Thursday, August 04, 2005

Did Paul Bremer steal billions of US budget for Iraq?

At the end of the Iraq war, huge sums of money were made available to the US-led provisional authorities, headed by Paul Bremer, to spend on rebuilding the country. By the time Bremer left the post eight months later, $8.8bn of that money had disappeared. Ed Harriman on the extraordinary scandal of Iraq’s missing billions!

*Thursday July 7, 2005*

*Guardian*

When Paul Bremer, the American pro consul in Baghdad until June last year, arrived in Iraq soon after the official end of hostilities, there was $6bn left over from the UN Oil for Food Programme, as well as sequestered and frozen assets, and at least $10bn from resumed Iraqi oil exports. Under Security Council Resolution 1483, passed on May 22 2003, all these funds were transferred into a new account held at the Federal Reserve Bank in New York, called the Development Fund for Iraq (DFI), and intended to be spent by the Coalition Provisional Authority (CPA) "in a transparent manner … for the benefit of the Iraqi people".

The US Congress also voted to spend $18.4bn of US taxpayers’ money on the redevelopment of Iraq. By June 28 last year, however, when Bremer left Baghdad two days early to avoid possible attack on the way to the airport, his CPA had spent up to $20bn of Iraqi money, compared with $300m of US funds. The "reconstruction" of Iraq is the largest American-led occupation programme since the Marshall Plan - but the US government funded the Marshall Plan. Defence secretary Donald Rumsfeld and Paul Bremer have made sure that the reconstruction of Iraq is paid for by the "liberated" country, by the Iraqis themselves.

The CPA maintained one fund of nearly $600m cash for which there is no paperwork: $200m of it was kept in a room in one of Saddam’s former palaces. The US soldier in charge used to keep the key to the room in his backpack, which he left on his desk when he popped out for lunch. Again, this is Iraqi money, not US funds.
The "financial irregularities" described in audit reports carried out by agencies of the American government and auditors working for the international community collectively give a detailed insight into the mentality of the American occupation authorities and the way they operated. Truckloads of dollars were handed out for which neither they nor the recipients felt they had to be accountable.

The auditors have so far referred more than a hundred contracts, involving billions of dollars paid to American personnel and corporations, for investigation and possible criminal prosecution. They have also discovered that $8.8bn that passed through the new Iraqi government ministries in Baghdad while Bremer was in charge is unaccounted for, with little prospect of finding out where it has gone. A further $3.4bn appropriated by Congress for Iraqi development has since been siphoned off to finance "security".

Although Bremer was expected to manage Iraqi funds in a transparent manner, it was only in October 2003, six months after the fall of Saddam, that an International Advisory and Monitoring Board (IAMB) was established to provide independent, international financial oversight of CPA spending. (This board includes representatives from the United Nations, the World Bank, the IMF and the Arab Fund for Economic and Social Development.)
The IAMB first spent months trying to find auditors acceptable to the US. The Bahrain office of KPMG was finally appointed in April 2004. It was stonewalled.

"KPMG has encountered resistance from CPA staff regarding the submission of information required to complete our procedures," they wrote in an interim report. "Staff have indicated … that cooperation with KPMG’s undertakings is given a low priority." KPMG had one meeting at the Iraqi Ministry of Finance; meetings at all the other ministries were repeatedly postponed. The auditors even had trouble getting passes to enter the Green Zone.

There appears to have been good reason for the Americans to stall. At the end of June 2004, the CPA would be disbanded and Bremer would leave Iraq. There was no way the Bush administration would want independent auditors to publish a report into the financial propriety of its Iraqi administration while the CPA was still in existence and Bremer at its head still answerable to the press. So the report was published in July.

The auditors found that the CPA didn’t keep accounts of the hundreds of millions of dollars of cash in its vault, had awarded contracts worth billions of dollars to American firms without tender, and had no idea what was happening to the money from the Development Fund for Iraq (DFI), which was being spent by the interim Iraqi government ministries.

This lack of transparency has led to allegations of corruption. An Iraqi hospital administrator told me that when he came to sign a contract, the American army officer representing the CPA had crossed out the original price and doubled it. The Iraqi protested that the original price was enough. The American officer explained that the increase (more than $1m) was his retirement package.

When the Iraqi Governing Council asked Bremer why a contract to repair the Samarah cement factory was costing $60m rather than the agreed $20m, the American representative reportedly told them that they should be grateful the coalition had saved them from Saddam. Iraqis who were close to the Americans, had access to the Green Zone or held prominent posts in the new government ministries were also in a position personally to benefit enormously. Iraqi businessmen complain endlessly that they had to offer substantial bribes to Iraqi middlemen just to be able to bid for CPA contracts. Iraqi ministers’ relatives got top jobs and fat contracts.

Further evidence of lack of transparency comes from a series of audits and reports carried out by the CPA’s own inspector general’s office (CPAIG). Set up in January 2004, it reports to Congress. Its auditors, accountants and criminal investigators often found themselves sitting alone at cafe tables in the Green Zone, shunned by their CPA compatriots. Their audit, published in July 2004, found that the American contracts officers in the CPA and Iraqi ministries "did not ensure that … contract files contained all the required documents, a fair and reasonable price was paid for the services received, contractors were capable of meeting delivery schedules, or that contractors were paid in accordance with contract requirements".

Pilfering was rife. Millions of dollars in cash went missing from the Iraqi Central Bank. Between $11m and $26m worth of Iraqi property sequestered by the CPA was unaccounted for. The payroll was padded with hundreds of ghost employees. Millions of dollars were paid to contractors for phantom work. Some $3,379,505 was billed, for example, for "personnel not in the field performing work" and "other improper charges" on just one oil pipeline repair contract.

Most of the 69 criminal investigations the CPAIG instigated related to alleged theft, fraud, waste, assault and extortion. It also investigated "a number of other cases that, because of their sensitivity, cannot be included in this report". One such case may have arisen when 19 billion new Iraqi dinars, worth about £6.5m, was found on a plane in Lebanon that had been sent there by the American-appointed Iraqi interior minister.

At the same time, the IAMB discovered that Iraqi oil exports were unmetered. Neither the Iraqi State Oil Marketing Organisation nor the American authorities could give a satisfactory explanation for this. "The only reason you wouldn’t monitor them is if you don’t want anyone else to know how much is going through," one petroleum executive told me.

Officially, Iraq exported $10bn worth of oil in the first year of the American occupation. Christian Aid has estimated that up to $4bn more may have been exported and is unaccounted for. If so, this would have created an off-the-books fund that both the Americans and their Iraqi allies could use with impunity to cover expenditures they would rather keep secret - among them the occupation costs, which were rising far beyond what the Bush administration could comfortably admit to Congress and the international community.

In the few weeks before Bremer left Iraq, the CPA handed out more than $3bn in new contracts to be paid for with Iraqi funds and managed by the US embassy in Baghdad. The CPA inspector general, now called the Special Inspector General for Iraq Reconstruction (Sigir), has just released an audit report on the way the embassy has dealt with that responsibility. The auditors reviewed the files of 225 contracts totalling $327m to see if the embassy "could identify the current value of paid and unpaid contract obligations".

It couldn’t. "Our review showed that financial records … understated payments made by $108,255,875" and "overstated unpaid obligations by $119,361,286". The auditors also reviewed the paperwork of a further 300 contracts worth $332.9m: "Of 198 contract files reviewed, 154 did not contain evidence that goods and services were received, 169 did not contain invoices, and 14 did not contain evidence of payment."

Clearly, the Americans see no need to account for spending Iraqis’ national income now any more than they did when Bremer was in charge. Neither the embassy chief of mission nor the US military commander replied to the auditors’ invitation to comment. Instead, the US army contracting commander lamely pointed out that "the peaceful conditions envisioned in the early planning continue to elude the reconstruction efforts". This is a remarkable understatement. It’s also an admission that Americans can’t be expected to do their sums when they are spending other people’s money to finance a war.

Lack of accountability does not stop with the Americans. In January this year, the Sigir issued a report detailing evidence of fraud, corruption and waste by the Iraqi Interim Government when Bremer was in charge. They found that $8.8bn - the entire Iraqi Interim Government spending from October 2003 through June 2004 - was not properly accounted for. The Iraqi Office of Budget and Management at one point had only six staff, all of them inexperienced, and most of the ministries had no budget departments. Iraq’s newly appointed ministers and their senior officials were free to hand out hundreds of millions of dollars in cash as they pleased, while American "advisers" looked on.

"CPA personnel did not review and compare financial, budgetary and operational performance to planned or expected results," the auditors explained. One ministry gave out $430m in contracts without its CPA advisers seeing any of the paperwork. Another claimed to be paying 8,206 guards, but only 602 could be found. There is simply no way of knowing how much of the $8.8bn has gone to pay for private militias and into private pockets.

"It’s remarkable that the inspector general’s office could have produced even a draft report with so many misconceptions and inaccuracies," Bremer said in his reply to the Sigir report. "At liberation, the Iraqi economy was dead in the water. So CPA’s top priority was to get the economy going."

The Sigir has responded by releasing another audit this April, an investigation into the way Bremer’s CPA managed cash payments from Iraqi funds in just one part of Iraq, the region around Hillah: "During the course of the audit, we identified deficiencies in the control of cash … of such magnitude as to require prompt attention. Those deficiencies were so significant that we were precluded from accomplishing our stated objectives." They found that CPA headquarters in Baghdad "did not maintain full control and accountability for approximately $119.9m", and that agents in the field "cannot properly account for or support over $96.6m in cash and receipts". The agents were mostly Americans in Iraq on short-term contracts. One agent’s account balance was "overstated by $2,825,755, and the error went undetected". Another agent was given $25m cash for which Bremer’s office "acknowledged not having any supporting documentation". Of more than $23m given to another agent, there are only records for $6,306,836 paid to contractors.

Many of the American agents submitted their paperwork only hours before they headed to the airport. Two left Iraq without accounting for $750,000 each, which has never been found. CPA head office cleared several agents’ balances of between $250,000 and $12m without any receipts. One agent who did submit receipts, on being told that he still owed $1,878,870, turned up three days later with exactly that amount. The auditors thought that "this suggests that the agent had a reserve of cash", pointing out that if his original figures had been correct, he would have accounted to the CPA for approximately $3.8m more than he had been given in the first place, which "suggests that the receipt documents provided to the DFI account manager were unreliable".

So where did the money go? You can’t see it in Hillah. The schools, hospitals, water supply and electricity, all of which were supposed to benefit from these funds, are in ruins. The inescapable conclusion is that many of the American paying agents grabbed large bundles of cash for themselves and made sweet deals with their Iraqi contacts.

And so it continues. The IAMB’s most recent audit of Iraqi government spending talks of "incomplete accounting", "lack of documented justification for limited competition for contracts at the Iraqi ministries", "possible misappropriation of oil revenues", "significant difficulties in ensuring completeness and accuracy of Iraqi budgets and controls over expenditures" and "non-deposit of proceeds of export sales of petroleum products into the appropriate accounts in contravention of UN Security Council Resolution 1483".

In the absence of any meaningful accountability, Iraqis have no way of knowing how much of the nation’s wealth is being used for reconstruction and how much is being handed out to ministers’ and civil servants’ friends and families or funnelled into secret overseas bank accounts. Given that many Ba’athists are now back in government, some of that money may even be financing the insurgents.

Both Saddam and the US profited handsomely during his reign. He controlled Iraq’s wealth while most of Iraq’s oil went to Californian refineries to provide cheap petrol for American voters. US corporations, like those who enjoyed Saddam’s favour, grew rich. Today, the system is much the same: the oil goes to California, and the new Iraqi government spends the national wealth with impunity.

*·* Bremer maintained one slush fund of nearly $600m in cash for which there is no paperwork: $200m of it was kept in a room in one of Saddam’s former palaces

*·* 19 billion new Iraqi dinars, worth about £6.5m, was found on a plane in Lebanon that had been sent there by the new Iraqi interior minister

*·* One ministry claimed to be paying 8,206 guards, but only 602 could be found

*·* One American agent was given $23m to spend on restructuring; only $6m is accounted for

This is an edited version of an article that appears in the current issue of the London Review of Books (lrb ).

Guardian Unlimited © Guardian Newspapers Limited 2005

62 comments:

jemyr said...

http://www.health-now.org/site/article.php?articleId=270&menuId=1

(published in 2003)

Following months of rumours, police have arrested several people on suspicion of stealing US $10 million worth of medicine and selling it on the black market, the new inspector-general at the Ministry of Health told IRIN in Baghdad.

Medicine bought for hospitals earlier this year seemed to disappear quickly, said Adel Abdullah Muhsin, the new inspector-general. US administrator Paul Bremer recently named independent inspector-generals in all Iraqi ministries to investigate allegations of corruption and kickbacks.

Despite the ministry's virtually non-existent inventory system, Muhsin enlisted 60 pharmacists across the country to help him find the missing drugs. The pharmacists quickly came back with their verdict - medicine wa stolen from warehouses, it was stolen from hospitals, it was even stolen on its way to patients, he said.

jemyr said...

http://www.rense.com/general43/frag.htm

jemyr said...

http://www.health-now.org/site/article.php?menuId=14&articleId=14

jemyr said...

http://www.freerepublic.com/focus/news/712720/posts

http://perkdogbuddasilva.blogspot.com/2005/01/life-is-good-or-cocoa-out-wazoo.html

http://www.usip.org/library/oh/sops/iraq/sec/goodwin.pdf

"
We saw very early on the need to involve the international community as well as the NGOs, all
these people; just try to get a big-tent approach was really what we were looking at. On August
17th we invited the World Bank, the UN, WHO, UNICEF, the European Commission, DFID (UK
Dept. for International Development), USAID, and a broad spectrum of Iraqis from around the
country, from the north and south. We also invited Ministry of Health employees to be part of
this group.
For the next three days we [separated into] nine work groups, [each of] which would focus on
things like public health, pharmaceuticals and medical distribution, licensing and credentialing
issues—there were nine different categories. We kind of said, “Okay, we need to lay out the
outcomes we want [and figure out hoe to achieve them].” For three days, August 17th through
the 19th, we kind of laid out “Here’s the plan going forward in developing the strategic plan.”
It was a wonderful three days of meetings, and unfortunately it ended at about three o’clock on
August 19th. Several of the people that were attending that meeting went over to the Canal Hotel
to check their email and have some meetings, which then blew up around four o’clock. We
spent the rest of the night evacuating patients, dealing with the wounded, things like that. "

madtom said...

"I placed a link to this post in Truth Teller's comment section."

Thanks,
I saw it, I was just here looking at them.

I try to cover both sides, but there are many sides to any one issue and I never "claimed" to cover them all. Myself.

madtom said...

"'My apologies again."

Don't sweat it. NAN
I knew what you meant, I was making it clear to the "other" that are always out there.

Bruno said...

Johninnz --

G'day to you, mate. Nice reply.


Dan --

[d] "Yet, I am also aware of thousands of projects the US has overseen including rebuilding roads and bridges, schools, water treatment facilities, electrical generation, building manufacturing, and others. This continues and has cost billions of $$$ so far. I do have an extensive list of these which I would post here but I have misplaced the file somewhere in the hundreds of folders on my computer and can't locate it at present."


Well, THEORETICALLY, of course. In reality, Iraqi money has been used to pay US companies to rebuild US caused war damage at extortionate rates, hasn't it? That's the reality, isn't it?

Unlike you, I have thousands of documents on Iraq on my computer, and unlike you, I keep them in order, so that I can find them. Like this:


Audits Document Rampant Waste, Corruption in Iraq Reconstruction
BY DAVID WOOD c.2005 Newhouse News Service

"[...]
In addition, U.S. occupation authorities in Baghdad spent almost $20 billion in Iraqi funds, most from oil sales and formerly held by the United Nations. It was turned over to the United States in 2003 for humanitarian and development programs. Auditors from Congress' Government Accountabilty Office, the Defense Contract Audit Agency, the U.S. Army Audit Agency and the State Department, among others, have raised serious questions about how all this money was used.

Pentagon investigators, for example, found $219 million in "unacceptable" charges under a contract with Halliburton Co., the U.S. contracting giant, for the $2.5 billion "Restore Iraqi Oil" program to supply Iraq with fuel and rebuild its oil industry. Another $60 million in claims were "unsupported" by documentary evidence -- receipts, in short. A separate program, the Development Fund for Iraq, was financed by $20 billion in Iraqi money. Between June 2003 and June 2004, nearly $12 billion of the money was shipped to Iraq in cash.

U.S. military auditors including Stuart W. Bowen, the Pentagon's special inspector general for Iraq reconstruction, have detailed millions of dollars that are missing or not properly accounted for. Of $120 million sent to one region for use by U.S. authorities, $96.6 million couldn't be accounted for. In one case, $7.2 million in $100 bills simply disappeared in Iraq, according to Bowen. Two cases of alleged fraud -- one involving $1.5 million, the other an unspecified amount -- are pending.

Pentagon auditors found that one Iraqi ministry had been paid to hire 8,206 guards, but only 602 were at work; Iraqi Airways put in claims for a payroll of 2,400 employees when it could justify only 400. U.S. authorities, a Pentagon audit report said, "did not implement adequate controls" to prevent such abuse.

Of about $1.6 billion from the Development Fund for Iraq that went to Halliburton, Defense Department auditors questioned some $218 million in apparent overcharges, including claims for labor, material, subcontracts and administrative expenses. [...]" //end excerpt


Ooops. That's right, not only have US contractors and agents been wallowing and guzzling that cash like pigs in a pig trough - but to reiterate - the money is IRAQI money.

For emphasis:


Where has all the money gone? Following the auditors into Iraq
by Ed Harriman - July 18, 2005 - Global Research

"[…] The 'reconstruction' of Iraq is the largest American-led occupation programme since the Marshall Plan. But there is a difference: the US government funded the Marshall Plan whereas Donald Rumsfeld and Paul Bremer have made sure that the reconstruction of Iraq is paid for by the 'liberated' country, by the Iraqis themselves. There was $6 billion left over from the UN Oil for Food Programme, as well as sequestered and frozen assets, and revenue from resumed oil exports (at least $10 billion in the year following the invasion). Under Security Council Resolution 1483, passed on 22 May 2003, all of these funds were transferred into a new account held at the Federal Reserve Bank in New York, called the Development Fund for Iraq (DFI), so that they might be spent by the CPA 'in a transparent manner . . . for the benefit of the Iraqi people'. Congress, it's true, voted to spend $18.4 billion of US taxpayers' money on the redevelopment of Iraq. But by 28 June last year, when Bremer left Baghdad two days early to avoid possible attack on the way to the airport, his CPA had spent up to $20 billion of Iraqi money, compared to $300 million of US funds.[…]" //end excerpt


That's right: 20 BILLION Iraqi $ vs 300 MILLION US $. Spent on US companies. Companies that are responsible to their shareholders and US owners to make as much of a profit as possible, which is why their operating costs are hugely inflated over those of native Iraqi companies who could do the job for far, far less.

But hey, these big US companies are protected by big US guns, so who's to complain, right?

madtom said...

Truth Teller,

There was a news report today that said:

"MOSUL, Iraq (AP) - There's one clear sign that life in the Sunni Arab-dominated western half of this city is changing for the better - children are again playing soccer at night. The reason: fewer insurgent attacks."
My Way

I was just wondering if you could comment, have you noticed any change in the situation, is security better, are the attacks down?

madtom said...

Dan,

I'm sorry if I was a bit rude the other day, I hope you won't hold it against me. It's just that everyone's been picking on me lately...Anyway here is what my blog is all about.
I have it posted on my side bar as my mission statement with all the details. Be well.

waldschrat said...

The Iraq consttution is supposed to be ready Aug 15. I've seen a lot of comments against some parts of it published earlier. I estimate it will either be revised by the writers or will be voted down (same result) based on the comments I have read. Only the time will tell.

Chemtherapy drugs have begun to move in the FedEx tracking system.

Lynnette In Minnesota said...

Dan,

The last time I saw Hurria was on August 4 on one of the other posts. I'm sure she is fine. Assuming Bruno was telling the truth, I believe he is from South Africa, if I recall correctly.

Madtom,

I think Baghdad Bob has retired. Maybe Khalid Jarrar would be a good replacement. He certainly has the charm.

Truth teller said...

madtom

"There's one clear sign that life in the Sunni Arab-dominated western half of this city is changing for the better "

For your information, all the city of Mosul is Sunni Arab-dominated. The sheiis in Mosul is not more than 5%.
The Eastern half of the city is also Sunni Arab-dominated.

"have you noticed any change in the situation, is security better, are the attacks down?"

During the last week, there were a lot of attacks in the Western side of the city, the situation is not better in any way.
Children play soccer every where even when there are attacks, people used to the sound of explosion and morter bombs. But no body dare to come out at night, we still have a curfew at night and the American and the Iraqi police shoot any body get out at that time, even the ambulance can't get out at the time of curfew. So many people had killed because they get out for emergency reasons, most important the childbirth which frequently happened at night.

madtom said...

Is this the same mosul

The population of Mosul is principally Kurdish, but with a large minority of Assyrians, and a smaller minority of Turkomans.

as this one.

Bruno said...

*groan*

FYI, I am not Hurria. Really, what's the point of posting under a different name anyway? If you analyse the way she writes and argues and the way I do, you will find a substantial difference, methinks.

Truth teller said...

madtom

There is only one Mosul in Iraq. The information of this site is a rubbish. It is full of mistakes and nonsense.

Truth teller said...

Dan

I have no estimate, but a lot of people killed for this reason.
There is a custom here, when any one die (or killed), hie family put a blck signin which they wrire the cause of death, the time, and where the family accepted people who want to condolences. High percentage of those signs, said "killed by American fire." There are names of men, women and children.

Women attempting to give child birth, are admitted to the hospitals, days before their due days to avoid such accidents.

madtom said...

" gets understandably impatient with being told all about his city by ... and Madtom, people who are 10,000 miles away and have never been there."

How do I always get dragged into these things. I think I have left a handful of messages on this blog. Do a search, yet I get the blame for irritating people. All I did was ask for verification of a news story, and the information on Wikipedia about Mosul, which we have now been informed is all "rubbish". Lucky for us, the info on Wikipedia can be updated.

madtom said...

" High percentage of those signs, said "killed by American fire." "

As a scientist you should be well aware of the value of this type of information.

Lynnette In Minnesota said...

"It is full of mistakes and nonsense."

I don't mean to be rude, TT, but now you understand how WE feel about some of the things written about US.

Madtom,

Sometimes it doesn't take much to irritate certain people.

Dancewater said...

"It's just that everyone's been picking on me lately"

what a whiner you are!

Madtom again:
" High percentage of those signs, said "killed by American fire." "

As a scientist you should be well aware of the value of this type of information."

why on earth would they put up false information? Do you think they are unable to figure out how people really died, when they have died right in front of their eyes?

Dancewater said...

Dan:
"I JUST heard on the radio news that SOMEONE is in BIG trouble for stealing 100s of 1000s of $$$ in the Oil-for-Food Program."

I have no doubt that 100s of 1000s of $$$ have been stolen/cheated from the oil-for-food program.

But it really pales in comparison to BILLIONS stolen from the Iraqis under Bremer's watch. At least for the oil-for-food program some Iraqis got fed, in the Iraqi-reconstruction-from-American-bombing program all they got was dead, left with no water, electricity, gasoline, security, and NO reconstruction.

yeah, I know: blame it all on the insurgents! The Bush Company dropped those bombs with the purest of intentions, and nothing is ever their fault!!!

and they are never to blame!!!

Truth teller said...

Corruption every where.

Where has all the money gone?
Ed Harriman follows the auditors into Iraq


""US House of Representatives Government Reform Committee Minority Office
| Link: http://www.democrats.reform.house.gov/

US General Accountability Office
| Link: http://www.gao.gov/

Defense Contract Audit Agency
| Link: http://www.dcaa.mil/

International Advisory and Monitoring Board
| Link: http://www.iamb.info/

Coalition Provisional Authority Inspector General
| Link: http://www.cpa-ig.com/

Special Inspector General for Iraq Reconstruction
| Link: http://www.sigir.mil/

On 12 April 2004, the Coalition Provisional Authority in Erbil in northern Iraq handed over $1.5 billion in cash to a local courier. The money, fresh $100 bills shrink-wrapped on pallets, which filled three Blackhawk helicopters, came from oil sales under the UN’s Oil for Food Programme, and had been entrusted by the UN Security Council to the Americans to be spent on behalf of the Iraqi people. The CPA didn’t properly check out the courier before handing over the cash, and, as a result, according to an audit report by the CPA’s inspector general, ‘there was an increased risk of the loss or theft of the cash.’ Paul Bremer, the American pro-consul in Baghdad until June last year, kept a slush fund of nearly $600 million cash for which there is no paperwork: $200 million of this was kept in a room in one of Saddam’s former palaces, and the US soldier in charge used to keep the key to the room in his backpack, which he left on his desk when he popped out for lunch. Again, this is Iraqi money, not US funds.

The ‘reconstruction’ of Iraq is the largest American-led occupation programme since the Marshall Plan. But there is a difference: the US government funded the Marshall Plan whereas Donald Rumsfeld and Paul Bremer have made sure that the reconstruction of Iraq is paid for by the ‘liberated’ country, by the Iraqis themselves. There was $6 billion left over from the UN Oil for Food Programme, as well as sequestered and frozen assets, and revenue from resumed oil exports (at least $10 billion in the year following the invasion). Under Security Council Resolution 1483, passed on 22 May 2003, all of these funds were transferred into a new account held at the Federal Reserve Bank in New York, called the Development Fund for Iraq (DFI), so that they might be spent by the CPA ‘in a transparent manner . . . for the benefit of the Iraqi people’. Congress, it’s true, voted to spend $18.4 billion of US taxpayers’ money on the redevelopment of Iraq. But by 28 June last year, when Bremer left Baghdad two days early to avoid possible attack on the way to the airport, his CPA had spent up to $20 billion of Iraqi money, compared to $300 million of US funds.

The ‘financial irregularities’ described in audit reports carried out by agencies of the American government and auditors working for the international community collectively give a detailed insight into the mentality of the American occupation authorities and the way they operated, handing out truckloads of dollars for which neither they nor the recipients felt any need to be accountable. The auditors have so far referred more than a hundred contracts, involving billions of dollars paid to American personnel and corporations, for investigation and possible criminal prosecution. They have also discovered that $8.8 billion that passed through the new Iraqi government ministries in Baghdad while Bremer was in charge is unaccounted for, with little prospect of finding out where it went. A further $3.4 billion earmarked by Congress for Iraqi development has since been siphoned off to finance ‘security’.

That audit reports were commissioned at all owes a lot to Henry Waxman, a Democrat and ranking minority member of the House of Representatives Committee on Government Reform. Waxman voted in favour of the invasion of Iraq. But since the war he’s been demanding that the Bush administration account for its cost. Within six months of the invasion, Waxman’s committee had evidence that the Texas-based Halliburton corporation was being grossly overpaid by the American occupation authorities for the petrol it was importing into Iraq from Kuwait, at a profit of more than $150 million. Waxman and his assistants found that Halliburton was charging $2.64 a gallon for petrol for Iraqi civilians, while American forces were importing the same fuel for $1.57 a gallon.

Halliburton’s chairman, David Lesar, who took over from Dick Cheney in July 2000, robustly defended his firm. But Waxman raised another question: if Halliburton was being allowed to rip off the Iraqi people, was the Bush administration allowing it to milk the US government as well? Waxman’s committee instructed Congress’s General Accountability Office to look into Halliburton’s biggest contract in Iraq: providing virtually all back-up facilities – from meals to laundry soap – to American forces. LOGCAP (Logistics Civil Augmentation Programme) contracts like this one are a product of the new ‘slimmed down’ American military, the quartermaster’s equivalent of Rumsfeld’s ‘invasion lite’. Rather than have uniformed troops peel potatoes and scrub floors, base support services have been privatised and contracted out so that, the idea goes, soldiers can get on with the fighting. The contracts are paid on a cost-plus basis, which allows the contractor to charge for what it has spent, then add on a profit. LOGCAP contracts have not been put out to tender, but rather awarded to a few US firms, the largest being Halliburton and its subsidiary Kellogg, Brown & Root.

The GAO report of July 2004 found that in the first nine months of the occupation, KBR was allowed a free hand in Iraq: a free hand, for example, to bill the Pentagon without worrying about spending limits or management oversight or paperwork. Millions of dollars’ worth of new equipment disappeared. KBR charged $73 million for motor caravans to house the 101st Airborne Division, twice as much as the army said it would cost to build barracks itself; KBR charged $88 million for three million meals for US troops that were never served. The GAO calculated that the army could have saved $31 million a year simply by doing business directly with the catering firms that KBR hired. In June 2004, the GAO continued, ‘by eliminating the use of LOGCAP and making the LOGCAP subcontractor the prime contractor, the command reduced meal costs by 43 per cent without a loss of service or quality.’

The GAO report makes clear that the Americans had given little thought as to how they might prevent looting and rebuild Iraqi society. They hadn’t even planned how they were going to provision the US forces staying on in Iraq: ‘the Army Central Command did not develop plans to use the [KBR] contract to support its military forces in Iraq until May 2003’ – a month after Saddam fell. Even then, this contract – with an estimated value of $3.894 billion – did not adequately provide for dining facilities, pest control, laundry services, morale, welfare and recreation, troop transportation or combat support services at the American bases hastily being built across Iraq. Stung by Waxman’s revelations about Halliburton’s petrol profiteering, and realising that KBR’s costs were spiralling out of control (LOGCAP costs in Kuwait, Iraq and Afghanistan rose from a projected yearly total of $5.8 billion in September 2003 to $8.6 billion in January 2004), the army vice chief of staff ‘asked units to control costs and look for alternatives to the LOGCAP contract’. This was the first admission that the Pentagon could not afford the occupation on top of the war.

At the same time, the Pentagon’s own auditors, the Defense Contracts Audit Agency, went to Houston to have a look at KBR’s books. They were not happy with what they found:

Our examination disclosed several deficiencies in KBR’s billing system resulting in billings to the government that are not prepared in accordance with applicable laws and regulations and contract terms. We have also found system deficiencies resulting in material invoicing misstatements that are not prevented, detected and/or corrected in a timely manner.

They also found that ‘KBR also does not monitor the ongoing physical progress of subcontracts or the related costs and billings.’ When the auditors asked to see the files of payments to subcontractors to back up the invoices KBR submitted to the government, there weren’t any: ‘We found no such documents included in KBR’s subcontract files, nor did we find any log of subcontractor payments.’ So how did KBR work out its monthly invoices to the government for its whopping $3.9 billion contract? ‘The explanation begins with the costs on a spreadsheet with no indication of where or how these costs are accumulated.’ The auditors also wanted to know what happened to the money the government had paid for those three million non-existent meals:

Despite repeated requests over two months, KBR has not been able to provide an adequate explanation or adequate documentation for the payments to any DFAC [dining-hall] subcontractors. The limited documentation that has been provided shows, for example, that KBR has added ‘overage’ factors of 10 to 35 per cent to each bill for one of the subcontractors. We still do not have an adequate explanation of the ‘overage’ factor.

KBR’s response has been to tough it out. The company wrote to the auditors saying that its position regarding the meals ‘had been misquoted as well as misinterpreted’. The auditors, the corporation said, knew full well that KBR had ‘established a Tiger Team that is actively researching and analysing the facts and circumstances surrounding each of its DFAC subcontracts’. ‘Tiger Teams’ are in-house investigative units. KBR’s Tiger Team stayed at the five-star Kuwait Kempinski Hotel, where its members ran up a bill of more than $1 million. This outraged the army, whose troops were sleeping in tents at a cost of $1.39 a day. The army asked the Tiger Team to move into tents. It refused. As to how the Tiger Team ‘actively researched and analysed the facts’, we have the sworn testimony that a KBR employee gave to Congressman Waxman’s committee: ‘The Tiger Team looked at subcontracts with no invoice and no confirmation that the products contracted for were being used. Instead of investigating further, they would recommend extending the subcontract.’

The Pentagon auditors asked to see ‘evidence that KBR’s internal audit department is functionally and organisationally independent and sufficiently removed from management to ensure that it can conduct audits objectively and can report its findings, opinions and conclusions without fear of reprisal.’ KBR locked them out of its audit department. The auditors then asked who did KBR’s audits. Halliburton, KBR wrote back. The Pentagon auditors said that from then on KBR would have to submit all bills to them ‘for provisional approval prior to submission for payment’. Tough talk. But, despite all the threats to withhold payment, and with several lawsuits pending, KBR and Halliburton have now been paid more than $10 billion for quartermastering US forces in Iraq.

One of KBR’s contracts was for transporting supplies between American bases. Fleets of new Mercedes Benz trucks, costing $85,000 each, travelled up and down Iraq’s central highways every day, accompanied by armed US military escorts. If there were no goods to transport, KBR dispatched empty lorries anyway, and billed accordingly. The lorries didn’t carry replacement air and oil filters, essential when driving in the desert. They didn’t even carry spare tyres. If one broke down, it was abandoned and destroyed so no one else could use it, and left burning by the roadside. For fear of ambush, KBR drivers were told not to slow down. ‘The truck in front of the one I was riding ran a car with an Iraqi family of four off the road,’ a KBR employee told Waxman’s committee. ‘My driver said that was normal.’

American profligacy with Iraqi money has been, if anything, even worse. According to the CPA’s own rules, the authority ‘was expected to manage Iraqi funds in a transparent manner that fully met the CPA’s obligations under international law including Security Council Resolution 1483’. Despite repeated efforts, however, it was only in October 2003, six months after the fall of Saddam, that an International Advisory and Monitoring Board (IAMB), with representatives from the United Nations, the World Bank, the IMF and the Arab Fund for Economic and Social Development, was established to provide independent, international financial oversight of the CPA’s spending.

The IAMB then spent months trying to find auditors acceptable to the US. The Bahrain office of KPMG was finally appointed in April 2004. It was stonewalled. ‘KPMG has encountered resistance from CPA staff regarding the submission of information required to complete our procedures,’ they wrote in an interim report. ‘Staff have indicated . . . that co-operation with KPMG’s undertakings is given a low priority.’ KPMG had one meeting at the Iraqi Ministry of Finance; meetings at all the other ministries were repeatedly postponed. The auditors even had trouble getting passes for the Green Zone.

There was a good reason for the Americans to stall. At the end of June 2004, the CPA would be disbanded and Bremer would leave Iraq. The Bush administration wasn’t going to allow independent auditors to be in a position to publish a report into the financial propriety of its Iraqi administration while Bremer was still answerable to the press. The report was published in July. The auditors found that the CPA hadn’t kept accounts for the hundreds of millions of dollars of cash in its vault, had awarded contracts worth billions of dollars to American firms without tender, and had no idea what was happening to the money from the Development Fund for Iraq (DFI) which was being spent by the interim Iraqi government ministries.

An Iraqi hospital administrator told me that, as he was about to sign a contract, the American army officer representing the CPA had crossed out the original price and doubled it. The Iraqi protested that the original price was enough. The American officer explained that the increase (more than $1 million) was his retirement package. Iraqis who were close to the Americans, had access to the Green Zone, or held prominent posts in the new government ministries, were also in a position to benefit enormously. Iraqi businessmen complain endlessly that they had to offer substantial bribes to Iraqi middlemen just to be allowed to bid for CPA contracts. Iraqi ministers’ relatives got top jobs and fat contracts.

Hard evidence comes from a further series of audits and reports carried out by the office of the CPA’s own inspector general (CPA-IG). Set up in January 2004, it reported to Congress. Its auditors, accountants and criminal investigators often found themselves sitting alone at cafeteria tables in the Green Zone, shunned by their compatriots. Their audit, published in July 2004, found that the American contracts officers in the CPA and the Iraqi ministries ‘did not ensure that . . . contract files contained all the required documents, a fair and reasonable price was paid for the services received, contractors were capable of meeting delivery schedules, or that contractors were paid in accordance with contract requirements’.

Pilfering was rife. Millions of dollars in cash went missing from the Iraqi Central Bank. Between $11 million and $26 million worth of Iraqi property sequestered by the CPA was unaccounted for. The payroll was padded with hundreds of ghost employees. Millions of dollars were paid to contractors for phantom work: $3,379,505 was billed, for example, for ‘personnel not in the field performing work’ and ‘other improper charges’ on a single oil pipeline repair contract. An Iraqi sports coach was paid $40,000 by the CPA. He gave it to a friend who gambled it away then wrote it off as a legitimate loss. ‘A complainant alleged that Iraqi Airlines was sold at a reduced price to an influential family with ties to the former regime. The investigation revealed that Iraqi Airlines was essentially dissolved, and there was no record of the transaction.’ Most of the 69 criminal investigations the CPA-IG instigated related to alleged ‘theft, fraud, waste, assault and extortion’. It also investigated ‘a number of other cases that, because of their sensitivity, cannot be included in this report’. At around this time, 19 billion new Iraqi dinars, worth about £6.5 million, were found on a plane in Lebanon which had been sent there by the American-appointed Iraqi interior minister.

The IAMB, meanwhile, discovered that Iraqi oil exports were unmetered. Neither the Iraqi State Oil Marketing Organisation nor the American authorities could give a satisfactory explanation for this. ‘The only reason you wouldn’t monitor them is if you don’t want anyone else to know how much is going through,’ one petroleum executive told me. Officially, Iraq exported oil worth $10 billion in the first year of the American occupation. Christian Aid has estimated that oil worth up to an additional $4 billion may also have been exported and is unaccounted for. If this is correct, it would have created an off the books slush fund that both the Americans and their Iraqi allies could use with impunity to cover expenditures they would rather keep secret – among them the occupation costs, which were rising far beyond what the Bush administration could comfortably admit to Congress and the international community.

America’s situation in Iraq took a turn for the worse in April 2004, with the uprisings in Najaf and Fallujah, the Abu Ghraib prison scandal and mass defections from the new Iraqi security forces. ‘At the beginning of April,’ one of the audits says, ‘the Iraqi National Guard force held steady at around 32,000 personnel. Between 9 and 16 April this number dropped to a low of 17,500.’ As for the police, ‘the Iraqi Ministry of Interior has decided to reduce the number of police officers to 89,000’ – from 120,000 – ‘by trimming from its rolls those who have proved to be unsuitable.’ At the same time, ‘recent attacks on the pipelines reduced exports in April to an average of 1.7 million barrels per day and 1.4 million barrels per day in May. The total could possibly be lower in June.’ That’s a million barrels per day fewer than under Saddam. Across Iraq, hospitals and schools were derelict, electricity was intermittent, and water supplies were polluted.

The American response to the militant insurgency and to the loss of their moral credentials at Abu Ghraib was a ‘hearts and minds’ campaign. Law-abiding Iraqis were to be shown respect and given buckets of money, while Bremer and the CPA prepared to hand over the management of Iraq to an interim government picked by the Americans. KBR’s lorry drivers were told not to run Iraqis off the road. And millions of dollars in cash – most of it Iraqi money – were handed out by American commanders in local communities across Iraq in an attempt to buy friends. ‘The Commanders’ Emergency Reconstruction Programme continues to be a very effective programme . . . which has built trust and support for the United States at grass roots level,’ the CPA-IG report said. ‘As of 19 June 2004, the local commanders have spent $364.6 million . . . on over 27,600 small projects . . . repairing and refurbishing water and sewer lines, cleaning up highways by removing waste and debris, transporting water to remote villages, purchasing equipment for local police stations, upgrading schools and clinics, purchasing school supplies, removing ordnance from public spaces . . .’ It was too little too late. With the concentration on big infrastructure projects and contracts for American corporate cronies and Iraqi businessmen ‘friends’, there had been little for ordinary Iraqis to benefit from or to take part in. Rumsfeld knew by the beginning of 2004 that his and Bremer’s management was in deep trouble. ‘Iraqis are puzzled; they truly don’t know what the US really intends for them. We haven’t communicated well. The “story” has not been believed,’ a Personnel Assessment Team reported to Rumsfeld on 11 February 2004. ‘We have in essence a pick-up organisation in place to design and execute the most demanding transformation in recent history.’

Last September was the crucial month. By then the US government had spent $60 billion on the US forces in Iraq, and $1 billion on the Iraqi security forces. The Americans knew that they were widely hated. ‘In the war of ideas or the struggle for hearts and minds . . . American efforts have not only failed, they may also have achieved the opposite of what they intended’ was the principal finding of the Pentagon’s Defense Science Board. The answer was a big rethink – a strategic spending review. The $18.4 billion Iraq Relief and Reconstruction Fund that Congress had voted to rebuild Iraq, and which Bremer had left largely untouched and possibly never intended to spend as mandated, would be spent on counter-insurgency warfare directed by US commanders and John Negroponte from the new US embassy in Baghdad.

First, $3 billion was diverted from the budgets to restore Iraq’s destroyed electricity supply, water supply and sewers to security and law enforcement. The reduced electricity budget (down from $5.6 billion to $4.4 billion) was to be spent patching up neighbourhoods flattened by American fire power, and electricity pylons and stations sabotaged by the insurgents. The electricity supply had become one of the war’s main battlegrounds.

This meant fewer large contracts for American and international energy firms, which were further discouraged from staying in Iraq as their personnel were attacked and the price of private security soared. It also meant flickering lights and hours of power cuts for ordinary Iraqis. Yet development and reconstruction were officially deferred. Or, as the auditors put it, ‘this redistribution of funds . . . appears to be generally consistent with the stated management objective of de-emphasising longer-term development projects as funds are shifted toward more immediately realisable goals.’

‘The country’s widely failing sewage management infrastructure and the sporadic availability of potable water,’ the auditors wrote, ‘continue to pose health threats and tarnish overall impressions of reconstruction achievements.’ Yet the water and sanitation budget was cut almost in half, as long-term development was again handed over to the Iraqi government so US funds could be doled out to Iraqis in neighbourhoods where the insurgents held sway and it was now unsafe for foreigners to go. ‘Initial plans to rehabilitate large portions of the country’s water and wastewater system through the IRRF have been curtailed,’ the auditors wrote. ‘Water resources and sanitation sector funds have been reallocated to security, governance, debt relief and efforts to boost Iraqi employment opportunities . . . creating local water and wastewater projects to stimulate Iraqi employment and deliver needed services to high-risk areas.’

The budget for employing Iraqis rose by more than 350 per cent, to be spent largely on ‘local projects that will visibly impact Iraqi communities before the 30 January 2005 national election’. At the same time, ‘the construction sector saw the withdrawal of the prime design-and-build road contractor from Iraq, reportedly because of concern for personnel and site security.’ The insurgents had forced a fundamental reshaping of US spending priorities, further widened the no man’s land between themselves and US troops, polarising Iraq, and assuming the initiative in the war.

None of this has changed. In December 2004, the US Mission in Iraq allotted an extra $457 million to keep the electricity working and ‘to boost short-term employment through health, electricity and water initiatives in Najaf, Samarra, Sadr City and Fallujah. Together,’ the auditors reported, ‘the two adjustments reflect a significant change in US spending priorities.’

In March this year, a further $832 million ‘was reprogrammed for management initiatives’, largely ‘for operations and maintenance at various power and water plants, urgent work in the electrical and oil sectors’ to repair sabotage damage, and to pay for building contracts on which it had become extremely dangerous and expensive to work. The most recent audit, issued in April, reports that projects are running between 50 and 85 per cent above the original estimated costs. The free-spending days are over. Americans are having to divert increasing amounts of US development money just to keep what remains of Iraq’s damaged public utilities working, and to finance the Iraqi police and army.

Six months into the occupation, in autumn 2003, the Americans planned to transfer security to the Iraqi police and army so they could ‘draw down US forces from Iraq’. The goal was to have 250,000 Iraqis in the security forces by the following summer. However, as a GAO report submitted to Congress in March this year explains, most of the recruits were neither vetted nor properly trained. The result has been that the ‘Ministry of Interior’s security forces committed numerous serious human rights abuses’; the Iraqi police and army have been easily infiltrated by former Ba’athists and other insurgents; and morale is low.

As the GAO put it,

police and military units performed poorly during an escalation of insurgent attacks against the Coalition in April 2004 . . . Many Iraqi security forces around the country collapsed during this uprising . . . units abandoned their posts and responsibilities and in some cases assisted the insurgency . . . Police manning a checkpoint in one area were reporting convoy movements by mobile telephone to local terrorists. Police in another area were infiltrated by former regime elements.

‘In response to the unwillingness of a regular army battalion to fight Iraqi insurgents in Fallujah’, the Americans created a special Iraqi Intervention Force. Then last autumn they decided to beef up the Iraqi police service from 90,000 to 135,000, to add 20 battalions to the Iraqi National Guard and double the border guard. This February, the State Department glowingly reported that almost 82,000 Iraqi police and 60,000 troops had been trained.

These figures are grossly misleading. According to the GAO’s March report to Congress ‘the reported number of Iraqi police is unreliable because the Minister of the Interior does not receive consistent and accurate reporting from the police forces around the country. The data does not exclude police absent from duty.’ As for the army, ‘Ministry of Defense reports exclude the absent military personnel from its totals. According to DOD officials, the number of absentees is probably in the tens of thousands.’ Furthermore the State Department no longer reports on whether Iraqi security forces have the required weapons, vehicles, communication equipment and body armour. Bluntly, ‘US government agencies do not report reliable data on the extent to which Iraqi security forces are trained and equipped.’ The GAO further found that the Iraqi police are being trained for ‘community policing in a permissive security environment’ rather than getting ‘paramilitary training for a high-threat hostile environment’. It’s hardly surprising that close to 2000 Iraqi police have been killed.

This is all horribly reminiscent of American policy in Vietnam. American troops are staying in Iraq to stiffen Iraqi forces who are dying in droves in an escalating counter-insurgency war that neither the Americans nor the Iraqi forces are prepared for. The Americans originally allocated $5.8 billion to build the Iraqi security forces. In February this year, George Bush asked Congress for another $5.7 billion to go towards this task.

What’s happened to the rebuilding of Iraqi society, and real governance based on transparency and accountability? In the few weeks before Bremer left Iraq, the CPA handed out more than $3 billion in new contracts to be paid for with Iraqi funds and managed by the US embassy in Baghdad. The CPA inspector general, now called the Special Inspector General for Iraq Reconstruction, has just released an audit report on the way the embassy has dealt with that responsibility. The auditors reviewed the files of 225 contracts totalling $327 million to see if the embassy ‘could identify the current value of paid and unpaid contract obligations’. It couldn’t. ‘Our review showed that financial records . . . understated payments made by $108,255,875’ and ‘overstated unpaid obligations by $119,361,286’. The auditors also reviewed the paperwork for a further 300 contracts worth $332.9 million. ‘For 198 of 300 contracts, documentation was not available . . . to indicate that contract execution was monitored for performance and payment . . . Files did not contain evidence that goods and services had been received for 154 contracts, that invoices had been submitted for 169 contracts, or that payments had been made for 144 contracts.’

Clearly the Americans see no need to account for spending the Iraqis’ national income now any more than they did when Bremer was in charge. Neither the embassy chief of mission nor the US military commander replied to the auditors’ invitation to comment. Instead, the US army contracting commander lamely pointed out that ‘the peaceful conditions envisioned in the early planning continue to elude the reconstruction efforts.’ This is a remarkable understatement. It’s also an admission that Americans can’t be expected to do their sums when they are spending other people’s money to finance a war.

Not only the Americans are guilty of a lack of accountability. In January this year, the SIGIR issued a report detailing evidence of fraud, corruption and waste by the Iraqi Interim Government when Bremer was in charge. They found that $8.8 billion – the entire Iraqi Interim Government spending from October 2003 through June 2004 – was not properly accounted for. The Iraqi Office of Budget and Management at one point had only six staff, all of them inexperienced, and few of the ministries had budget departments. Iraq’s newly appointed ministers and their senior officials were free to hand out hundreds of millions of dollars in cash as they pleased, while American ‘advisers’ looked on. ‘CPA personnel did not review and compare financial, budgetary and operational performance to planned or expected results,’ the auditors explained. One ministry gave out $430 million in contracts without its CPA advisers seeing any of the paperwork. Another claimed to be paying 8206 guards, but only 602 could be accounted for. There is simply no way of knowing how much of the $8.8 billion went to pay for private militias and into private pockets.

‘It’s remarkable that the inspector general’s office could have produced even a draft report with so many misconceptions and inaccuracies,’ Bremer said in his reply to the SIGIR report. ‘At Liberation, the Iraqi economy was dead in the water. So CPA’s top priority was to get the economy going.’ The SIGIR responded by releasing another audit this April, an investigation into the way Bremer’s CPA managed cash payments from the Development Fund for Iraq in just one part of Iraq, the region around Hillah: ‘During the course of the audit, we identified deficiencies in the control of cash . . . of such magnitude as to require prompt attention. Those deficiencies were so significant that we were precluded from accomplishing our stated objectives.’ They found that CPA headquarters in Baghdad ‘did not maintain full control and accountability for approximately $119.9 million’, and that agents in the field ‘cannot properly account for or support over $96.6 million in cash and receipts’. These agents were mostly Americans in Iraq on short-term contracts. One agent’s account balance was ‘overstated by $2,825,755, and the error went undetected’. Another agent was given $25 million cash for which Bremer’s office ‘acknowledged not having any supporting documentation’. Of more than $23 million given to another agent, there are only records for $6,306,836 paid to contractors. Many of the American agents submitted their paperwork hours before they headed to the airport. Two left Iraq without accounting for $750,000 each; the money has never been found. CPA head office cleared several agents’ balances of between $250,000 and $12 million without any receipts. One agent who did submit receipts, on being told that he still owed $1,878,870, turned up three days later with exactly that amount. The auditors thought that ‘this suggests that the agent had a reserve of cash,’ pointing out that if his original figures had been correct, he would have accounted to the CPA for approximately $3.8 million more than he had been given in the first place, which ‘suggests that the receipt documents provided to the DFI account manager were unreliable’.

Staff at the CPA head office in Baghdad usually worked 12 hours a day, seven days a week, often on three-month postings. They didn’t trust the computer network so many of them put their records on USB sticks and in private computer files that couldn’t be opened by their replacements. At one point there was only one officer at the CPA account manager’s office clearing all the paying agents throughout Iraq. Paying agents in the field often couldn’t get – let alone be bothered with – the paperwork, which was frustrating for the honest ones and a boon to their crooked colleagues. So where did the money go? You can’t see it in Hillah. The schools, hospitals, water supply and electricity, all of which were supposed to benefit from this money, are in ruins. The inescapable conclusion is that many of the American paying agents grabbed large bundles of cash for themselves and made sweet deals with their Iraqi contacts.

And so it continues. The IAMB’s most recent audit of Iraqi government spending, which is yet to be published, talks of ‘incomplete accounting’, ‘lack of documented justification for limited competition for contracts at the Iraqi ministries’, ‘possible misappropriation of oil revenues’, ‘significant difficulties in ensuring completeness and accuracy of Iraqi budgets and controls over expenditures’, and ‘non-deposit of proceeds of export sales of petroleum products into the appropriate accounts in contravention of UN Security Council Resolution 1483’.

Bremer re-established the Iraqi Board of Supreme Audit a month before he left Baghdad. It is now said to have more than a thousand auditors and support personnel spread throughout Iraqi government ministries. A new Iraqi Commission on Public Integrity, the equivalent of the FBI, is said to have 200 staff and 15 US advisers. Yet according to the latest American figures, of more than 3400 complaints, only about one in 50 has been passed to the Commission on Public Integrity for possible prosecution.

There is an explanation for this lack of activity. On Thursday, 1 July 2004, two days after Bremer left Baghdad, Ehsan Karim, the new head of the Board of Supreme Audit, was killed by a bomb as he left the Finance Ministry. Two weeks later, Sabir Karim (no relation) was murdered in a drive-by shooting as he set off for work at the Ministry of Industry, where he was in charge of investigating corruption. A few weeks ago, another senior official investigating corruption was murdered. The IAMB keeps the names of its Iraqi delegates secret to keep them alive.

In the absence of any meaningful accountability, Iraqis have no way of knowing how much of the nation’s wealth is being handed out to ministers’ and civil servants’ friends and families or funnelled into secret overseas bank accounts. Given that many Ba’athists are now back in government, some of that money may even be financing the insurgents.

Both Saddam and the US profited handsomely during his reign. He controlled Iraq’s wealth while most of Iraq’s oil went to Californian refineries to provide cheap petrol for American voters. US corporations, like those who enjoyed Saddam’s favour, grew rich. Today the system is much the same: the oil goes to California, and the new Iraqi government spends the country’s money with impunity.""
End.

I think it is clear to you now, who is the Terrorist..!

madtom said...

"why on earth would they put up false information? Do you think they are unable to figure out how people really died, when they have died right in front of their eyes?"

Well when someone die as a result of a terrorist bomb, kidnapped, or is decapitated. What about the people that end up in the river. What gets written on the signs in those cases? You would think those signs would out number the "killed by the Americans" signs 3 to 1.

Truth teller said...

madtom

There are signs said: "killed in an explosion", "assassinated by a terrorist", or "Killed in car accident"
Every thing is written as it is. No body care to write false reasons for death.

The people that end up in the river, are usually killed at the hand of the police during interrocation..!!
Don't be surprised, it is a fact. The US army and the allied forces are the major cause of death.

madtom said...

"There are signs said: "killed in an explosion","

OK, thanks. Your original post on this made it sound as if all the signs said killed by the American.
Of course there is yet another possibility, that being, that there are a lot of insurgents living in your area, which might also cause those flags to cluster there.
Maybe we should watch for this.

"The US army and the allied forces are the major cause of death."

I won't dispute this statement, as that is what they are supposed to do.

waldschrat said...

In keeping with my tradition of redirecting the topic of conversation I am pleased to post the following:

=============================================================================================
Perseid to bathe sky in brief light

By DANA BARTHOLOMEW

Los Angeles Daily News

LOS ANGELES - Fireballs will fly across the heavens early Friday during the Perseid meteor shower, one of the most dazzling astronomical events of the year.

And veteran stargazer Tony Cook will crane his neck -- in a northeasterly direction -- to greet it.

''Even if I can't drive out to dark skies, I always get up to watch these meteors,'' said Cook, an astronomical observer at the Griffith Observatory.

''Some are fireballs bright enough to cast shadows on the ground, like fireworks, which increase in velocity toward dawn.''

The Perseid meteor shower has wowed night owls for eons.

Also known as ''The tears of St. Lawrence'' after a Christian saint reportedly martyred by Romans over a red-hot iron stove, the meteors radiate out of the constellation Perseus each August.

This year, the Perseid meteors can best be seen looking northeast under moonless skies before dawn Friday -- and to a lesser extent Saturday -- from a lounge chair or sleeping bag.

But the real magic will occur under blackened skies over nearby mountains or deserts, where a barrage of meteors is expected to ignite the Milky Way with a meteor a minute once the moon sets, from about 11 p.m. until dawn.

''Every minute is exciting,'' said Bob Alborzian, 60, of Burbank, a member of the Los Angeles Sidewalk Astronomers board who has observed the Perseids for decades. ''These objects live billions and billions of years. In comparison, we're insignificant.''

=============================================================================================

Meantime, a shipment of procarbazine has reached Dubai on it's way to Mosul, a shipment of vincristine and adriamycin will hopefully leave Minneapolis next week destined for the hospital, and a shipment of ostomy supplies larger than anything I could ever afford is being prepared by FOW-USA.

Bruno said...

Dan -

Official statistics by IBC state that resistance attacks have resulted in 9,5% of deaths and attacks by US forces 37 % of deaths. Your statement is incorrect. The Coalition is the greatest cause of casualties in Iraq.

Waldschrat -

Tell me, is the Perseid shower visible from the Southern hemisphere this time of the year? If so, methinks I'll have a few late nights ...

waldschrat said...

bruno -
I do not know if the Persied meteors can be seen from the southern hemisphere, but it never hurts to gaze at the stars a while.

Lynnette In Minnesota said...

Ahhh, Hurria, there you are. We've kind of missed your scalpel like prose.

So, what is your opinion on the constitution being drafted?

madtom said...

"Not to anyone who actually read it."

You are correct, my mistake.

jemyr said...

Here's the brochure that shows how you can donate to the ostomy organization:

http://www.fowusa.org/text/FOW-USA%20Brochure.pdf

Bruno said...

Here is an excellent source of information for anybody who wants to learn more of the events in Iraq:

http://www.blogger.com/comment.g?blogID=6654690&postID=112412765662154172

contains posts and links by Sahir.

jemyr said...

Dan,

What are you talking about?

waldschrat said...

Dan seems to have gone off the deep end a bit.

Dan, TT's daughters shut off comments in their blogs because they were recieving obscene, hurtful ravings from pseudo-patriots so wrapped up in misguided emotions that they imagined it was reasonable to send abusive messages to teenagers who are simply trying to live some sort of normal life in a war zone where chaos, destruction and death have become all too routine.

Lynnette In Minnesota said...

"These computers that he is treating his daughters to are located in California, U.S.A.!

Dan,

Please clarify.

Maybe you mean their servers for their internet provider are located in CA? I know there was a question with Riverbend and other Iraqi bloggers going through computers in Texas? If I recall correctly. It brought up the question of whether or not they were really in Iraq. But it was simlply a routing thing within the Internet. I am not an expert on the Internet, so I cannot be more specific.

Is this what you are upset about?

Lynnette In Minnesota said...

"this web thing"

And an amazing "thing" it is, isn't it?

"It is irrelevant except for Bush's desperately needed P.R..."

Now you disappoint me, Hurria. You are just spouting the party line. Don't you even want to take a stab at voicing an opinion on federalism, Islam in government or the oil revenue sharing question?


"In the meantime, the immediate, urgent and critical needs of the Iraqi people are being ignored.."

Maybe in some areas. But in others the story is a little different. (Yes, I am deliberately leaving off the source of this piece. I think they deserve a chance without interference from insurgents or others who would seek to spoil their progress. Just on the off chance that those types read this comments section.)


"The area's resurrection, and the accompanying construction boom, has come in part because of American forces, who have spent $2 million on new schools, water wells, and roads in this one northern sector since January.

"We consider this a success story," said Staff Sgt. Mike Blair, with the 1st Battalion 148th Field Artillery Regiment from Idaho, who has helped coordinate infrastructure projects as part of the unit's civil affairs team.

"Seven months ago, nothing was here. Only a few foundations had been laid. It's amazing what's happened here," he said.

Citing close cooperation with coalition forces, Karim happily rattled off a list of American-supported projects, among them $81,000 to rehabilitate the government buildings, $29,000 for the police headquarters, and $49,00 for a primary school named after an American military commander.

Earlier on, the area had been a "tent city" with many returnees setting up temporary shelter, but most of the tents are now gone since most people have managed to put up roofs and start rebuilding homes.

Many have gotten help from the Patriotic Union of Kurdistan, one of the two main Kurdish political parties, which has given each returning family $1,500 and 10 tons of cement, Karim said.

The rebuilding boom has left much of the village in a state of dust-covered construction. Tractors and bulldozers rumble over the roads as new water and sewer pipelines are being installed."


The only difference between that area and others is the violence. Support the fighters and no progress will be made. A wise man once said "Pride goeth before a fall".

Lynnette In Minnesota said...

Here is an interesting excerpt from an opinion piece in the August 19 Wall Street Journal:

"How the U.S. adventure in Iraq ends is anybody's guess. However, it's repercussions will be felt, first, by the Arabs themselves. By refusing to profit from the prospective democratic upheaval that Saddam's removal ushered in; by never looking beyond the American messenger in Iraq to the message itself; by lamenting external hegemony while doing nothing to render it pointless, Arabs merely affirmed their impotence. The self-pitying Arab reaction to the Iraq war showed the terrible sway of the status quo in the Middle East. An inability to marshal change for one's benefit is the stuff of captive minds."

"Mr. Young, a Lebanese national, is opinion editor at the Daily star in Beirut and a contributing editor at Reason magazine."

He was referring to the greater Middle East, but it speaks to some peoples reactions within Iraq as well.

waldschrat said...

A question to ponder for all who live in neighborhoods where things do not blow up atrandom and kidnappers and nervous people with guns do not wander the streets:

If you were an Iraqi doctor on vacation in a neighboring country with your family, and it became clear that not all parts of the world involve daily risks to your life and shortages of the good things of this world, WOULD YOU RETURN HOME?

Many doctors have fled Iraq.

Lynnette In Minnesota said...

Yes, many professionals have fled Iraq. This is what Truth Teller and his family have received in the past.

"I talked to you about it before.. This is one side of the flyer we got.. It says: "They didn't think that we saw them, but those who work with al-Zarkawi are being watched" Najma

Lynnette In Minnesota said...

" But I must say to you that I think more and more of the world’s people are coming to see Strykerdad’s country as not any longer the defender of freedom and democracy,.."


"But my country, New Zealand, sacrificed more of its men, proportionally, than any other nation on earth in the wars of the 20th century, in defence of freedom and democracy."

Well that says it all. I for one am perfectly willing to let New Zealnd have a crack at it. Be my guest, John.

Lynnette In Minnesota said...

John,
Just for the record I don't hate you. In fact I don't really hate anyone. No, not even the terrorists we are fighting. They are deserving of pity and contempt but nothing so intense, as far as I am concerned, as hatred. Maybe our people actively fighting them would, of course, feel differently.

But the point of my comment was simply to point out that you are very ready to criticize people when you are not in their position. You are right, New Zealand is a small country, and as such has managed to fly beneath the radar of the al-Queda types. Neither do you know what it is like to have so many people expect so much from you. We are doing what we feel is the right thing. We cannot please everyone, and frankly do not have any desire to please al-Zarqawi or Osama bin Laden.

As for your dicussion, I see only your comments. The others have been deleted by someone. Strykerdad says it was not him. Sorry, this does not appear to be a fair and balanced discussion.

BTW, we certainly cannot hope to match the level of spite that is directed at us. After being called a beast, an ape, a warmonger etc. I do not have much respect for some of the people who frequent this blog.

madtom said...

"Now the Shia are fighting each other, presumably having learned too well the occupation lesson that the only solution to all problems is a gun."

As opposed to what John, to the political process they had before the war? What you see in Iraq to day is not "because of the war and occupation", it's the result of years of tyranny and oppression and a tribal society. And the peace and tranquillity that you used to read about before the war were a result of the Ministry on Information. And did not reflect really of the situation on the ground for the majority of Iraqis.

You should in fact be happy, as the administration is currently in the process of bringing back the MoI of sorts. Maybe within the next few months you'll again be treated to your favorite reports of peace and tranquillity. it's the 10 o'clock news, and all is well.

madtom said...

"Not that I give a damn about Sunnis, Shiites or Iraq in general,"

Thank you for being honest about where your coming from. Now we know, and can judge your comments in their correct context.

I guess it's safe to assume you don't give a damn about Cubans or anyone else, or is it just them brown folk you don't care for. Maybe someone out there living in the state of tyranny might still have a chance at you giving a damn. Do they? and do they require any special qualifications.

waldschrat said...

Hurria said...
"I am opposed to federalism. I am opposed to government by religion. Regarding the oil revenue sharing issue, the devil is in the details."

It's not my place to have an opinion on Iraqi politics but I find no fault with your position. You are certainly not alone in such opinions. Perhaps the end result will be that the constitution will be rejected, a more representative assembly will be elected, and a better constitution will be drafted. I could live with that. I could even applaud it!

madtom said...

John,
"And I’m afraid I now feel betrayed, just as I think America is coming to feel betrayed by the errors and dishonesty of its current government."

Well, I have to give this one. I am currently in a state of shock with the new "Iraqi Islamic Republic", may god save us all from this same fate.

waldschrat,
"Perhaps the end result will be that the constitution will be rejected, a more representative assembly will be elected, and a better constitution will be drafted. I could live with that. I could even applaud it!"

I second that motion, I would invite all my Iraqi friends to vote "No" in the upcoming referendum. There is no reason why you should have to settle for second best. I advise you to insist on and open and fair democracy, and reject the theocracy currently being presented. Just look around you, and ask yourself where has it ever worked before.

Lynnette In Minnesota said...

John,

Yes, you are being overly sensitive. My statement regarding the discussion should have been taken at face value. No insult meant to you.

Also, if you think I am a "rabid right winger", you haven't really met one. But, I will certainly defend my country to the best of my ability.


"Not that I give a damn about Sunnis, Shiites or Iraq in general.."

Try and explain that as you may, it still sounds cold to me. It also explains why you apparently would not lift a finger to help them be rid of Saddam. Who by the way did have the capability and willpower to create and use WMD's. As he has shown in the past.

Think what you like of the United States, that is your choice. Just as it is your choice on what you want to believe when reading the internet. I personaly take everything I read on the internet or elsewhere with a grain of salt. But gullibility can be an endearing personality trait.

Lynnette In Minnesota said...

"I am opposed to government by religion.

Regarding the oil revenue sharing issue, the devil is in the details."



I strongly agree with you on these two points. But I feel that if they can be resolved in a fair and equitable manner than the issue of federalism would not be such a scary (for want of a better word) one.

I do realize that there are people in Iraq who prefer the stronger central government. But I question their motives on that. As it is easier for a minority to dominate the country in that situation. Like Saddam and the Baath party did for so long. No I do not necessarily think that that is your reasoning, Hurria. But it is a distinct possiblity.

Lynnette In Minnesota said...

""Strykers", Lynette, and Dan are looking more and more like those Japanese soldiers they supposedly discovered on isolated islands years after the war was over who still thought it was going on, and that Japan was winning."

Oh, Hurria, we all have our little illusions. Only time will tell who's turn out to be reality.

Lynnette In Minnesota said...

Hmmm, a slip of the brain.

Who's = whose.

waldschrat said...

johninnz said...

Strykerdad
Well, since Truthteller seems content to let us nut cases continue to rave on...
======================================================================================

Er, Truthteller is out of own on vacation. You folks have been tilting at a vacant windmill for a few weeks now. I had supposed you knew. See This Link for confirmation.

waldschrat said...

A quote from Sistani posted in another blog:

Today the differences reached the peak when Sistani dropped a bomb by rejecting federalism and thus rejecting the constitution of the Kurdish-Sheat alliance putting the current ruling parties in a difficult position.
Sistani in his statement said "The Sunnis are your family. Stay by their side this time so that they stay by your side in the coming times…"

Lynnette In Minnesota said...

"So who's been deleting Strykerdad's comments?"

Good question. The notation on those deletions say it was by the author. So, if it's not Strykerdad than someone has access to his account. Usually if the blog administrator does the deleting, than the notation on the deletion states that.

Maybe Strykerdad needs to bring it up with Blogger.

Leonard said...

1-0 for Microsoft
Mike Howard at Microsoft points out in his blog concerning a recent article in Information Week that encapsulates in a nutshell why I like how Microsoft is approaching the whole subject of code security for its ...
Hi, you have an interesting blog here! You don't mind if I bookmark it, do you!

I have a diamond engagement rings blog that pretty much covers diamond engagement rings related stuff.

See if you like it when you have time :-)

madtom said...

"I would like to hear some specifics as to the negative comments left concerning the proposed constitution. Why so much antipathy?"

strykerdad,
I have made my most specific criticisms of the constitution here.

waldschrat said...

Dan, your comments seriously dismay me. Have you thought of seeking psychiatric help?

Lynnette In Minnesota said...

Waldschrat,

ITM is always a good read. Iraq needs more people like "the brothers".

Dan,

Take a deep breath and count to 10. Now exhale.....slowly.

madtom said...

"Thanks Mad Tom! Very well done, I will share the link to your blog with others. Great resource."

Thank you very much, but that's not my blog! That was Mad Canuck's blog. My contribution was in the comments

Truth teller said...

Strykerdad

I read just now, that some of your comments were deleted! not by you or by me.
My PC save every comment the as soon as it is published, that means all your comments are saved.
if you want, I can publish them again. just aske me to do that.

Mad Canuck said...

Strykerdad - hehee... first time my blog's been mistaken for MadTom's. Thanks for the compliment on the constitution writeup, though. I have a complete translation now and am working on a full paragraph-by-paragraph analysis of the complete draft that should be ready by this weekend.

Thanks again... :)

Truth Teller: Welcome back, I'm glad you all enjoyed Syria and Jordan.

waldschrat said...

Mad Canuck -

I'd certainly like to look at a full translation of that constitution! Not that I'm a constitutional scholar or anything, but I used to proofread gibberish written in govermentese in my former life as a bureaucrat before I retired.

Constitutions are supposedly important documents, at least that's the way they teach kids in American schools. I have to say I'm more comfortable being defensive about America's consttution than I am defending the policies of any particular American president.

madtom said...

"Iraqi Constitution Draft

Translated by the AP"
here

Mad Canuck said...

Hi Waldschrat, the full AP translation with my comments is here if you are interested.