Tuesday, July 05, 2005

The Big Teat 

Courtesy of our indefatigable colleague Susie Madrak at Suburban Guerrilla: The liberation of the Iraqis was followed in short order by the liberation of their money. Ed Harriman of the London Review of Books has plowed through a stack of government audits in hopes of figuring out where the missing billions went:
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 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.’

[A]ccording 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.

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