[Mb-civic] Grand Theft Baghdad

[ean at sbcglobal.net]

http://www.tompaine.com/articles/2006/02/27/grand_theft_baghdad.ph
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Grand Theft Baghdad
Charlie Cray
February 27, 2006

Charlie Cray is the director of  The Center for Corporate Policy in 
Washington, D.C., and co-author of The People's Business: Controlling 
Corporations and Restoring Democracy (Berrett-Koehler, 2004).

President Bush just sent Congress a request for another $72.4 billion 
or the Iraq war and occupation. Instead of writing another blank check, 
Congress should commit itself to a thorough investigation of the 
incompetence and corruption that has undermined the reconstruction 
mission. At the same time that it demands that the administration 
provide a clearer overall strategy in Iraq, Congress should establish a 
permanent committee on war profiteering and corruption modeled after 
the one Harry Truman chaired during World War II.

The president’s own administration officials report that the 
reconstruction of Iraq has been botched. In early February, the Special 
Inspector General for Iraq Reconstruction, Stuart Bowen, released a 
report to the Senate Armed Services Committee that describes a 
significant gulf between the aims of U.S. reconstruction officials and 
what they will be able to accomplish. What Bowen called a 
“reconstruction gap” mostly affects three sectors essential to the 
success of Iraq’s reconstruction: water, electricity and oil.

After an investment of billions, Bowen reports that slightly more than a 
third of all water projects planned will ever actually be completed. 
Currently, two of three Iraqis are left with no potable water; only one in 
five has sewerage. Furthermore, recent figures suggest that at 4,000 
megawatts, nation-wide electrical generating capacity is below pre-war 
levels and far below the goal of 6,000 MW. Instead of rebuilding 
several steam-turbine power stations— as Iraqi engineers and 
managers recommended—the CPA’s crony contractors chose to build 
new natural gas and diesel-powered combustion-turbine stations, 
despite the fact that Iraq doesn’t have adequate supplies of either. As 
a result of this arrogance and neglect, billions were wasted while the 
electricity in Baghdad is on for just a few hours each day.  

Meanwhile, at 2.6 million barrels per day, crude oil production is 
significantly short of the goal of 3 MBPD. Liquefied petroleum gas has 
fared worse, with the CPA adding just 500 tons per day to existing 
production capacity, when the goal was to add 1,800 tons daily.

Given these and other shortfalls, it should be alarming that very little of 
the $72 billion that Bush is requesting would go to finish these jobs. 
Worse, Bowen warns that “the Iraqi government is not yet prepared to 
take over the near or long-term management and funding of 
infrastructure.”

The problems are not simply technical and bureaucratic: there are also 
signs of massive corruption. In its 2005 report, Transparency 
International, which tracks governmental corruption around the globe, 
warned that post-war Iraq could be “the biggest corruption scandal in 
history.”

To be sure, much of the corruption plaguing the reconstruction of Iraq 
involves Iraqis rather than U.S. companies or officials.  Last 
September, Iraq’s finance minister Ali Allawi warned that between $1.3 
and $2.3 billion of government funds had disappeared. But the U.K.-
based Independent also reported that “government officials in 
Baghdad even suggest that the skill with which the robbery was 
organized suggests that the Iraqis involved were only front men, and 
‘rogue elements’ within the U.S. military or intelligence services may 
have played a decisive role behind the scenes.” 

Although Bowen claims corruption “is not a pervasive problem on the 
U.S. side of the reconstruction,” his own investigators uncovered a 
brazen case involving four Americans (including two CPA employees) 
operating in southern Iraq. The bribery and kickback scheme involved 
millions and seized assets including vehicles, real estate, and 
weapons. An operation that corrupt could only occur because, 
according to Frank Willis, a top CPA official, the CPA’s accounting 
system was “nonexistent.” CPA employees were too busy tossing 
around football-sized $100,000 bricks of 100 bills inside the Green 
Zone to worry about what was going on outside where the money was 
eventually distributed.

“With so much cash arriving in Iraq, you might think that extensive 
precautions would be taken,” says Rep. Henry Waxman, D-Calif. “But 
exactly the opposite happened: U.S. officials used virtually no financial 
controls 
 payments were made from the back of a pickup truck 
 
and cash was stored in unguarded sacks in Iraqi ministry offices
”

So far, the only effort to hold contractors accountable for illegal or 
incompetent actions has been in the courts. On February 13th, 
arguments began in the first high-profile civil fraud case filed against 
an Iraq war contractor. Two whistleblowers are charging Custer Battles 
LLC with using sham invoices and offshore shell companies to defraud 
taxpayers of $50 million while performing security work.

Bowen, whose office is busy with another 57 ongoing investigations, 
says the CPA lost track of about $9 billion dollars worth of contracts. 
So clearly the Custer Battles case is not an isolated example. From 
this case and from reports by the inspector general for Iraq 
reconstruction, it is clear that past appropriations came with little 
oversight.

Yet the Republican-controlled Congress has shown little interest in 
contrast to its interest in the U.N. oil-for-food scandal. In November, 
Sen. Byron Dorgan, D-N.D., offered an amendment to the 2006 
Defense Appropriations bill which would have established a special 
investigative committee like Truman’s famous WW II committee. But 
the proposal went down 53 to 44, almost purely along partisan lines.

With Halliburton receiving over half the value of the Iraq reconstruction 
contracts, all calls for accountability have automatically been dismissed 
as a partisan attack on the vice president or an element of the anti-war 
agenda that threatens to undermine troop morale.

During Dorgan’s speech, Sen. John Ensign, R-Nev., intervened with a 
surprise announcement on the floor: "
As the chairman of the 
Readiness Subcommittee, I plan on holding hearings on exactly this. I 
plan on pulling that curtain back
 If it happens to be it is embarrassing 
to the administration, we are going to find out the truth on this — just 
like Harry Truman went after those cost-plus contracts in those days."

When Ensign finally held his hearing earlier this month, no other 
Republicans were present. A cynic might say that he is merely going 
through the motions to try to take the issue off the table before the fall 
elections. Yet if Ensign were to drill deeper than his investigation has 
gone so far, he would probably find that the contractors like Halliburton 
have not only bilked taxpayers, but some of their actions have 
undermined the military’s overall mission.

This lack of oversight isn't only a fiscal concern; it also has dangerous 
implications for U.S. troops. Two ex-employees of Kellogg, Brown & 
Root—a subsidiary of Halliburton—for example, have charged the 
Army’s number one contractor with exposing U.S. troops to 
contaminated water from the Euphrates .

"I don't know how many [troops] might have gotten sick as a result," 
says Ben Carter, one of the two KBR whistleblowers, who has 20 years 
of experience working as a water purification expert. "I can't know, 
because  Halliburton apparently has no records and refuses to 
acknowledge there might be a problem."

Numerous leads remain unexplored, and Bowen cannot be expected 
to investigate them all. The current Congress’s token efforts should be 
measured against that of Truman’s committee, which held hundreds of 
hearings and issued 51 separate reports.

Because the issue has as much to do with fiscal responsibility as it 
does with protecting American troops, Congress should provide for 
much greater oversight before giving Bush and Rumsfeld another $72 
billion check. The incompetence, cronyism, and corruption witnessed 
in Katrina-related contracts underscores the need for much greater 
oversight.

Legislation requiring contractor accountability should apply the lessons 
of Iraq to all federal contracts. Not only do we need to crack down on 
the kind of cronyism that puts incompetent people in the wrong places, 
and no-bid contracts like those given to Halliburton, but clear criminal 
sanctions are needed for war profiteering as well as new protections 
for those brave enough to blow the whistle. All of this and a vigilant 
Congress willing to investigate is needed to create a shift in contracting 
culture.


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"A war of aggression is the supreme international crime." -- Robert Jackson,
 former U.S. Supreme Court Chief Justice and Nuremberg prosecutor

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