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  • Monday, January 31, 2005

    $9 billion missing from Iraq's funds

    You're probably aware of the oil for food scandal, what you may not be aware of is the scandal that the US led "Coalition Provisional Authority" (or the US colonial governors of Iraq) seems to have misplaced almost $9 billion worth of Iraq's money, from this article:

    One of the main benefactors of Iraq funds was Texas-based firm Halliburton (HAL.N: Quote, Profile, Research) , which was paid about $1.7 billion dollars out of those funds to bring in fuel for Iraqi civilians. U.N. auditors have asked for a full accounting of these funds.
    Halliburton's name does seem to crop up a lot when talking about corruption and cronyism doesn't it. See all recent "A Logical Voice" posts

    4 Comments:

    At 1/31/2005 03:41:00 pm, Anonymous Anonymous said...

    Actually, there are very few companies in the world that can do the kind of work done by Halliburton. Schlumberger being another, Bechtel perhaps too.

    Still, what does a reuters rep know about engineering businesses anyway, the whole point of the piece is a hit job. I reckon she failed, forgot to drag in Enron, Dick Cheney etc. Tsk tsk.

    Just a smokescreen to detract attention from the real scandal, the UN oil for food program itself, used to enrich top UN officials, their relatives and various European politicians.

     
    At 1/31/2005 04:26:00 pm, Blogger Voice 1 said...

    $9 billion a "smokescreen", I'd certainly say that amount of money could have done an awful lot of good, if the Iraqis themselves were in charge of the money.

     
    At 1/31/2005 04:33:00 pm, Anonymous Anonymous said...

    There's more than that to the issue:

    FBI Investigates Murder of U.S. Contractor in Iraq
    In other Iraq news, The FBI has launched an investigation into the recent killing of a U.S. contractor in Iraq who died just days after he accused the Iraqi Defense Ministry of corruption. 43-year-old Dale Stoffel worked for the company Wye Oak Technology which was refurbishing old Iraqi military equipment. According to the Los Angeles Times, he died shortly after he alerted U.S. officials that Iraqi officials were part of a kickback scheme involving a multi-million dollar contract awarded to his company. On Dec. 8 he met with coalition officials to discuss his concerns. Shortly after Stoffel left the meeting, he was shot dead along with a business associate and an Iraqi translator.
    - http://www.democracynow.org/article.pl?sid=05/01/20/1522225


    Published on Saturday, October 16, 2004 by the Boston Globe

    Iraq Audit Can't Find Billions
    Gaps found in spending for reconstruction

    by Bryan Bender

    WASHINGTON -- About half of the roughly $5 billion in Iraq reconstruction funds disbursed by the US government in the first half of this year cannot be accounted for, according to an audit commissioned by the United Nations, which could not find records for numerous rebuilding projects and other payments.

    One chunk of the money -- $1.4 billion -- was deposited into a local bank by Kurdish leaders in northern Iraq but could be tracked no further: The auditors reported that they were shown a deposit slip but could find no additional records to explain how the money was used or to prove that it remains in the bank.

    Auditors also said they could not track more than $1 billion in funds doled out by US authorities for hundreds of large and small reconstruction projects.

    The audit, released yesterday, found serious gaps in how the Development Fund for Iraq -- a pool of money drawn from Iraqi oil revenues and international aid, including some from the United States -- was handled by American occupation officials responsible for funding reconstruction projects and the operations of Iraqi ministries and provincial governments. The development fund is separate from the $18.4 billion in US reconstruction funds set aside last year to rebuild the country.

    All the funds -- more than $5 billion -- were spent between Jan. 1 and June 28, 2004, during the period when the US-led Coalition Provisional Authority ran the country.

    The audit reported numerous instances of improper disbursement practices by the coalition authority. Among the findings:

    Hundreds of projects worth more than $100 million covered by the Commander's Emergency Response Program, designed to allow US military officers to quickly fund small reconstruction projects around the country, had either no contracts on file, no evidence that bids were obtained through competition, no purchase invoices, or no payment vouchers.


    Weapons were paid for under a buyback program with funds specifically prohibited for such use.


    The coalition authority gave money to the Iraqi Ministry of Finance, which then maintained two different sets of records. The report said a ''reconciliation between these two sets of accounting records was not prepared and the difference was significant."


    Checks were made payable to the coalition authority's senior adviser to the Ministry of Health, rather than to suppliers, raising questions about whether the money was spent for its intended purposes.


    A number of projects were awarded without bids ''without justification" by treasury officials in one Iraqi province.


    The coalition authority could not find an underlying contract or evidence of services rendered for a $2.6 million disbursement earmarked for the Ministry of Oil. The audit said the matter is under investigation by the State Department, which became the primary American presence in Iraq after the coalition authority dissolved.
    The auditors said they were told by US officials that all discrepancies were ''under investigation."

    The Bush administration did not respond late yesterday to the audit, which follows a sharply critical report in July from the inspector general of the coalition authority, which itself found ''insufficient controls" over at least $600 million spent on Iraqi reconstruction.

    The more comprehensive UN audit -- released yesterday by Democrats on the House Government Reform Committee -- provided new fodder for the presidential campaign of Democrat John F. Kerry, which portrayed it as evidence that President Bush mishandled postwar Iraq. ''The audit report is yet more evidence of the Bush administration's mismanagement of Iraqi and US taxpayer resources in their failed effort to reconstruct Iraq," Susan Rice, a top national security adviser for Kerry, said in a statement. ''Unfortunately, waste, fraud, and abuse have become the hallmark of the Bush administration's handling of Iraq."

    Democrats on the Government Reform Committee, which has responsibility for monitoring the reconstruction effort, said in a joint statement that ''serious problems" in the management of Iraq funds must be rectified.

    ''These problems involved hundreds of millions of dollars, numerous sole-source contracts, missing and nonexistent contracting files, and continuing investigations into major irregularities," the statement said.

    Representative Henry Waxman of California, senior Democrat on the committee, said the audit indicates that Congress must immediately launch its own investigation.

    ''The Bush administration cannot account for how billions of dollars of Iraqi oil proceeds were spent," he said in a statement. ''The mismanagement, lack of transparency, and potential corruption will seriously undermine our efforts in Iraq."

    Spokespersons for the Republican majority on the committee did not return phone calls.

    Rice suggested the findings raise further questions about whether the US-led rebuilding effort is making a difference in the lives of Iraqis and bringing stability to the war-ravaged country.

    Citing the former head of the coalition authority, L. Paul Bremer III, she said: ''Over a year ago, Paul Bremer hit the nail on the head when he said that 'early progress on reconstructing Iraq will give us an edge against the terrorists and save American lives.' A year later, it appears the administration is still not listening."

    The audit was performed by the accounting firm of KPMG for the UN's International Advisory and Monitoring Board.

    The Development Fund for Iraq was created under the aegis of the UN in May 2003 and set up by the Federal Reserve Bank of New York at the coalition authority's request. The UN's advisory board was established at the same time to ensure that the Iraqi oil money and international contributions were ''used in a transparent manner" during the occupation, according to UN Security Council Resolution 1483.



    Published on Friday, July 30, 2004 by the Los Angeles Times
    Iraq Funds Are Focus of 27 Criminal Inquiries
    by T. Christian Miller

    WASHINGTON — A comprehensive examination of the U.S.-led agency that oversaw the rebuilding of Iraq has triggered at least 27 criminal investigations and produced evidence of millions of dollars' worth of fraud, waste and abuse, according to a report by the Coalition Provisional Authority's inspector general.

    The report is the most sweeping indication yet that some U.S. officials and private contractors repeatedly violated the law in the free-wheeling atmosphere that pervaded the multibillion-dollar effort to rebuild the war-torn country.

    More than $600 million in cash from Iraqi oil money was spent with insufficient controls. Senior U.S. officials manipulated or misspent contract money. Millions of dollars' worth of equipment could not be located, the report said.

    "We found problems in the CPA's financial management, procurement practices and operational controls," Stuart W. Bowen Jr., the inspector general, wrote in the report. "These results are not surprising: The CPA faced a variety of daunting challenges, including extremely hazardous working conditions."

    The report raises anew questions surrounding the occupation government under Ambassador L. Paul Bremer III, who turned over control in June to an interim Iraqi government.

    The coalition's failures continue to haunt the country today as Iraqis struggle with security issues and infrastructure problems with electricity, transportation and water.

    The Times has reported on several cases in which a small circle of former Republican administration officials had drawn scrutiny for their actions in Iraq, including a deputy undersecretary of Defense under investigation by the FBI in connection with a telecommunications contract. In another case, officials have said, a former senior U.S. advisor conducted negotiations with a family connected to Saddam Hussein to form a new Iraqi airline.

    Former CPA officials and contracting experts said they were surprised at the number of criminal investigations described in Bowen's report. They noted that criminal corruption charges in the U.S. involving federal contracting were rare.

    The CPA has disbanded, and Pentagon officials did not return calls for comment.

    Iraq was "a much more Wild West environment. It's a wartime environment," said Steven Kelman, a Harvard professor and contracting expert. "I wouldn't be surprised if, psychologically, some folks have the idea that they're risking their lives under difficult conditions. They justify that they're entitled to a salary increase."

    The report cited several criminal cases under investigation, though it provided no names and few details.

    In one case, a senior U.S. advisor "manipulated" the contracting system to award a $7.2-million security contract. The contract was later voided and the money returned.

    In another incident, a contractor billed $3.3 million for nonexistent personnel working on an oil pipeline repair contract. A security contractor guarding the pipeline overcharged the CPA by $20,000. Both incidents are under criminal investigation.

    In another example, a military assistant to a Pentagon employee gambled away part of a $40,000 grant issued to help coach an Iraqi sports team, the report found.

    "In the early days, there was no record keeping. They were flushed with money and seized assets. People just didn't follow established procedures," said Charles Krohn, a former CPA official. "You were dealing with inexperienced people who didn't understand that there's always a day of reckoning."

    Besides the more than two dozen criminal cases under investigation by the inspector general, about 35 other matters have been referred to other U.S. agencies for further investigation, said James Mitchell, an inspector general spokesman.

    He did not know how many of the criminal cases involved U.S. citizens, or what actions the other agencies have taken in regard to the referrals.

    So far, he said, none of the criminal investigations has resulted in a prosecution.

    "It's only been a short time that we've been in business," Mitchell said.

    The CPA inspector general's office began in January and has more than 100 employees continuing investigations.

    Many of the report's findings concern the handling of Iraqi oil revenue, which was placed into a special account called the Development Fund for Iraq. All told, more than $20 billion passed through the account, which was not subject to the same stringent contracting and accounting rules as U.S. government money.

    Several former CPA officials interviewed in the past have said the development fund was seen as a way to get quick approval for reconstruction projects without the hassle of burdensome contracting regulations.

    Many of the former officials have also acknowledged that they frequently suspected or were told that officials used the money to pay bribes or buy favors for allies and family members.

    "It's just like anybody who wanted something would get it [through the development fund] and then the money would go out," one former CPA official said. "Some people were working the system, trying to figure out how to get their hands on a lot of loose cash lying around."

    CPA officials have vigorously defended their handling of the Iraqi money, saying that all actions were taken transparently. A recent United Nations audit largely backed up that assessment, with U.N. officials raising concerns that not all of the money that entered the fund could be adequately tracked.

    Several of the CPA departments criticized by the report objected to the findings. In one case, inspectors questioned the location of $18.6 million worth of property owned by the CPA. Most of the material, including electric generators and cars, was later found.

    Other CPA officials acknowledged the problems, but said that improvements were made as time passed.

    "It is important to recognize that during the time frame this audit covered, [development fund] procedures were continuously being improved and modified," said U.S. Air Force Col. Don D. Davis, the CPA's former comptroller. "In fact, many of the findings identified in this report were already being addressed by this staff."


    PS. Please tell Bush to stop supporting the tyrant Islam Karimov because the man boils people to death.

     
    At 1/31/2005 05:04:00 pm, Blogger Voice 1 said...

    Thanks for those articles.

     

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