More than five billion dollars in US aid to Pakistan has often never reached the military units it was intended for to fight Al-Qaeda and the Taliban, and was instead diverted to other programs, the New York Times reported on Monday.
Much of the money meant to reimburse frontline Pakistani units was channeled to weapons systems aimed at India and to pay inflated Pakistani reimbursement claims for fuel, ammunition and other costs, unnamed US government and military officials told the daily.
Pakistanis critical of President Pervez Musharraf said he used the reimbursements to prop up his government, and one European diplomat said the United States should have been more careful with its money.
"I wonder if the Americans have been taken for a ride," said the diplomat, who spoke on condition of anonymity.
Money intended to repay Pakistan for maintaining 100,000 troops in the restive tribal areas apparently does not reach the troops who need it, officials said.
"It is not making its way, for certain, we know, to the broader part of the armed forces which is carrying out the brunt of the operations on the border" with Afghanistan, a senior US military official told the Times.
Despite the vast funds flowing to Pakistan, a US official visiting the border recounted finding members of the country's frontier corps "standing there in the snow in sandals."
Several soldiers were wearing World War I-era pith helmets and had battered Kalashnikov rifles with only 10 rounds of ammunition each, the official said.
The two countries have never forged clear strategic goals as to how the US military aid should be spent or how Pakistan could show it was meeting Washington's expectations, according to US and Pakistani officials.
US aid to Pakistan has come under scrutiny recently in the United States given the strength of Al-Qaeda and Taliban cells in Pakistan's northwestern tribal areas as well as the failure to secure the capture of Osama bin Laden.
Musharraf has also been forced by US pressure to ease back on repressive measures, lift emergency rule, shed his military uniform and move the country toward greater democracy.
The United States provides the five billion in aid to reimburse Pakistan for carrying out military operations against terrorist threats. A separate US program delivers 300 million every year to pay for equipment and training for the Pakistan military.
The US Congress on Thursday slapped restrictions on the 300 million in traditional military aid, 50 million of which will be withheld until Pakistan shows it is restoring democratic rights.
US funds are vital for Pakistan's military, with American aid accounting for about a quarter of the military's entire budget, the paper said.
Pakistani officials interviewed by the New York Times denied their government had overcharged the United States for the "war-on-terror" military aid it gets.
But US officials cited helicopter maintenance as an example of the funding program's failure.
While Pakistan received $55 million for helicopter maintenance for an eight-month period in 2007, the officials said they found out that only 25 million had been received by the Pakistani army for helicopter maintenance for the whole of 2007.
Allegations that generous military aid to Pakistan has been squandered represent another setback for President George W. Bush's administration, which has viewed Pakistan as an important ally in the "war on terror."