Afghanistan: U.S. Taxpayers Spending $85 Million for Unusable ‘Ghost Hotel’

Not only has the U.S. government wasted $85 million to construct a major hotel and an apartment building in Afghanistan deemed abandoned and uninhabitable, American taxpayers are also footing the bill for security at the buildings, located near the U.S. Embassy, according to an Afghan reconstruction watchdog agency appointed by Congress.  

Fox News learned from the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR), the watchdog, that the American government has likely spent thousands, if not millions, of taxpayer funds on securing the hotel and apartment building, given that they sit across the street from the embassy. 

Under the George W. Bush administration, the Overseas Private Investment Corporation (OPIC), the U.S. government’s development finance component, approved a proposal submitted by Fathi Taher, a Jordanian citizen, and his U.S. sponsor, General Systems International LLC, to construct the 209-room, five-star Marriott Kabul Hotel for $58 million.

“But today, 10 years later, all that’s there is an empty shell — a ghost hotel,” notes Fox News.

In September 2011, under the administration of President Barack Obama, the OPIC approved another proposal from Taher and a different U.S. sponsor, Apus Apartments LLC, for the construction of a $27 million apartment building adjacent to the hotel, dubbed  the “Kabul Grand Residences.”

However, the apartment building also appears to be an abandoned empty shell, noted SIGAR in a November 17 letter addressed to the OPIC. 

Tayl Investors Group, a Fathi Taher entity, has been identified as the developer and the project manager for both the hotel and the apartment projects.

John Sopko, the inspector general, revealed in the letter:

I am writing to alert you to serious deficiencies in the management and oversight of $85 million in loans made by the Overseas Private Investment Corporation (“OPIC”) for the construction of a hotel and an adjacent apartment building, directly across the street from the U.S. Embassy in Kabul, Afghanistan. I recently toured both buildings and was briefed by my staff about the underlying funding of these projects. Both the hotel and the apartment building now appear to be abandoned empty shells, and both loans are in default, possibly as the result of fraud.

Citing “troubling management practices and lax oversight by OPIC,” SIGAR reveals that the “$85 million in loans is gone, the buildings were never completed and are uninhabitable, and the U.S. Embassy is now forced to provide security for the site at additional cost to U.S. taxpayers.”

Inspections conducted by the watchdog agency found that the buildings were suffering from structural cracks in the walls and roof; damaged fireproofing on steel beams and columns; demolished wall sections; incomplete electrical, elevator, communications, fire prevention/suppression, sewer, heating, ventilation, and air conditioning systems; unfinished concrete masonry units; uninstalled doors and windows; and a plethora of other problems.

Based on the inspections, SIGAR found that “the assurances made to obtain” the OPIC loan disbursements for the hotel “were false and misleading.”

“As with the hotel, we found that the apartment project was never finished and appears to be abandoned, and that representations made to OPIC that the building could open by August 2013 were blatantly false and unrealistic,” also noted Sopko.

The company hired to monitor the apartment project, Gardiner & Theobald, never made a visit to the construction site.

“OPIC did not regularly visit the sites or have an on-site monitoring presence at either construction project, but instead relied almost exclusively on representations made by the loan recipients regarding the status of the projects,” wrote the inspector general.

He concluded that “the failure to properly manage and oversee these loans may indicate systemic problems in the management and oversight of OPIC loans for other projects in Afghanistan and elsewhere around the world, putting additional millions of dollars at risk.”

In a statement to Fox News, OPIC said it is working on rectifying the issues highlighted by SIGAR.

The hotel and apartment building had been intended to provide a gateway for Afghans returning to their native land and proponents promised they would be a major boost to the nation’s economy.

According to SIGAR, the hotel project called for the construction of “a 209-room, five-star hotel in Afghanistan… that [would] provide accommodation for foreign investors, an important boost to reconstruction efforts in the country, and a gateway for returning Afghan citizens who have spent time outside of their homeland.”

“The foreign exchange generated from official government and business travelers will contribute to the economic development of other sectors in the Afghan economy,” had determined the OPIC. “These foreign exchange earnings are expected to total over $80 million annually.”

Regarding the apartment building, SIGAR wrote that it was intended to provide “secure housing to local residents, expatriate workers, foreign diplomats, international aid workers, and U.S. government personnel.”


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