-country nationals working on bases in the U.S. Central Command region, which includes Afghanistan and Iraq — outnumbering both American and local contract workers.

These laborers do the cooking, cleaning, laundry, construction and other support tasks necessary to operate military facilities. In Afghanistan they primarily come from India and Nepal and are employed by subcontractors for one of two large American companies, Fluor Corp. and Dyncorp International, which manage U.S. bases in Afghanistan under the Department of Defense’s Logistics Civil Augmentation Program. Dozens of subcontracting companies, mostly headquartered in the Persian Gulf, work on Fluor and Dyncorp contracts.

South Asian workers are at the bottom of the social hierarchy on U.S. bases. They earn far less than American or European contractors, work 12-hour days with little or no time off and, on some bases, aren’t allowed to use cellphones or speak to military personnel. On the base we visited, Camp Marmal, most were surprised and nervous when we approached them, concerned that talking to journalists could get them in trouble. One young man’s face contorted in terror when asked whether he had paid a recruiting fee. He shook his head no, fearful of any reprisals. “To come here, you have to use an agent,” another worker told us. “There is no other way. So we pay money to come.”

An agent is a person from a recruitment agency hired to find laborers for a company — in this case, the subcontractor. Sindhu Kavinamannil, a certified fraud examiner who has investigated labor networks between India and the Middle East, says there are tens of thousands of recruitment agencies in India and Nepal, the majority of them unregistered. They might be headquartered in large cities, she adds, but they each have hundreds of agents and subagents spread out across small towns and villages.

At Camp Marmal, the most prominent Fluor subcontractor is Ecolog International. One current Ecolog employee we met, who didn’t want to be identified, said he paid $4,000 to an agent in his village for a job he was told would pay $1,200 per month. His recruiter told him the final papers would be signed in Dubai, a crucial stopping point for workers en route to Afghanistan. In Dubai he learned his salary would be only $500 per month. Because he had borrowed money at a high interest rate to pay his recruitment fee, he had no choice but to work for an entire year just to earn enough money to pay off his loan.

“We can call this bonded labor or human trafficking, because it all starts with false promises about what the job is, and they have to pay an amount to get the job,” Kavinamannil explains. “Debt will make you work anywhere. It doesn’t matter if it’s a war zone.” When we reached out to Fluor, which manages Camp Marmal, the company said it “provides hotlines to allow individuals to report anonymously any suspected instances of human trafficking” and holds its subcontractors to a “zero tolerance policy regarding trafficking in persons.”

Yet that Ecolog employee’s experience is fairly typical. Of 75 people “Fault Lines” contacted who work or used to work on U.S. bases across Afghanistan, 65 said they paid agents fees ranging from $1,000 to $5,000. Many said their monthly salaries, generally $400 to $800, ran several hundred dollars short of what they were promised. Some paid fees, only to be warehoused by an agent for months and never receive a job. Nearly everyone we talked to was still paying back loans.

According to a former human resources manager at a major subcontractor in Afghanistan, who asked to remain anonymous, subcontractors intentionally steer potential South Asian job candidates through third-party recruiters. The workers we spoke with confirmed this experience, saying that when they attempted to apply directly to companies like Ecolog, they received no response or were directed to apply through an agent.

Why would a company outsource hiring when it receives direct applications? “Employees at the subcontractor are taking kickbacks from these agents,” the former manager told us. “They tell the workers to apply through the agent, and the agent gets money from (the workers). The agent splits some of that fee with the people in human resources.”

In other words, because taking fees from applicants is illegal, subcontractors outsource hiring to recruiters who are willing to pass a portion of their fees up the chain. As a result, applicants who pay recruiting fees are often indirectly paying their employer — the subcontractor — simply for the opportunity to work.

In Dubai, we tested these allegations by setting up an undercover meeting with an agent who recruits workers for Ecolog and Supreme Group, another contractor in Afghanistan. We posed as representatives from a fledgling U.S.-based subcontractor, looking to hire workers from India and Nepal for U.S. military contracts.

The agent explained that subcontractors like Ecolog do not actually pay him. Though his contract states that Ecolog owes him $300 for each worker he recruits, in reality, he said, he pays an Ecolog representative a small bribe to hire people from his candidate pool. His earnings come entirely from fees paid by job candidates. And it didn’t take long before the agent offered to give us $100 to $200 for each worker we were willing to hire from him.

When we contacted Ecolog, the company told us that the details of its arrangements with suppliers constitute sensitive information but that it is against company rules for its staff to receive funds from recruiters. The company added that it is also against its policy for employees to pay recruitment fees and that Ecolog welcomes direct applications.

The recruiter we met told us he has supplied 9,000 third-country nationals for Ecolog and Supreme contracts in Afghanistan.

This is the business model operating on United States military bases in Afghanistan and Iraq. It’s the same model used by employers in the oil-rich Gulf countries, which have long relied on cheap migrant labor from South Asia to build their economies. The crucial difference is that the trafficking of workers to U.S. bases is made possible by U.S. tax dollars.

According to Sam McCahon, a former Army judge advocate general officer who is an advocate for reforming the military contracting system, more than 500,000 contract laborers have worked on U.S. facilities since 2002. He estimates that this exploitive system has wasted over $15 billion of taxpayer money. And it has left tens of thousands of men from across India and Nepal deeply scarred and mired in crushing debt.

In India we visited two villages in the southern state of Tamil Nadu, from which hundreds of men have traveled to jobs on U.S. military bases. Govindnagaram (pop. 6,452) and Odaipatti (pop. 13,892) lie in the bucolic valley of the Nilgiri Hills, where, as farming incomes have dropped over the past decade, residents have had to look elsewhere for work. The area has become fertile ground for recruiting agents and loan sharks looking to reap quick profits.

“Farming isn’t like it used to be. Now most people use the land as collateral, and that’s how they go abroad,” explained Ganesan Subbaiah, who has worked as a cook with the U.S. military. Subbaiah sold his father’s farmland and his mother’s jewelry to pay an agent for a job with a U.S. military in Afghanistan. But after he arrived in Dubai to sign his contract, he was told he would be going to an American base in Djibouti for a much lower salary.

We spoke to dozens of men in the villages, and each of them had a story of deception, loss and humiliation in his quest for work. Some, so shattered by their experience, vowed never to look overseas for work again. Others held out hope for a direct line — sans agents — to a job on a U.S. base to pay off their outstanding debts.

For these men, the U.S. military’s regulations to discourage trafficking have had no impact. “We’ve already paid the agents for the job,” explained a man named Kumaran, who said his agent — after collecting a hefty fee — made him sign a declaration stating he had not paid anything. “If we tell the U.S. military that we paid a fee, they’ll just send us back, and we’ll lose everything.”

Another man, who had worked at Camp Taji in Iraq, remembered that upon arrival, his contractor required him and his colleagues to sign a Trafficking Awareness form, issued by the Department of Defense. “We all knew — and they knew — that we had paid,” he said, referring to his supervisors. “Oh, yeah, everybody knows.”

The only possibility for change, he thought, was if workers could be hired directly, without the need for a fee. But McCahon says that’s unlikely to happen because there’s so much money to be made under the existing contracting system. “American contractors make more profit off this process than if they hire the workers directly,” he says. “That’s because the U.S. government pays prime contractors, like Fluor and Dyncorp, on a cost-plus basis, which means the government reimburses all of their allowable costs and then typically pays them a fixed profit of 6 percent of those costs. Subcontractors have been reported to make profits of more than 75 percent by hiring cheap, trafficked labor and overcharging prime contractors. But the incentive is for prime contractors not to care — they incur more costs, and thus make more profit, by subcontracting it out.”

The U.S. government has been aware of inequities and violations in the military contracting system for at least eight years. In 2012 both the Obama administration and Congress issued new rules to curtail these problems. But no contractor has ever been prosecuted, suspended or fined for trafficking abuses on U.S. military contracts. When pressed for a reason, McCahon responded,“If you look at most of the defense contractors, the large entities, they tend to be staffed and headed by former generals. They still have friends in the Pentagon.”

The Department of Defense has yet to respond to “Fault Lines” for this report.

The auditing firm must be approved by the Justice Department, which is conducting a civil fraud inquiry into whether the company systematically overcharged the Navy in providing provisions and sewage-removal services for warships in the Middle East and Africa. Officials said the audit could help spur settlement talks between Inchcape and the Justice Department.

Former federal contracting officials said that the need to hire an outside auditor also showed how little the Navy had done to get to the bottom of the accusations against Inchcape since they first surfaced in 2010. In November, the Navy suspended Inchcape, saying that the company — which had received almost $300 million in Navy contracts — had displayed “conduct indicating questionable business integrity.”

“To wait for the Navy to do a serious audit is like waiting for Godot,” said Charles Tiefer, a professor at the University of Baltimore School of Law and a former member of the federal Commission on Wartime Contracting in Iraq and Afghanistan. “Considering that the Navy has sat on its hands for years, getting an accounting from a private firm is a sign of desperation.”

Asked why they had not conducted their own audit, Navy officials said they had not had “full access” to the documents subpoenaed from Inchcape. They said they were cooperating with the Justice Department and would review the work of the independent auditor.

The accusations against Inchcape, which is owned by the Dubai government, stem from a whistle-blower suit filed by a company employee in 2010. Employees asserted that Inchcape had received discounts from subcontractors and then pocketed the difference instead of refunding it to the Navy.

Court records show that the Defense Department issued a subpoena in 2011 ordering Inchcape to hand over all of its Navy billing records since 2002 to the Naval Criminal Investigative Service, which was assisting in the investigation. And in late 2012, a federal judge ordered Inchcape to give investigators a copy of an internal company audit from 2008 into some of the questionable billings.

But after Inchcape challenged its suspension in December, the main evidence that the Navy presented was that 2008 audit. James F. Merow, a judge on the Court of Federal Claims, said that it did not appear that the Navy’s suspension office had “conducted any meaningful investigation” of other documents “despite having had time to do so.”

Faced with the possibility that the judge might dismiss the suspension, records show, the Navy agreed to lift it in exchange for promises from the company to follow federal rules, refund overcharges, and hire independent monitors and auditors. Inchcape said in a statement that it was delighted that the suspension had been lifted but declined further comment. The Justice Department also declined to comment.

The problems with Inchcape are part of broader contracting issues in the Navy’s global ship-supply network that burst into view in September when the Navy’s main supplier in the Pacific, Leonard Glenn Francis, was arrested on charges of conspiring to bribe Navy officials with cash, trips and prostitutes.

A third ship-supply company used by the Navy, Multinational Logistic Services, placed a senior executive on leave in December over questions about his previous job at Inchcape.

Inchcape has already lost most of its Navy business, with Multinational Logistic Services winning a contract this week to handle ships in the Middle East. Inchcape also works for other federal agencies.

This week, the House Committee on Oversight and Government Reform asked the Navy secretary, Ray Mabus, to provide records of ship-supply contracts since January 2009.