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July 06, 2005

Follow the money

Corruption "What’s happened to the rebuilding of Iraqi society?

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 ‘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’…

…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 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…

…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…

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."

Documentation: The Special Inspector General for Iraq Reconstruction

(From Monkey Filter. More there: Iraq Index from The Brookings Institute)

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July 6, 2005 in War in Iraq | Permalink

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