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One of the government's highest profile American contractors in Afghanistan has agreed to pay tens of millions of dollars to settle allegations that it overbilled the U.S. government.

In return, the Justice Department will end its investigation into allegations that Louis Berger was intentionally overcharging American taxpayers, individuals close to the investigation told McClatchy on Thursday. The settlement, which could be as high as $65 million, would include civil and criminal penalties.

The U.S. government will spend $511 million to expand its embassy in Kabul, the U.S. ambassador said Wednesday, describing the work as a demonstration of America's long-term commitment to Afghanistan.

"We make this commitment by commemorating the recent award of a $511 million contract to expand the U.S. Embassy here in Kabul," Ambassador Karl Eikenberry said during a ceremony at the construction site that marked the formal announcement of the contract.

Afghan President Hamid Karzai has said US private security firms, including Xe Services LLC, formerly known as Blackwater, are being behind terrorism in the country.

At a press conference in Kabul, Karzai said that US security companies have been behind explosions that have claimed the lives of women and children.

An intense military campaign aimed at crippling the Taliban has so far failed to inflict more than fleeting setbacks on the insurgency or put meaningful pressure on its leaders to seek peace, according to U.S. military and intelligence officials citing the latest assessments of the war in Afghanistan.

Escalated airstrikes and special operations raids have disrupted Taliban movements and damaged local cells. But officials said that insurgents have been adept at absorbing the blows and that they appear confident that they can outlast an American troop buildup set to subside beginning next July.

"If you're asking, are there al-Qaeda in Iraq, the answer is yes, there are. It's a fact, yes." Donald Rumsfeld, US Secretary of Defence, August 2002

It was one of the key American justifications for the Iraq war. But the theory that al-Qaeda was present in Saddam-era Iraq, much cited by the Bush adminsitration in the run-up to the invasion, has been undermined by the content of secret US military documents.

Fresh evidence that US soldiers handed over detainees to a notorious Iraqi torture squad has emerged in army logs published by WikiLeaks.
The 400,000 field reports published by the whistleblowing website at the weekend contain an official account of deliberate threats by a military interrogator to turn his captive over to the Iraqi "Wolf Brigade".

The interrogator told the prisoner in explicit terms that: "He would be subject to all the pain and agony that the Wolf battalion is known to exact upon its detainees."