5/2/05:IRAQ:SHAMEFUL THEFTS OF US OCCUPYING FORCES.
- From: uneoo@xxxxxxxxxx
- Date: 8 Sep 2005 02:12:09 +1000
source: www.globalpolicy.org
Fraud and Corruption
Forget the UN. The US Occupation Regime Helped Itself to
$8.8b of Mostly Iraqi Money in Just 14 Months
By George Monbiot
Guardian
February 8, 2005
The Republican senators who have devoted their careers to mauling the
United Nations are seldom accused of shyness. But they went strangely
quiet on Thursday. Henry Hyde became Henry Jekyll. Norm Coleman's
mustard turned to honey. Convinced that the UN is a conspiracy against
the sovereignty of the United States, they had been ready to launch
the attack which would have toppled the hated Kofi Annan and destroyed
his organization. A report by Paul Volcker, the former chairman of the
US federal reserve, was meant to have proved that, as a result of
corruption within the UN's oil-for-food program, Saddam Hussein was
able to sustain his regime by diverting oil revenues into his own
hands. But Volcker came up with something else.
"The major source of external financial resources to the Iraqi
regime," he reported, "resulted from sanctions violations outside the
[oil-for-food] program's framework." These violations consisted of
"illicit sales" of oil by the Iraqi regime to Turkey and Jordan. The
members of the UN security council, including the United States, knew
about them but did nothing. "United States law requires that
assistance programs to countries in violation of UN sanctions be ended
unless continuation is determined to be in the national interest. Such
determinations were provided by successive United States
administrations."
The government of the US, in other words, though it had been informed
about a smuggling operation which brought Saddam Hussein's regime some
$4.6bn, decided to let it continue. It did so because it deemed the
smuggling to be in its national interest, as it helped friendly
countries (Turkey and Jordan) evade the sanctions on Iraq. The biggest
source of illegal funds to Saddam Hussein was approved not by
officials of the UN but by officials in the US. Strange to relate,
neither Mr Hyde nor Mr Coleman have yet been bellyaching about it. But
this isn't the half of it.
It is true that the UN's auditing should have been better. Some of the
oil-for-food money found its way into Saddam Hussein's hands. One of
its officials, with the help of a British diplomat, helped to ensure
that a contract went to a British firm, rather than a French one. The
most serious case involves an official called Benon Sevan, who is
alleged to have channeled Iraqi oil into a company he favored, and who
might have received $160,000 in return. Kofi Annan, the UN secretary
general, has taken disciplinary action against both men, and promised
to strip them of diplomatic immunity if they are charged. There could
scarcely be a starker contrast to the way the US has handled the far
graver allegations against its own officials.
Four days before Volcker reported his findings about Saddam Hussein,
the US inspector general for Iraq reconstruction published a report
about the Coalition Provisional Authority (CPA) - the US agency which
governed Iraq between April 2003 and June 2004. The inspector
general's job is to make sure that the money the authority spent was
properly accounted for. It wasn't. In just 14 months, $8.8bn went
absent without leave. This is more than Mobutu Sese Seko managed to
steal in 32 years of looting Zaire. It is 55,000 times as much as Mr
Sevan is alleged to have been paid.
The authority, the inspector general found, was "burdened by severe
inefficiencies and poor management". This is kind. Other
investigations suggest that it was also burdened by false accounting,
fraud and corruption.
Last week a British adviser to the Iraqi Governing Council told the
BBC's File on Four program that officials in the CPA were demanding
bribes of up to $300,000 in return for awarding contracts. Iraqi money
seized by US forces simply disappeared. Some $800m was handed out to
US commanders without being counted or even weighed. A further $1.4bn
was flown from Baghdad to the Kurdish regional government in the town
of Irbil, and has not been seen since.
Contracts to US companies were awarded by the CPA without any
financial safeguards. They were issued without competition, in the
form of "cost-plus" deals. This means that the companies were paid for
the expenses they incurred, plus a percentage of those expenses in the
form of profit. They had a powerful incentive, in other words, to
spend as much money as possible. As a result, the authority appears to
have obtained appalling value for money. Auditors at the Pentagon, for
example, allege that, in the course of just one contract, a subsidiary
of Halliburton overcharged it for imported fuel by $61m. This appears
to have been officially sanctioned. In November, the New York Times
obtained a letter from an officer in the US Army Corps of Engineers
insisting that she would not "succumb to the political pressures from
the ... US embassy to go against my integrity and pay a higher price
for fuel than necessary". She was overruled by her superiors, who
issued a memo insisting that the prices the company was charging were
"fair and reasonable", and that it wouldn't be asked to provide the
figures required to justify them.
Other companies appear to have charged the authority for work they
never did, or to have paid subcontractors to do it for them for a
fraction of what they were paid by the CPA. Yet, even when confronted
by cast-iron evidence of malfeasance, the authority kept employing
them. When the inspector general recommended that the US army withhold
payments from companies which appear to have overcharged it, it
ignored him. No one has been charged or punished. The US department of
justice refuses to assist the whistle-blowers who are taking these
companies to court.
What makes all this so serious is that more than half the money the
CPA was giving away did not belong to the US government but to the
people of Iraq. Most of it was generated by the coalition's sales of
oil. If you think the UN's oil-for-food program was leaky, take a look
at the CPA's oil-for-reconstruction scheme. Throughout the entire
period of CPA rule, there was no metering of the oil passing through
Iraq's pipelines, which means that there was no way of telling how
much of the country's wealth the authority was extracting, or whether
it was paying a fair price for it. The CPA, according to the
international monitoring body charged with auditing it, was also
"unable to estimate the amount of petroleum ... that was smuggled".
The authority was plainly breaching UN resolutions. As Christian Aid
points out, the CPA's distribution of Iraq's money was supposed to
have been subject to international oversight from the beginning. But
no auditors were appointed until April 2004 - just two months before
the CPA's mandate ran out. Even then, they had no power to hold it to
account or even to ask it to cooperate. But enough information leaked
out to suggest that $500m of Iraqi oil money might have been
"diverted" (a polite word for nicked) to help pay for the military
occupation.
I hope that Messrs Hyde and Coleman won't stop asking whether Iraqi
oil money has been properly spent. But perhaps we shouldn't be
surprised if their agreeable silence persists.
.
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