Chemonics Inc. / USAID

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Chemonics Inc. / USAID

Postby Wombaticus Rex » Wed Mar 18, 2015 3:57 pm

My day job introduces me to many fascinating institutions, but this one really gave me pause.

Let's start with their cheerful founder, Gerald D. Murphy, whose brother David worked for the CIA during the Cold War(s). He was profiled by NYT in 1993, and at that point, 98% of Chemonics income came from one source: USAID, which despite vast pretentions of charity is little more than a CIA cut-out.

Gerald isn't a coy boy.

The A.I.D. loan is but one example Mr. Murphy cites of how his company has benefited from official connections that Erly's Chemonics subsidiary has developed through its aid agency work.

Mr. Murphy said he started Chemonics in 1976 because "I've always wanted a way to do two things: one, have my own C.I.A., and two, be helpful to people."

His recipe for cooking up business, he said, was to send the new unit's president to Washington to call on members of Congress, announcing he was a consultant looking for business.

Chemonics, whose staff includes former A.I.D. and Agriculture Department officials, has more than quadrupled its revenues in the last decade. It has been hired by the aid agency to work on issues close to Erly's heart, ranging from trade policy in Jamaica, where Comet was trying to increase its rice imports, to alternative crops in Honduras, where Erly was considering a citrus project.

Thanks to Chemonics contacts with top-level ministers of foreign governments, Mr. Murphy said, Erly executives "have an open door to walk in and sit down and talk about whatever seems sensible." And Chemonics "has given me an appreciation for the political process in Washington in a different way," he added.

"It's obviously a political process," he continued. "A.I.D. contracts just don't happen."

22 years later and Chemonics is bigger than ever, billing itself as "Employee Owned" and boasting a very interesing board -- two members of note:

Dov S. Zakheim, Board Member

The Honorable Dov S. Zakheim is a Senior Advisor at the Center for Strategic and International Studies and Senior Fellow at the CNA Corporation. The former Under Secretary of Defense (Comptroller) and Chief Financial Officer for the Department of Defense (DoD), Dr. Zakheim developed and managed Departments budgets, negotiated five major defense agreements with U.S. allies and partners, and served as a principal advisor to the Secretary of Defense. He also served as the DoD’s coordinator of civilian programs in Afghanistan. Dr. Zakheim is currently serving as the Vice Chairman of both the Center for the National Interest and the Foreign Policy Research Institute, as well as being a board member of Search for Common Ground. He is a member of the Council on Foreign Relations; the International Institute for Strategic Studies, and Chatham House/The Royal Institute of International Affairs and a Fellow of the Royal Swedish Academy of War Sciences. Dr. Zakheim holds a doctorate in economics and politics from St. Antony’s College, University of Oxford, where he held three graduate and post-graduate fellowships.

Eric Howell, Chief Financial Officer

As chief financial officer, Mr. Howell is responsible for corporate financial planning and management. He joined Chemonics in 2005 as a director in the Europe and Eurasia region, overseeing projects in Kosovo, Tajikistan, and Kyrgyzstan. Prior to working for Chemonics, Mr. Howell served as chief of party for a land privatization project in Ukraine and a privatization project in Belarus, and worked as an investment banker for Salomon Smith Barney in New York and Hong Kong.

In terms of actual results, Chemonics is remarkably consistent: there are none. Their recent work in Haiti has been attracting attention because, even by the lavish standards of "international aid," their work is a gaping black hole with zero accountability -- which is probably why they spend so much time talking about "transparency." (The homie Barack Obama has hit upon a similar career path.)

Report on attempted audit of their Haiti activities: ... onicsagain

A gem:

When the AP asked for a budget breakdown, FHI 360 spokeswoman Liza Morris said, "We were pulling that for you but were told that it was proprietary by our funder."

Who is the funder?

"Our funder," she said, "is USAID."
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Re: Chemonics Inc.

Postby Wombaticus Rex » Wed Mar 18, 2015 3:57 pm

Per their official history:


Chemonics International is founded in Washington, D.C., by the company's first president, Thurston F. Teele. Its mission, then and now, is to promote meaningful change around the world, helping people live healthier, more productive, and more independent lives. 1975 Landmark agribusiness studies in Cameroon and Kenya represent Chemonics’ earliest work, earning high praise from USAID, the company’s primary client.


Chemonics launches its first long-term effort for USAID, a rural economic development project in Mali. The commitment to work in sub-Saharan Africa has remained unbroken for more than 30 years.


The company initiates its first projects in Asia: one to improve financial management and marketing for the Afghan Fertilizer Company and the other to conduct an investment analysis for Thailand’s Board of Trade.


A large program, Egypt Basic Village Services, marks the beginning of a long and fruitful relationship between Chemonics and the people of the Middle East. This project also represents the company’s first major contributions to municipal governance, finance, and infrastructure.


Within a decade of its founding, Chemonics is active on four continents and in every field of international development.


The company adapts to rapid growth by establishing regional divisions to respond to the priorities of individual countries and USAID missions. This decentralized structure is still in place.


Chemonics collaborates with a group of local professionals to launch a management-services affiliate in Egypt. This affiliate, Chemonics Egypt, is the first and longest-lived of many partnerships Chemonics has formed to tap local expertise in the service of development.


The company begins to serve transitional governments and nurture emerging markets in more than a dozen former Soviet bloc countries. Chemonics specialists win praise for groundbreaking work in privatizing banking, business, and land assets.


The Environment and Infrastructure Group, Chemonics’ first technical division, is launched to leverage growing knowledge about urban and regional environmental issues. In addition to USAID, the group works with a range of U.S. government agencies, bilateral and multilateral donors, and public institutions worldwide.


In what was then the largest, most ambitious environmental management project in USAID history, Chemonics sets out to tackle air pollution in Cairo and to reduce the impact of industrial pollution on the health of Egyptians.


Chemonics sponsors “Propaganda and Dreams,” an exhibition of U.S. and Soviet photography from the 1930s. The exhibition is part of a series of Chemonics grants designed to highlight artwork that raises public awareness of international development. A more recent project, “Secret Games” in 2001, featured efforts to empower children in disadvantaged communities.


With a new shareholder structure that grants part ownership to senior managers, Chemonics becomes an independent company.
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Re: Chemonics Inc.

Postby Wombaticus Rex » Wed Mar 18, 2015 4:06 pm



by Fariba Nawa, Special to CorpWatch | May 2nd, 2006

Part of the United States’ grand scheme for rebuilding Afghanistan into a self-sufficient nation was to lift the country’s agriculture industry into the 21st century. Afghan farmers, who make up about 80 percent of the working population, needed canals and irrigation systems and the means to get their product to domestic markets more efficiently, to minimize crop loss, and to reestablish their access to the international market. In this spirit, USAID awarded a contract worth $153 million over three years to the Washington, D.C.-based Chemonics International Inc. The company’s job: provide the information and infrastructure to ensure food security and improve the lives of Afghanistan’s farmers. The program was dubbed Rebuilding Agricultural Markets Program (RAMP).

Highly paid experts were flown in to consult. Chemonics worked with 40 NGOs and dozens of subcontractors. In Parwan province, near Kabul, the brain trust envisioned a farmers’ cooperative. Chemonics, along with a French NGO called ACTED, built grain storage silos and greenhouses and invented fruit-drying machinery to preserve perishable produce. Built only two years ago, today these structures sit along a lonely road, looking like war casualties or abandoned children’s playthings. All had collapsed or disintegrated during their first Afghan winter, before the farmers had ever used them. The farmers are not heartbroken; they say they would never have used these flimsy storage solutions for their crops anyway because their fruits, grains, and vegetables would have been easy prey for thieves.

Before the country descended into war in 1978, Afghanistan was poor but self-sufficient, with an economy primarily based on agriculture. Historically, 80 percent of the country’s export revenues and 50 percent of its gross domestic product have come from agriculture. Dried fruits, pomegranates, and grapes were once a major export, but the war and drought ravaged the fields, destroying irrigation systems and drying up revenues.

Desperate for means to feed their families, farmers turned to an illegal but lucrative native crop—the poppy, the local variety of which contains opium that can be altered to produce heroin. Poppies need very little water or fertilizers to thrive. That’s where the drug war and the War on Terror converge. The United States government awarded Chemonics an additional contract worth $120 million over four years to train opium growers in alternative skills, as part of the United States’ and United Nations’s ongoing efforts to eradicate opium cultivation and squeeze off the heroin trade in Central Asia. Some opium growers were redeployed as manual laborers, helping to construct concrete canals.

According to the The Center for Public Integrity, 90 percent of Chemonics’ income is from taxpayer money funneled through USAID. Chemonics’ controlling owner, Scott Spangler, served as a senior USAID director under the first President Bush. Between 1990 and 2003, Spangler and his wife gave about $100,000 to the Republican Party. The Center’s profile of the firm includes details on Chemonics’ spotty past:

* In September 1997, the company received a $26 million five-year USAID contract to promote democracy in local government in Poland. During the first year of the project, Management Systems International, independent evaluators hired by USAID, called it poorly designed, and criticized Chemonics for not hiring locals and instead hiring too many consultants who hadn’t worked in Poland before. “The returns [on] cost of the first year, $7.3 million, are very difficult to show,” said Management Systems’ report for USAID. “Polish counterparts were able to see that the quality was low and resented, justifiably, that [the foreign] experts were being paid large salaries and were producing little.”

USAID then stepped in and appointed new managers and hired Polish workers to replace American ones. In the end, despite the independent evaluators’ criticisms, USAID gave Chemonics an “excellent” rating for the project. ...

* In May 14, 1991, USAID solicited proposals for the Black Integrated Commercial Support Network, a 5-year project to promote greater entry of black firms into the mainstream economy in South Africa. Six companies, including Chemonics and Labat Anderson, submitted proposals. Labat Anderson’s proposal was lower than Chemonics’ by about $2 million; Chemonics was awarded the contract. In October 1991, Labat filed a bid protest with the Government Accounting Office, charging that USAID had improperly negotiated with Chemonics after both companies had submitted their best and final offers. Labat also charged that USAID permitted only Chemonics to amend that offer. In February 1992 the GAO sustained Labat’s protest on both grounds. In a subsequent court action, Labat failed to win monetary damages, but the judge questioned why USAID reimbursed Chemonics for more than $45,000 in legal fees from 1991 and 1992 which “may have been incurred” for an “unsuccessful defense of a contract award that violated several procurement regulations.”

Chemonics deferred requests for interviews in Kabul and Washington, D.C., to USAID. USAID told us it had given permission to Chemonics to do the interview, but the company did not respond to our requests.

The Afghan Ministry of Agriculture has been pointedly unimpressed with Chemonics’ work in the country. Among the primary goals set out by USAID in the Chemonics contract was the establishment of reliable domestic and international markets for Afghan agricultural goods. By nearly all accounts but its own, Chemonics has been a failure in this regard. A “market center”—a small patio with a pitched roof RAMP built on the main road in Parwan where farmers from the cooperative were supposed to sell their harvest—was vacant and covered with dust.

On a tour of the RAMP projects in Parwan, the province’s agriculture deputy director wanted to show me both the successes and the failures. On the main road, a large tent made of a sturdy material penetrable by sunlight—a new type of greenhouse—could be seen from afar. Inside, the senses are assaulted with the green smells of fresh vegetables. Shiny cucumbers hung from healthy plants. This project was overseen by the International Center for Agricultural Research in the Dry Areas (ICARDA), an NGO in the RAMP program, and allowed one farmer to make $1,200 last year, enough to support his family.

“With this greenhouse, we were consulted in every step and asked what the farmer’s capabilities were, what his resources were and what would work for him, and that’s why it has worked,” said Abdul Hafiz, the provincial agriculture director.

The farmer’s cooperative that had disintegrated in its first winter was an example of the flip side of the coin. The contractors never consulted the local agriculture ministry, Hafiz said. “If they had asked us, we could have told them that this type of greenhouse will not hold up to the harsh weather conditions here. But they never did and we did not insist to know because they are the experts who should know. At least, that’s what we are told,” he said, shrugging his shoulders.

Agriculture ministry officials say they are open to the American push to shift the country from a socialist to a capitalist economic model, but they fear that rushing the conversion could backfire, or make a few wealthy at everyone else’s expense. As a case in point, Hafiz’s assistant showed a huge, newly built warehouse that could be used by several local farmers to store and distribute their harvests. Instead, RAMP gave it to a single landowner who is using it to store refrigerator parts and bags of pesticides.

In Kabul at the agriculture ministry, Sharif Sharif, one of the deputy ministers who speaks English and works closely with Chemonics, said the contractor was getting better at working with the government but that the improvement only occurred after constant complaints and errors.

“We asked them to please work with us. Give us a chance. Please allow our experts to join in the actual work so they can learn because they have degrees, but they need the know-how,” he said.

Sharif points to several RAMP projects that he considers wrong-headed or wasteful. A flour mill RAMP built for one farmer in the northern province of Kunduz could store enough flour for the entire province. A project for 25 cold-storage units planned to be ready to hold vaccines and medicines is behind schedule; only seven units had been constructed so far.

Sharif also feels that Chemonics’ urgency for RAMP to develop international markets—which largely failed—has caused them to neglect domestic needs for food security. RAMP, for example, has instructed farmers in Parwan to grow more vegetables, and promised to find buyers for them both within the country and beyond. The farmers, who normally planted beans and lentils, grew green vegetables as encouraged. But instead of profiting, they lost money. Vegetables flooded the market and drove the price down.

The agriculture ministry’s frustration with RAMP and Chemonics seemed validated by the July 2005 report from the United States Government Accounting Office, which evaluated reconstruction programs in Afghanistan. The report says that while Chemonics met most of its targets, it had failed to consider the sustainability of its projects or make Afghan farmers any more self-sufficient. A GAO official in Washington said Chemonics also did not submit required reports updating the agency on its progress, partly because USAID had pressured the company to complete projects quickly to reassure the Afghans that work was moving forward in a timely fashion. The failure to submit reports allowed the company to hide failed, redundant, counterproductive, or otherwise embarrassing projects without reporting their financial price tags.

One project that flew under the radar involved building irrigation canals for farmers in Helmand province. A little advanced research might have exposed the fact that the farmers in the region are overwhelmingly opium poppy growers and that they were using the water to grow even more poppies. The success of one of Chemonics’ contracts was openly undermining another: to wean farmers off the opium market.
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Re: Chemonics Inc.

Postby Wombaticus Rex » Wed Mar 18, 2015 4:53 pm


The Road to Lima: Peru's Coca Growers and their First Grand Congress

By Luis Gómez | Part II of a series on the drug war in Perú | March 15, 2004

Before we arrive in Lima at the first Grand Coca Growers' Congress of Peru, let's make a few stops, because the route is long. The first is at the offices of a corporation, of a large United States company named Chemonics that works under the auspices of a non-governmental organization. In our prior report we saw how Marisela Guillén, one of the coca growers' leaders, accused that company of fraudulent operations...

Guillén, in an interview with the Peruvian daily Ojo last December 7th, accused Chemonics of other things, too: of defrauding the peasant farmers who accepted compensation to eradícate coca. She said that the National Commission for Development and Life Without Drugs (DEVIDA, in its Spanish initials) and Chemonics, the current operator of Peru's "alternative development" program, "offer farmers $180 dollars to eradicate, but once they have eliminated their crops, they only give them 126 soles (a little less than $49 dollars), nothing more, and they don't comply with the public works that they promised."

Who the hell is Chemonics? By the size of its operations and its global network, we can say that it is a big business... according to resumes of its directors, it's a source of employment for various ex-bureaucrats of high level from USAID, the famous U.S. aid organization... And could it be that with such good relations that the people of Chemonics have with U.S. administrations that it has made a little more than $414 million dollars between 1990 and 2002? Will business be even better now since the government of George W. Bush gave them contracts in Iraq and Afghanistan, between 2002 and December 18, 2003, for more than $167 million dollars?

As examples of its work, Chemonics restructured the national debt of Ecuador, helped to subcontract the potable water service in a Colombian city to the multinational corporation Vivendi, works in reforestation programs in Bolivia, and, in the same country, has worked in economic development programs with coffee producers in Yungas, producing various internal conflicts between peasant farmer organizations (especially with the coca growers of Yungas)... The Peruvian coca growers are right to feel bothered, not only because of their accusations of fraud, but also because they have inside their territory, in addition to police and military forces, a corporation led by people who aver very interested in bringing U.S. "assistance" forward (that is to say, silent intervention)...

But let's not stop too long, for now, anyway, at Chemonics, because other issues are weighing upon us... We'll come back some other time to this corporation because it is surely causing complaints in Peru, in Bolivia, and in other corners of our América...

The New Base for the Military, er, Gringo "Aid"

In those days that Marisela Guillén denounced Chemonics, a news story occurred that was very big in Peru: The announcement of the installation of a U.S. military base in the jungle region of the country. The base, christened with the euphemistic title of "Anti-Drug Coordination Center," will be "the axis of land, air, sea, and river operations in the fight against drug trafficking," according to a report by the Andina news agency. At the same time, the renewal of interdiction flights, suspended in 2001, after the tragic "accident" that culminated with the fall of a small airplane that a missionary and her daughter. The plane fell into the front yard of Narco News reporter Peter Gorman.

They had already tried to install this base in April 2002, as we reported at the time. But this time, supported by the administration of President Alejandro Toledo, the North Americans were at the point of obtaining it in the same place, the town of Uchiza. In fact, it was reported that civilians were discovered in this region building "a complex, including an airfield." All of this had the title of a bilateral cooperation program titled "New Horizons."

On December 4th, 2002, the U.S. Embassy in Peru issued a press release do deny it, that it wasn't happening. That the famous Anti-Drug Coordination Center would be the axis of joint operations between Peruvians and Gringos, but it would not be a military base. (Why, then, were there, in addition to military troops, civilians, mercenaries, DEA agents, and others of that style?) Ah, and the Embassy also denied that there had been a date set to renew interdiction flights, saying it was all being talked about between the governments, but that it hoped to renew them that same months... The flights have not yet begun anew, but the construction of the base continues...

The "Fight" Continues

In the final months of 2003, anti-drug combat in Peru was in its glory: large quantities of chemical precursors were discovered, various clandestine laboratories were destroyed, marijuana plants were eradicated, hundreds of kilos of cocaine were seized, and, really, they did it all. But the most famous capture came in Buenos Aires, Argentina, where Interpol trapped the Colombian Omar Penagos, who, it turned out, was one of the narco-operators in Peru and closely related to Vladimiro Montesinos, the former Rasputin of Alberto Fujimori, and an old friend of U.S. intelligence and anti-drug agencies.

On December 12th, last year, according to the daily La República of Lima, Peru's Interior Minister, a celebrity named Fernando Rospigliosi, gave a clear indication that he "knows" how things work. After an operation with machine-gun-armed helicopters in Monzón Valley destroyed seven cocaine laboratories in a shootout, Rospigliosi swore that these interdictions had caused the price of coca leaf to fall... That is to say, that the farmers, seeing that it was already not profitable, would have to switch crops. "We believe that the price will continue to fall, and this is a major hit against drug trafficking," were Secretary Rospiglioso's final words. In other words, against all the laws of the market ( and the general logic that governs prohibited drug prices around the world), the minister was convinced that his work was very effective... How does that sound to you?

In Peru, coca is sold in bags called arrobas, weighing 12 kilos. The state-owned business in charge of doing it and controlling it is the National Coca Business (ENACO, in its Spanish initials), that in its bylaws declares "the sale of coca leaf and its derivatives" as a commercial activity. Well, according to Enaco's price charts, a kilo of coca costs seven dollars for exportation... That is to say that they sell the arroba bag for $84 dollars, or around 290 soles... And this provides a very large profit for Enaco... Let's remember the words of Marisela Guillén last December to the daily Ojo.

"Enaco pays 50 soles per arroba bag while others pay 60 or 70 soles," she said. That means that the coca growers receive about $14 dollars and 50 cents for an arroba of coca, that is then sold for $84 dollars abroad (plus extra fees and costs), and that gives the Peruvian State agency Enaco a profit of more than 200 percent... As Secretary Rospigliosi says that the price paid to farmers keeps dropping. Does this mean that the Peruvian government wants to increase its profits? That is possible. Or do they want to lower the price for the "competition" that pays 60 or 70 soles, as Guillén says, to supply the narco? Is it possible that the interdiction and eradication efforts are lowering supply? As you will see, kind readers, Rospigliosi and his people have some loose ends to clarify to the whole world...

For everyone else, if you would like to look at Enaco's website for a while you'll have some fun... These gentlemen also post the prices of chemical precursors (called infiltradores) and of processed cocaine on their menu of "Product Sales" for "foreign markets." Is that an error? Or is it the case that the State-owned business sells cocaine? Could that be true?

Via: ... ghanistan/

It’s just the people who are miserable, including those serviced by Chemonics. Awarded hundreds of millions of dollars in contracts in Afghanistan, Chemonics ranks just behind Halliburton and Bechtel in scarfing up tax dollar-funded development projects. Like some of the other usual suspects in Afghanistan, it doesn’t always take meticulous care in the execution of its projects. In Haiti, USAID hired Chemonics to build a temporary parliament building for $173 million. When the contractor pulled out, parliament had a debris-laden, unusable frame that Haiti, one of the poorest countries in the world, had to spent three quarters of a million to make habitable.

Afghanistan fared no better. Pulitzer Prize winner David Rohde has described Chemonics activities in Helmand province for Reuters, focusing on agricultural development. Naturally Chemonics itself didn’t do the work. Like so many other USAID contractors, the corporation in turn subcontracted its projects to a series of shady operators including one “Williams” who made three quarters of a million doing substandard work, spending much of the money on security and making side-profits like renting rooms to contractors and journalists for fifty dollars a night.

That David Rohde piece in question: ... an-effort/

Between 2001 and 2010, Congress doubled USAID’s budget yet staffing remained largely unchanged.


After the fall of President Hosni Mubarak in Egypt, for example, Koltai tried to convince USAID to revamp a $34-million program designed to “improve the business environment” in Egypt. He hoped to divert money to train young Egyptian technology entrepreneurs and bring in U.S. executives and investors.

But the contractor, Chemonics International, refused to change its program, according to Koltai. When the USAID procurement officer challenged the firm, he found himself outmanned. Citing language in its contract, Chemonics’ lawyers threatened to sue. The system astounded Koltai.

“Chemonics has a whole legal department whose existence is based on memorizing the fine print,” he said. “The person overseeing the public money is outgunned. We, the American taxpayer, did not have the right to say ‘stop the presses, there’s been a revolution.’ ”

The USAID procurement officer impressed Koltai. He declined to identify him but said he was a “smart, dedicated” civil servant, with relatively low pay, scant support and tough working conditions.

“He was paid $85,000, while managing hundreds of thousands of dollars,” Koltai said. “You’d never find that in the private sector.”

In an interview last fall, a spokesperson for Chemonics defended the firm’s work and said it does adapt to changing circumstances.


I do not begrudge Veritas, DynCorp or Chemonics their profits. The private sector is doing what it does best: finding innovative ways to make money. The problem is that the United States now has a private sector and military brimming with capital, capacity and talent. But our civilian public-sector institutions are sclerotic, ossified and weak.


The world is changing but Washington is not.
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Re: Chemonics Inc.

Postby cptmarginal » Wed Mar 18, 2015 6:40 pm

A new one on me, thanks for posting

Via: ... ghanistan/

It’s just the people who are miserable, including those serviced by Chemonics. Awarded hundreds of millions of dollars in contracts in Afghanistan, Chemonics ranks just behind Halliburton and Bechtel in scarfing up tax dollar-funded development projects. Like some of the other usual suspects in Afghanistan, it doesn’t always take meticulous care in the execution of its projects. In Haiti, USAID hired Chemonics to build a temporary parliament building for $173 million. When the contractor pulled out, parliament had a debris-laden, unusable frame that Haiti, one of the poorest countries in the world, had to spent three quarters of a million to make habitable.

Afghanistan fared no better. Pulitzer Prize winner David Rohde has described Chemonics activities in Helmand province for Reuters, focusing on agricultural development. Naturally Chemonics itself didn’t do the work. Like so many other USAID contractors, the corporation in turn subcontracted its projects to a series of shady operators including one “Williams” who made three quarters of a million doing substandard work, spending much of the money on security and making side-profits like renting rooms to contractors and journalists for fifty dollars a night.

Afghan anti-drugs workers killed

Wednesday, 18 May, 2005

Suspected Taleban militants have ambushed and killed five Afghans working on a US-funded anti-drugs project in the south of the country.

Gunmen attacked as the group drove through Helmand province, 180km (110 miles) from the city of Kandahar.

Two of the men worked on an irrigation project run by US company Chemonics. A government engineer, driver and guard also died.

Taleban militants recently stepped up attacks in Afghanistan.

A spokeswoman for Chemonics, a consulting firm based in Washington, confirmed the attack, adding that there had been no direct warning to company staff.

Tension rises in Kandahar ahead of Nato summer offensive

Attack on contractors' compound is unlikely to be the last

Saturday 17 April 2010

Rahimullah Khan was at home in Kandahar, eating a late-evening meal with his family when he heard a grenade hit the checkpoint outside the building, then gunfire and "a huge explosion".

It was the sound of a minivan packed with explosives ripping through the front of the heavily defended compound where contractors from Louis Berger Group, the Afghanistan Stabilisation Initiative and Khan's own employer, Chemonics International, live. At least 26 people were injured in the attack, including 10 foreigners, and three people killed, all of whom are Afghans, provincial authorities said.

40% of Afghan aid returns to donor countries, says report

Afghanistan's biggest donor, USAid, allocates nearly half its funds to five big contractors. The US government has awarded major contracts, some worth hundreds of millions of dollars, to KBR, the Louis Berger group, Chemonics International, Bearing Point, and Dyncorp International, according to a study by the US-based Centre for Public Integrity quoted in today's report.

A great overview: ... 35_pf.html

U.S. Pursues a New Way To Rebuild in Afghanistan

By Rajiv Chandrasekaran

Friday, June 19, 2009

The idea to transform a vacant tract near the Afghan city of Mazar-e Sharif into a sprawling commercial farm, with miles of strawberry fields and thousands of cashmere goats, began with an entreaty from President George W. Bush to the billionaire chairman of Dole Foods at a 2006 Republican Party fundraiser.

Go to Afghanistan, Bush urged David H. Murdock, "to see what you can do to help."

After a tour of the country the following April, Murdock told U.S. officials he wanted to build a 25,000-acre plantation modeled after Dole's vast holdings in the Philippines. But a few months later, he concluded that transportation and security challenges made the project unsuitable for the company.

That did not dissuade the U.S. Agency for International Development. Mindful of the president's interest in the project -- and convinced that Murdock dropped out because he did not receive a thank-you call from Bush -- USAID decided to go it alone. It allocated $40 million in reconstruction money to the venture, and it directed a contractor to hire workers and purchase equipment.



Chemonics, a for-profit development firm based in Washington, received the contract for southern Afghanistan in late 2005. It was one of many contracts won by the company, which has become a principal instrument of U.S. development policy in the country.

One of its first alternative-livelihoods projects was to build a road. And for that, it flew in 11 Bolivian engineers.

Andrew S. Natsios, the USAID administrator at the time, had recently viewed cobblestone roads in Bolivia's Chapare rainforest that were built under a U.S.-funded alternative-livelihoods program to discourage coca planting. He figured that such roads, which are inexpensive but require extensive manual labor to build, could be a new tool in the fight against poppies in southern Afghanistan because the construction effort would result in thousands of short-term jobs. Chemonics readily agreed.

The Bolivians trained 46 Afghans in the art of placing fist-size river stones on the ground. Then they set about constructing a road from the capital of Helmand to an archaeological site on the outskirts of the city. Once a sixth of a mile was complete, Chemonics held a celebration that featured speeches from local officials and the U.S. ambassador to Afghanistan.

Chemonics had plans to build additional cobblestone roads across southern Afghanistan, but local Afghan leaders objected. They said that they were willing to humor the Americans with the path to the ruins, but that what they really wanted were gravel and asphalt roads. They complained that the cobblestones hurt their camels' hooves.

"It wound up being a huge waste of time and money," said one person who worked on the project. "Nobody did the due diligence."

Natsios maintains that the cobblestone roads were a good idea, but he said he could not comment on the implementation because it occurred after he left the agency. A Chemonics spokeswoman said the company "can't comment on the decision-making process that took place before the work began." A senior USAID official, speaking on the condition of anonymity, said Afghan officials initially supported the project but then changed their minds because they believed they could extract kickbacks from gravel and asphalt construction.

After the cobblestone venture, Chemonics shifted to other cash-for-work projects, including cleaning irrigation canals, that were more palatable to local officials. Although it allowed USAID to claim that it had generated hundreds of thousands of days of labor, the overall impact was the development equivalent of a sugar rush: It didn't last. Poppy farmers always managed to find enough help -- largely because unemployment is so acute -- and cultivation in southern Afghanistan reached all-time highs.

In 2007, the poppies grown in Helmand province alone could have more than met the world's demand for opium. And when U.S. funding for short-term labor dried up, many participants went to fight for the Taliban, according to some Chemonics specialists who worked on the cash-for-work projects.

Several Afghan development experts advising the Obama administration believe the fundamental mistake with the U.S. alternative-livelihoods approach is that it did not concentrate on agriculture. The Chemonics contract, which USAID increased to $166 million in 2007, included money for the construction of a business park, a women's center, an Internet cafe and a recreational facility designed to demonstrate, according to a USAID report, that Chemonics was "a good neighbor within the municipality."

What the U.S. strategy should have addressed, the experts maintain, were the basic reasons why poppy is so attractive to poor Afghan farmers.

Drug middlemen often provide farmers with a cash advance at the beginning of the planting season, and they routinely promise to buy the crop at a set price. Some merchants even offer technical assistance to help farmers increase their yields. For subsistence farmers, such aid is vital, and it leads them to plant poppy even when other crops -- including pomegranates, grapes and almonds -- can fetch higher prices.

"Our whole concept of alternative livelihoods is conceptually flawed," said Barnett R. Rubin, an Afghanistan expert at New York University and a consultant to Holbrooke. "Poppy is not a crop, it's an industry. You're not going to compete with it with day-labor projects."

But USAID declined to include agricultural credit and price supports in the alternative-livelihoods program for southern Afghanistan. Agency managers regarded price supports, which exist for some crops in the United States, as unsustainable for the Afghan government over the long term. The agency did decide to offer credit, but it did so through a separate program that would seek to establish private credit unions and small lending institutions. That program was not focused on agriculture, and security concerns have limited its operation in southern poppy-growing areas.

The few farm-related activities that USAID funded through the alternative-livelihoods program sometimes generated results counter to what the agency wanted. Several former Chemonics specialists involved with the project said that some of the farmers who accepted U.S.-sponsored wheat seed and fertilizer handouts simply sold the seeds in Pakistan, or ground them to make flour, and they used the fertilizer to nourish their poppy fields.

But the specialists contend that their superiors at Chemonics, which has received more than $430 million worth of Afghanistan reconstruction contracts from USAID since 2003, did not complain about it to USAID project managers because of concerns it might jeopardize future work with the agency.

Michelle Millard, a Chemonics spokeswoman, called the allegation "simply not accurate." She said the firm "has worked closely with USAID to refine the design and scope of programs to ensure their effectiveness." Agency officials say they rarely find out about problems in the field, unless the contractor informs them, because agency managers seldom leave their fortified compound in Kabul to independently assess projects.

"We're all sitting in this bubble," said one agency official stationed in the Kabul headquarters. "We have no idea what's really happening out in the rest of the country."
Cotton Proposition

Soon after the cobblestone-road project, Yosuf Mir, an Afghan American who lives in Fairfax County, approached Chemonics with what he thought was a no-lose solution to wean thousands of farmers off poppy cultivation: cotton, a crop widely grown in southern Afghanistan until the Soviet invasion in 1979.

When he asked farmers why they were growing poppies instead, he said, "They told me, 'What else can I do? We don't have the seeds. We don't have the fertilizer. We don't have anyone to sell to. There's nobody to give us credit except for the drug dealers.' "

The solution seemed obvious to Mir. The Afghan government was seeking to sell the state-run cotton ginning factory in Kandahar. He would buy it.

He consummated the transaction in 2005, pledging $1 million of his family's land in exchange for a 20-year lease. With that investment -- and with USAID's help in distributing cotton seeds -- he estimated that 35,000 farmers would resume growing cotton, and his factory could employ as many as 12,000 people. "We would," he said, "create a real alternative livelihood for the Afghan people."

When Mir approached Chemonics, leaders of the alternative-livelihoods program expressed support for his proposal. Charles Grader, a former senior manager of a USAID agriculture project run by Chemonics, said a study commissioned by the firm deemed cotton "one of the better alternate crops." But for cotton to be economically viable, he said, USAID or the Afghan government would have to provide a subsidy to the farmers, in much the same way the U.S. government aids domestic cotton producers.

In April 2006, Chemonics asked USAID for authority to help rehabilitate Mir's cotton factory. USAID rejected the request within weeks -- the notion of agriculture subsidies was anathema to free-marketers at the agency.

Mir eventually received a fuller explanation for the decision: U.S. law prevents the government from aiding foreign cotton producers because doing so could help them compete against American growers.

Several U.S. officials familiar with the matter said that USAID could have asked the White House to issue an exemption, given the national security importance of stabilizing Afghanistan, but that senior officials at the agency opposed funding a program to promote a crop in which Afghanistan did not have a comparative advantage on world markets.

"Their thinking is all about free trade -- that Afghanistan is better suited to produce pomegranates and raisins than bales of cotton," said one USAID official who disagrees with the agency's stance. "But what about the goal of keeping people from shooting at our troops?"

Late last year, Mir had to let go of the last 200 employees of the cotton factory, several of whom had worked there through the Soviet occupation and the Taliban years.

Most of them, Mir said, have since joined the Taliban.

"Even the Taliban knew the value of keeping the factory open," he added.
Sales and Marketing

In late 2006, Chemonics won another USAID contract, initially worth $102 million, for an initiative called the Accelerating Sustainable Agriculture Program. Agriculture experts recruited by the firm to work under the contract figured it would be a chance to implement the sorts of assistance projects that Afghanistan badly needed but that USAID did not want under the alternative-livelihoods program.

They proposed setting up a commercial poultry operation that would employ women in 50 villages and produce as many as 45 million eggs a year, reducing the country's reliance on imports from Pakistan and Iran. And they urged extending a project that had been set up under an earlier USAID contract to establish and restore vineyards.

"It would have produced real change in the lives of hundreds of thousands of Afghans," said Gary Kuhn, the executive director of Roots of Peace, a nonprofit organization that would have done the vineyard work for Chemonics.

But Loren Stoddard, director of USAID's Afghan agriculture and alternative-livelihoods programs, believed the contract should concentrate on promoting "buyer-led development." That meant sales and marketing activities, not field-level work to help farmers increase production.

The grapevine project was killed. So, too, was the egg venture.

Stoddard had worked as a produce salesman before joining USAID in 2002. Before arriving in Kabul in 2006, he spent four years with the agency in Guatemala, where he earned plaudits from his superiors for helping to facilitate business deals between local farmers and Wal-Mart.

He wanted to do more of the same in Afghanistan. The key to resuscitating the economy, in his view, is for farmers to specialize not in wheat, which is a staple of the local diet, but in what the country grows best -- and what buyers in other nations want to import: pomegranates, almonds, pistachios, raisins and fruits such as apricots that can be dried or turned into juice. He is fond of noting that Afghanistan was one of the world's largest exporters of dried fruits and nuts before the Soviet invasion. But the first step in making that happen, he believes, is to line up purchasers, not focus on farmers.

"Rich farmers sell first and then grow," Stoddard said in an interview. "Poor farmers grow first and then hope somebody will buy it."

To implement his vision, Stoddard ordered Chemonics to use the contract money to hold a series of agriculture fairs that would give Afghan farmers a chance to display their wares to foreign buyers, to organize promotional shipments of pomegranates to supermarkets in the Persian Gulf region, and to establish "agribusiness brokerage centers" to facilitate business deals.

"In 2006, nobody had heard of an Afghan pomegranate," he said. "We've put the light on the fact that there's a lot of great stuff here to sell."

The 25,000-acre farm Murdock envisioned at then-President Bush's behest was going to be Stoddard's flagship project. He was convinced it would "help Afghans realize there was a bright future ahead of them" by demonstrating modern agricultural techniques and generating an appetite around the world for Afghan-grown products.

Stoddard said Murdock wanted the farm built on a vacant parcel because he feared tenant disputes. After Dole exited, USAID decided to stick with the empty-land strategy, despite concerns from some at Chemonics that the site might not be suitable for commercial agriculture.

USAID had planned to rely on underground aquifers to irrigate the farm. But every well that was drilled brought up water that was too salty.

The agency is using the remaining money allotted for the project to help develop private agricultural projects in the province.

Even if there had been enough water to run the farm, several agriculture specialists familiar with the venture contend it would have been out of place in a country where most people grow crops on small plots of land.

"It was one man's pipe dream," said another specialist who worked on the project for Chemonics. "It made no sense."

Until recently, Stoddard had relatively free rein to design and implement agriculture projects as he wished, according to several U.S. officials. That was because "nobody -- nobody at the White House, nobody at USAID headquarters, nobody at [the] State [Department] -- really understood agriculture in Afghanistan. And USDA was almost never at the table," said Ward, the former senior USAID official. "Loren had a vision for what would work. We may not agree with it, but at least he had a plan. Nobody else had one."

At USAID, which once had dozens of agronomists and agriculture economists on staff, only a handful of people with specialized training in agriculture development remain. Although the agency does not provide an exact count, most of its scientific and technical experts were sent packing in the 1980s and 1990s as budgets were cut and the workforce shrank.

"This is what happens when you eviscerate a federal agency," Ward said. "There's a consequence. You may not see it right away. In this case, we're seeing it a generation later, when we need AID to help us win a war -- and it can't."
Left Hanging

Late last year, when Mohammad Asif Rahimi, Afghanistan's newly appointed agriculture minister, visited his office for the first time, he was shocked by what he found -- or, rather, what he didn't. There was no phone. No Internet connection. No secretary.

"It looked like the Taliban left a week ago," he said.

To Rahimi, the reason was obvious: USAID had focused its money and attention on its own programs instead of helping Afghans assume responsibility for their own affairs. Agency officials said they did not provide more assistance to the ministry because they regarded Rahimi's predecessor as an ineffective leader.

As Rahimi learned more about the U.S. agriculture strategy, he said he became increasingly angry.

"This 'leave it to the hands of the private-sector' approach -- it's absolutely unrealistic," he said. "The agriculture sector needs a lot of support from the government."

Another one from David Rohde, covering some of the same territory as Adam Curtis' "Kabul: City Number One" ... rofit-war/

Little America: An Afghan town, an American dream and the folly of for-profit war

By David Rohde

June 1, 2012

American officials inspect a field in Helmand, 1960s

Eight years ago, a 72-year-old American aid worker named Charles Grader told me a seemingly fantastical story. In a bleak stretch of Afghan desert that resembled the surface of Mars, several dozen families from states like Montana, Wisconsin and California had lived in suburban tract homes with backyard barbecues. For 30 years during the Cold War, the settlement served as the headquarters of a massive American project designed to wean Afghans from Soviet influence.

American engineers oversaw the largest development program in Afghanistan’s history, constructing two huge earthen dams, 300 miles of irrigation canals and 1,200 miles of gravel roads. All told, the project made 250,000 acres of desert bloom. The town, officially known as “Lashkar Gah,” was the new capital of Helmand province and an ultra-modern world of workshops and offices. Afghans called it “Little America.”


Lanky, with a thick shock of gray hair and a faded all-American look, Grader was a marker of how the American approach to development had changed since the Cold War. No longer a government worker, he was a private contractor paid $130,000 a year by Chemonics International, a for-profit consulting firm based in Washington. From Kabul, he managed a $130 million USAID contract to revitalize agriculture and slow the exploding cultivation of opium poppy, the raw form of heroin, across southern Afghanistan.

Instead of USAID implementing projects itself, the agency doled out government aid money to private contractors like Chemonics, who then hired a cascading series of subcontractors to actually carry out the work.


Several months after visiting Little America with Grader, I returned to Helmand to learn more about the contractors leading the U.S. effort. My guide was a 40-year-old ex-U.S. Army paratrooper who asked to be identified by a pseudonym – Bob Williams – for safety reasons. Williams’s small contracting firm was the subcontractor Grader hired to actually carry out Chemonics’s agricultural development work in Helmand.

Continued at link

"Instead of triumphing, many of the Americans I met there ended up dejected, confused and cynical. What happened in Little America – and what it says about America’s place, role and future in the world – haunts me as well."

(I like the little superficial shallow details: “We could fill that baby up,” Williams said, referring to the bone-dry pool. “If we could get this going, damn, it would be nice.”)
The new way of thinking is precisely delineated by what it is not.
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Re: Chemonics Inc.

Postby Wombaticus Rex » Sun Mar 22, 2015 12:38 am

Thanks for that WaPo piece, tragic yet entertaining red meat.

Digging through Foreign Policy archives on a whole other thread yielded this piece:

With their typical gift for understatement, the context goes like this...

Riv Shah, President Barack Obama’s U.S. Agency for International Development administrator, is waging a high-stakes battle to make U.S. foreign aid programs less dependent on American for-profit contractors. At the same time, he’s aiming to roughly double the amount of assistance that flows directly to governments and local organizations in the developing world.

Shah’s initiative reflects Obama’s broader desire to clean up government contracting announced early in his term, as well as the thrust of a White House review of development policy and the State Department’s first-ever Quadrennial Diplomacy and Development Review. Although Shah’s plan hasn’t gotten much public attention, it represents a seismic shift in how American foreign aid programs are conducted and will require both wrenching institutional change and a very tough political battle if it is to become a reality.

More remarkable is a big chart downstream I won't reproduce here, titled Top 10 USAID Contractors for FY 2011 -- Chemonics, Inc is ranked at #1 with a whopping USD $735,599,989 in "Obligated Program Funds." (For comparison, #2 only has USD $417m in OPF.)


Because USAID remains laden with bureaucratic restrictions, it also tends to rely on large umbrella contracts that favor a handful of well-connected Beltway firms. The 10 largest USAID contractors received more than $3.19 billion in 2011, and more than 27 percent of the agency’s overall funding was directed to American for-profit firms last year. To put this in perspective, if the for-profit contractor Chemonics were a country, it would have been the third-largest recipient of USAID funding in the world in 2011, behind only Afghanistan and Haiti.
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Re: Chemonics Inc.

Postby Wombaticus Rex » Tue Mar 31, 2015 12:59 pm

Merely determining the ownership and structure of Chemonics is proving to be a fun project unto itself. Christ Jesus.

Via: ... stors.aspx

Washington, D.C. -- Chemonics International Inc. has been sold to a group of private investors led by Arizona businessman Scott Spangler and senior managers of the 23-year-old firm. The sale closed on March 30, 1999.

"The sale gives us a strong and positive underpinning for our future growth," said Chemonics President and Founder Thuston Teele. "We are delighted with the outcome."

As the firm's majority partner and stockholder, Spangler will serve as chairman of the board. Other board members and co-investors include Eyk Von Otterloo, a private investor based in Boston; Chemonics Chief Financial Officer Ashraf Rizk; and Teele.

"International development is a lifelong interest of mine," Spangler said. "I am pleased to participate in the ownership of one of its leading practitioners."

The sale, estimated at $30 million, transferred all Chemonics' assets, including staff and contracts, to the new owners. Senior management is unchanged and the firm will continue to do business under the same name.

"The biggest change is that we will have, for the first time, a board with which we will have a very strong rapport," said Teele, "Equally important is that we will offer a stronger financial base from which to serve our clients and grow."

Teele said the firm has negotiated a $21 million line of credit with NationsBank, a long-time financial partner, and that sales in the fiscal year ending March 31 are estimated at about $85 million -- a 45 percent increase over prior fiscal year sales of $58.2 million.

Chemonics' former parent, ERLY Industries, has been in Chapter 11 since September 1998. Spangler, a private investor, serves on the boards of several non-profit organizations involved in international development. He is vice chairman of Save the Children and a director of Africare, United World Colleges, and Population Action International.

In 1990, he was nominated by President George Bush and confirmed by the U.S. Senate as assistant administrator of the U.S. Agency for International Development's Africa Bureau. He was nominated and confirmed as the agency's associate administrator for operations in 1991 and served as acting administrator in late 1992.

Before this, Spangler was president and CEO of AZL Resources, Inc., an American Stock Exchange-listed energy and agricultural company headquartered in Arizona. In the 1960s, he lived and worked in Ghana and Uganda as an economic advisor to their governments under an MIT/Ford Foundation program.

Teele founded Chemonics International in 1975. The firm is a leading provider to emerging market countries of consulting services in environment, economic reform, privatization, municipal management, and agriculture. Its main clients are the U.S. Agency for International Development, World Bank, InterAmerican Development Bank, Asian Development Bank, U.S. Trade & Development Agency, and the U.S. Environmental Protection Agency.

There is another Scott Spangler -- middle inital A -- who is a registered sex offender in Arizona; they are not the same person.

Eyk Von Otterloo is one of those remarkable guys who manages to avoid a Wikipedia page, despite controlling over $100 bn of investments, working with Jeremy Grantham for decades, and being a globe-trotting art collector who has been hugely generous to Yale.
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Re: Chemonics Inc.

Postby Iamwhomiam » Sat Apr 04, 2015 4:38 pm

Great job putting this together, Mr. WRex and cpt, what an addition! (kinda evokes nostalgia!) Thank you.

Maybe add USAID to the title? meh

I feel we should discard "Octopus" as antiquated and inadequate. I suggest we now cal it "Mold."

Because 'it' operates similarly to a slime mold, reaching out wherever possible, retracting when overcoming obstacles becomes to difficult or costly, but then trying another tact of course, finds success and proceeds to exploit its newly acquired territory.

Gives new meaning to "Breaking The Mold."

Good work!. Thanks for being curious, Rex
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Re: Chemonics Inc. / USAID

Postby tapitsbo » Fri Oct 07, 2016 2:24 pm ... s-military

An unmonitored money dump?

USAID relies on Chemonics to deliver resources to the White Helmets. The company’s contract with the group is part of the $339.6 million committed by USAID for “supporting activities that pursue a peaceful transition to a democratic and stable Syria.” This whopping sum of money supplements the reported $1 billion the CIA spent in the past year supplying and training the rebel forces attempting to overthrow the Syrian government, fueling a grinding civil war that necessitates the presence of thousands of first responders.
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