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The American Government Is Funding Human Trafficking

The ugly business of how military contractors find their workers

AP Photo/Rodrigo Abd

In September 2012, President Obama issued an executive order asserting a zero tolerance policy for government contractors who violated human trafficking laws. He specifically targeted recruitment fees that workers in southeast Asia frequently pay for work with military contractors in Afghanistan and Iraq. The Special Inspector General for Afghanistan Reconstruction (SIGAR) is currently investigating Dyncorp, Fluor, and their subcontractor Ecolog after discovering that thousands of their employees paid such fees to secure jobs in Afghanistan.

Since 2007, the Army has awarded Dyncorp and Fluor a combined $16.8 billion to run a contract called the Logistics Civil Augmentation Program (LOGCAP). The contractors oversee everything from laundry, to food preparation, to construction on military bases throughout Afghanistan. These companies, in turn, have relied on the subcontractor Ecolog to hire workers in Dubai, many of whom came from south Asia after paying a recruiter in their home country several thousand dollars.

Recruitment fees are the most common, but least punished form of human trafficking. “We protect women and children, but these are dark-skinned men,” says Sam McCahon, an attorney based in India. “The fact is 80 percent of human trafficking is for labor—only 20 percent is sex trafficking.” It is not surprising that labor trafficking is seen as a lesser evil than sex trafficking. The argument often goes: Is it really so bad to charge a worker in India a one-time fee in exchange for a job overseas with higher wages than he could find in his own country? But recruitment fees essentially create a system of indentured servitude. Workers usually take out high-interest loans in their home country to pay the fee, and the payments can trap them in their new jobs. Recruiters often mislead workers about their salary and the location of their job—promises of high-paying jobs in Jordanian hotels turn into custodial positions on U.S. military bases in warzones.

Obama’s executive order was not the first attempt to fix this. The 2009 rulebook for contractors operating in Iraq and Afghanistan forbade recruitment fees, and three years earlier, a ban on recruitment fees was incorporated into the U.S. legal code. In fact, the practice has been illegal since the Anti-Kickback Act of 1986. But none of the existing legislation has worked.

“The government says it has a zero tolerance policy, and yet there’s fairly credible allegations that these guys have been involved in trafficking and they continue to win government contracts,” says Steven Watt, a human rights attorney at the ACLU. “It’s pretty far from a zero tolerance policy.”

McCahon is more blunt:This is the only situation in which the government uses U.S. tax dollars to fund human trafficking,” he says. “It’s not that we’re idly sitting by; we’re actively paying for it. It’s like the U.S. government is the John, telling the pimp, ‘We need bodies here, but we aren’t going to look at how you got them, or if they are even getting paid.’”

McCahon used to represent government contractors in combat zones, but seven years ago, he shifted his focus. He was at a conference where the vice president of company with a contract in Iraq was asked what he was doing to mitigate human trafficking. McCahon remembers the vice president saying, “We have no privity of contract with the subcontractor’s employees, so it’s not our problem.”

“Nobody’s ever disputed that this is going on. Everyone knows it’s happening. The thing is no one is taking responsibility to stop it,” McCahon says.

He cited one case where an Indian college graduate named Ramesh paid $5,000 upfront to an agent who promised an $800 per month salary to work for a U.S. contractor in Iraq. Once in Iraq, he was only offered $150 per month, but took the job because he felt he had no other choice. When the loan shark became dissatisfied with the repayment rate, he sexually assaulted Ramesh’s sister. His sister hung herself and his mother fell into a state of shock. When Ramesh returned home to India, he and his surviving family members poisoned themselves.

While labor trafficking is clearly a human rights issue, McCahon is quick to point out that recruitment fees are also procurement fraud. Under the current contract, Dyncorp and Fluor pay Ecolog to bring them a specified number of workers. The contractors assume responsibility for transporting and housing their workers and are reimbursed by the government for the associated costs. “So if a subcontractor brings over 8,000 workers, and each worker comes with a $2,500 recruitment fee, that’s a $20 million black money kickback,” explained McCahon. “This is the largest contract fraud in the history of reconstruction.” The Army reimburses Dyncorp and Fluor for all of their allowable costs, plus 3 to 6 percent of their costs as profit—so the higher the costs, the higher the profit.

The contractors under investigation deny any collusion with fee-charging recruiters. Dyncorp declined to comment on the allegations, although the career section of its website warns: “Please note any communication requesting any amount of money in exchange for employment with Dyncorp International is fraudulent … DynCorp International and its affiliates never charge candidates fees or payments of any kind in order to secure employment.” Employees who are hired by subcontractors are unlikely to see this message or even know that they are working on a Dyncorp contract until they show up in Afghanistan.

The contractors have also failed to explain why they do not directly hire their employees, when the process of working through several layers of subcontractors has clearly resulted in violations of labor trafficking laws. Fluor admitted to SIGAR that internal investigations uncovered over 2,400 employees who had paid recruitment fees before coming to Afghanistan. Fluor says that because it is not a law enforcement agency, it can only investigate if money is paid directly to Fluor or its subcontractor in their area of jurisdiction (Afghanistan). If its subcontractor hires a recruiter who collects money from workers in India or Dubai, Fluor claims no responsibility. “They feel they get additional insulation, from both a tax and liability perspective, by having a subcontractor. It’s one more layer between them and the crime,” says McCahon.

Ecolog insists that it does not charge recruitment fees. “The penalties are so great if you get caught. Can you imagine losing hundreds of millions of dollars because someone took a small fee. Logically, it wouldn’t make sense,” said Steven Sagehorn, the president of Ecolog. He acknowledged that workers may have paid a recruiter to get them to Dubai, where Ecolog would have hired them, but denied cooperation with the recruiter.

An ACLU report from 2011 suggests otherwise. The report includes a copy of an online recruitment advertisement found on an Indian jobs website that lists employment opportunities in Afghanistan, working for Ecolog. According to the ad, candidates are sent to Dubai for selection and agreement signing”—after paying a service charge of roughly $2,000.

No contractor has ever been disciplined for a trafficking violation under the current Federal Acquisition Regulation, the set of rules for government purchases of goods and services. This means that even though there has been evidence of contractors violating anti-trafficking rules, there is no official negative past performance record, so they continue to be eligible to receive top-dollar government contracts.

In 1999, several Dyncorp employees were involved in sex-slave trade in Bosnia. A Wikileaks cable revealed that ten years later, Dyncorp hosted a party for Afghan police, supplying them with drugs and dancing boys for hire. But today, Dyncorp is the largest recipient of State Department reconstruction funding in Afghanistan, accounting for 69 percent of contract money awarded since 2002.