Department of Justice Freezes $63M U.S. Funds in Alledeged Fraud Case in Afghanistan

Post Date: August 11, 2013 | Category: Justice Abroad

Special Inspector General for Afghanistan Reconstruction (SIGAR)

Special Inspector General for Afghanistan Reconstruction (SIGAR)

Special Inspector General for Afghanistan Reconstruction (SIGAR) investigation of large-scale corruption in Afghanistan led to the Department of Justice freezing more than $63 million in U.S. government funds, allegedly obtained through fraudulent means, located in bank accounts held in Afghanistan and in correspondent banks in the United States and abroad. The bank accounts are owned by Hikmatullah Shadman, an Afghan trucking contractor, who according to court documents allegedly defrauded the U.S. of more than $77 million by charging inflated prices for trucking contracts to deliver U.S. military supplies. These trucking contracts were allegedly obtained through bribes, kickbacks, and bid-rigging, according to court papers.

John Sopko"We are determined to use all possible means to recover stolen taxpayer money. I'm proud of my agents, who worked closely with the Department of Justice on this groundbreaking achievement. This hits the criminals where it hurts. SIGAR will stop at nothing to follow this money trail wherever it leads," said Special Inspector General for Afghanistan Reconstruction John F. Sopko.

This is the first time the U.S. government has attempted to freeze and then seize funds held by an Afghan contractor in an Afghanistan bank, and was the direct result of SIGAR’s investigation. The funds were in Hikmatullah’s accounts in Afghanistan International Bank (AIB), but have since been transferred to other banks outside Afghanistan.

Key Facts from the Case 

SIGAR Investigation Uncovered Scheme to Allegedly Defraud the U.S.:

  • Beginning as early as November 2010, and continuing until at least March 2012, Hikmatullah allegedly conspired to obtain illegal payments for transportation of U.S. military supplies.
  • Hikmatullah allegedly obtained contracts, through fraudulent means, covering at least 5,421 transportation missions, valued at $77,920,605, to resupply the United States.
  • Hikmatullah allegedly paid bribes and kickbacks, and manipulated contract bids, in order to obtain these contracts.

Timeline of Events:

  • On November 7, 2012 a U.S. judge issued seizure warrants for more than $77 million held in bank accounts at AIB. These seizure warrants were sent to Afghanistan pursuant to the United Nationals Convention Against Corruption, as a mutual legal assistance request.
  • In addition to the seizure warrants, arrest warrants in rem were filed in November, 2012, and received by Afghanistan on December 31, 2012, with a request to freeze the accounts.
  • In response to the U.S. request, on or about January 28, 2013, AIB froze two defendant bank accounts at the direction of the Afghan Attorney General’s Office.
  • On March 25, 2013, Hikmatullah transferred money out of the AIB accounts to accounts at Bank Alfalah and Emirates NBD Bank in the United Arab Emirates.
  • On or about April 4, 2013, the United States learned that the freeze on the AIB accounts had been lifted. Subsequently, the Acting Attorney General of Afghanistan informed the United States that Afghanistan would not comply with the U.S. mutual legal assistance request.
  • On May 3, 2013 the United States filed an amended verified complaint for forfeiture of the assets transferred out of AIB bank, and on May 8, 2013, the U.S. District Court, District of Columbia, issued arrest warrants in rem against those funds in the interbank accounts.
  • In May, 2013, SIGAR investigators served the arrest warrants on eight banks in New York having interbank accounts with foreign banks to which Hikmatullah had transferred funds.
  • To date, SIGAR has moved $10.1 million from the Hikmatullah accounts.
  • SIGAR and the Justice Department continue to pursue the rest of the money.

Court Documents: U.S. District Court of the District of Columbia, Case No. 12-cv-01905 (RWR)

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