Corruption In Iraq May Account for More Than 1/3 of the Total Cost of the US-Iraq Occupation

< Money that just "disappeared"

As with what always seems to happen after the major military action in a war is concluded and the reconstruction begins, corruption, both political and financial tend to become major obstructions to any chances of success. Unfortunately, the very long, continuing US military occupation of Iraq has apparently dulled the memories of most of the American public. This failure of the public's memory is particularly true when recalling the poor political appointment decisions made in 2003 by the Bush administration. The appointments being referred to here were for those individuals that were given the authority to initially head up the Coalition Provisional Authority (CPA) of Iraq. This was of course, the operation that ran the Iraqi government prior to the election of an interim Iraqi government. The inappropriate decisions made at that time, along with the bad idea of privatizing and out-sourcing the occupation and reconstruction of Iraq has continued to fuel what may be the most corrupt (and expensive) reconstruction effort in the history of the world. And there is currently no end in sight....

Instead of offering a long article and going on and on about what has occurred over the past 5 years, I will just list in a bulleted fashion, the items that can be backed up by official reports or from well known, qualified publications. Those references will be noted where appropriate.

Corruption Issues in Iraq:

>>>Transparency International (TI) is a well recognized international organization that focuses on all issues of corruption in governments. Here are some items from their investigation reports:

>>>"In Iraq, allegations range from petty bribery to large scale embezzlement, expropriation, profiteering and nepotism." The TI Report has stated that the corruption in Iraq will probably become "the biggest corruption scandal in history". Report contributor; Reinourd Leenders said; "I have seen all sorts of levels of corruption in Iraq, starting with petty officials asking for bribes to process a passport, to contractors delivering shoddy work and the kind of high level corruption involving ministers and high officials handing out million dollar contracts to their friends and clients."

>>>The TI Report also stated: "But it's not just about Iraqis dividing up the cake. US audits of its own spending have found repeated shortcomings including a lack of competitive bidding for contracts worth billions of dollars, payment of contracts without adequate certification that the work has been done, and in some cases, outright theft."

>>>The CPA report by special inspector Stuart Bowen found that $8.8 Billion dollars from Iraqi oil revenues had been distributed by US administrators to Iraqi ministries w/o proper accounting procedures. The money has virtually disappeared.

>>>The US Pentagon's auditing agency found that Halliburton Corp., formally run by US VP, Dick Cheney, overcharged on a no-bid contract by more than $108 Million dollars.

>>>Halliburton's subsidiary KBR is being investigated by a US House of Representatives committee for charging $27 Million dollars to transport $82,000 dollars of fuel from Kuwait to Iraq.

>>>Transparency Int'l, the Christian Science Monitor, Newsweek and the New Standard publications have reported and heavily criticized that the US government is refusing to prosecute US firms accused of corruption in Iraq. The reason being that the CPA, was an "occupation government" and an "international authority", not an arm of the US government. Therefore, US Federal judges have stated that US laws could not be used to prosecute. This was the final decision, even though, President George W. Bush signed a 2003 law authorizing $18.7 billion dollars to go to the "US authorities in Iraq as an entity of the United States government."

>>>Max Boot, Senior Fellow at the Council on Foreign Relations wrote in the LA Times: "The heavy use of private US contractors by the Bush Administration not only lead to corruption problems, but is impeding the US military's progress in Iraq."

>>>Peter Singer, a Fellow at the Brookings Institute and a respected political author said that due to all the civilians performing military, construction and oil work in Iraq, the "Coalition of the Willing" should more aptly be described as the; "Coalition of the Billing".

>>>Even the international reporting firm Reuters reported that; "One of the biggest problems to the establishment of a legitimate government in Iraq is the rampant corruption inside the Iraqi Government."

>>>The head of the Commission on Public Integrity (CPI) in Iraq, which was set up to fight corruption in Iraq, has said that he continues to receive pressure from the Iraqi government to "not work so hard".

>>>Due to the Iraqi oil pipelines being blown up, the oil must be transported by oil tankers on Iraq's roads. The smuggling of the oil has become so bad that it is sometimes referred to as the "Second Insurgency". Senior US official, Stuart Bowen, in charge of auditing Iraq's faltering reconstruction since 2004, said corruption had reached such levels to threaten the survival of the state. A US government report has concluded that oil smuggling alone, abetted by corrupt Iraqi officials, is netting insurgents $100 Million dollars per year. This has helped make them financially self-sustaining.

>>>Mr. Bowen has stated that the insurgency has also been abetted by rampant "US incompetence". In an audit by Mr. Bowen's inspectors, they found that 14,000 guns, paid for out of US reconstruction funds for Iraqi government use, could not be accounted for. Where they ended up can never be fully known because no one from the US chose to write down the serial numbers before they disappeared. In fact, only approximately 10,000 of the 370,000 US funded weapons that have been distributed in Iraq have had the serial numbers recorded as per US Defense Department regulations.

>>>In 2006, Mr. Bowen's inspectors referred 25 cases of fraud to the US justice Department for criminal investigation. Four have led to convictions and 90 more are still under investigation.

>>>Back during the days of the CPA's authority, Mr. Bowen's group confirmed $9 Billion dollars in Iraqi oil revenues that could not be accounted for. They decision had been made that the Iraqis need US dollars and the cash was flown into the country in shrink-wrapped bundles on military transport planes. The money was then handed over (by the ton) to the Iraqi ministries by the head of the CPA, Mr. Paul Bremer. (Mr. Bremer was a political diplomat appointed by President Bush.) Mr. Bowen said in his testimony to the US Congress; "We know it (the money) got to the Iraqis, but we don't know how it was used."

>>>(Here is an even bigger problem and that is the US government's process for giving out reconstruction contracts.)

It was decided by the US administrators to divide the Iraqi economy into "sectors". The government then distribute the reconstruction contracts among 9 large US corporations. In most cases, the contracts were distributed without competitive bids and were on a "cost-plus" basis. Even though there was a rush to sign the contracts in early 2004, much of the work did not even start until the end of the year.

>>>Two, Department of Defense employees and a Pentagon contract employee have pleaded guilty, admitting that they steered $8 million dollars in contracts to US contractors for $1 million dollars in cash, jewelry, cars and prostitutes.

>>>An audit has found that Halliburton's KBR Division was awarded an oil industry repair contract in February 2004. The repairs did not start until November, but KBR still charged $53 Million dollars for "over-head costs" for the time from February until November. The audit went on to show that half of KBR's $300 Million dollars in Iraqi construction projects went for "over-head costs".

>>>With all of the problems with KBR, they have still continued to win new no-bid, US government contracts.

>>>A California Company, Parsons Corporation, was found to have only finished 6 out of 140 primary healthcare centers in Iraq. Parsons' contract was finally ended "for convenience". "For convenience" means Parsons was still "Paid-in-Full" for the other 134 centers they did not build.

>>>Parsons also had built an Iraqi Police College. The plumbing was so bad, the sewage from the upper floors rained down on the police cadets when the toilets upstairs were flushed. It is very difficult to assign punitive action for any shoddy construction work performed in Iraq.

>> Most of the reasons for the problems with contractors has been due to poor supervision by the CPA. The CPA employees were not chosen for their financial expertise, but instead for their political loyalty to George Bush and his administration. A number of high-level managers and Directors in the CPA had no previous experience and some were just recently out of school. In one example, a high-level manager with the power to make multi-million dollar decisions was only 26 years old. For his previous work experience, he had driven an ice cream truck while he was in college. He was however, a very loyal, hard working Republican worker for the election of George W. Bush.

>>>According to a draft of a US government internal report that was acquired by cable TV's MSNBC, supplies and medicine in Baghdad's overcrowded hospitals have been siphoned off and sold elsewhere for profit because of the corruption in the Iraqi Ministry of Health.

>>>US Advisers to the Iraq's Anti-Corruption Agency have stated: "Corruption protected by senior members of the Iraqi Government remains untouchable."

>>>An entire battalion of Iraqi police "was found to be nonexistent" and corruption in the Iraqi Army is "widespread" with "ghost employees" and shortages of supplies.

>>>The report also said that a corruption incident implicated a Shiite Iraqi Oil Minister and four oil ministry officials. One of the officials was Sunni. A technicality was used to exempt the three Shiites from prosecution and the Sunni was the only one to go to prison.

>>>Iraqi law allows the Prime Minister to exempt Cabinet Members from prosecution. It also allows ministers to exempt their employees as well. Stuart Bowen said is was basically like a "Get Out Of Jail Free" card.

>>>Top Iraqi anti-corruption investigator, Judge Rahdi al Rahdi, says the amount of missing money involved in just his investigations alone is approximately $11 Billion dollars.

>>>Ali Allawi, a former Iraqi Minister, said there are serious corruption problems in every government department, especially the Ministries of Oil, Health, Transportation and Trade.

>>>Allawi says that US Authorities can do little because of the Iraqi officials with whom they are dealing. "This is a group they are saddled with and they must support them and must just grin and bear it."

Coming soon: Iraqi corruption "Whistleblowers" are punished for turning in examples of corruption.