At a Senate Democratic Policy Committee hearing this morning, a CPA official and other whistleblowers testified on the waste, fraud, and abuse of Iraqi funds under the stewardship of the Bush Administration. Rep. Henry Waxman was invited to participate in the hearing and gave the following opening statement (
in pdf):
Over the past several months, we've heard a lot about the Oil- for-Food scandal. Several
Congressional committees have launched investigations and held hearings. While I believe it is
appropriate to investigate these allegations, I also think we should be investigating our own
Administration's conduct.
The United States controlled Iraq's oil proceeds from May 2003 until June 2004. Yet
Congress has not held a single hearing to examine the evidence of mismanagement, overpricing,
and lack of transparency in the successor to the Oil- for-Food program: the Development Fund
for Iraq. The DFI was run by the Bush Administration through the Coalition Provisional
Authority. Under U.S. control, it received over $20 billion in Iraqi funds and spent over $14
billion.
While Congress has been ignoring the DFI, a series of reports by both U.S. and
international auditors have raised serious red flags about the Administration's stewardship of the
Iraqi funds.
Two weeks ago, the Special Inspector General for Iraq Reconstruction reported that the
CPA disbursed $8.8 billion in cash to Iraqi ministries without adequate oversight. The Inspector
General found that "proper cash accountability was not maintained [and] physical security was
inadequate." The funds were turned over to the ministries "without assurance the monies were
properly used or accounted for."
In one case, CPA transferred funds for 8,206 Iraqi guards on the payroll even though only
602 guards could actually be found. The IG concluded, "there was no assurance that funds were
not provided for ghost employees."
In fact, the IG determined that the CPA's stewardship of the Iraqi funds was so poor that
it did not meet the basic requirements of the U.N. Security Council Resolution that established
the DFI.
An earlier IG report detected "several physical safeguard violations," including a vault
key kept in an unsecured backpack. In another instance, a disbursement officer left a room with
the safe open.
Similarly, international auditors found that CPA had "inadequate accounting systems,"
"inadequate record keeping," and "inadequate controls" over Iraqi oil proceeds. They also
reported that CPA's entire accounting system consisted of just one contractor maintaining excel
spreadsheets. That's one person for $20 billion.
We also know that $1.5 billion in DFI funds were used to pay Halliburton's inflated fuel
prices. CusterBattles, whose schemes we'll hear about today, was also paid with DFI funds.
One of today's witnesses, Frank Willis, was a former senior official with the CPA. He
will provide a first-hand perspective on the $8.8 billion in cash from the DFI that was transferred
to Iraqi ministries without adequate controls.
My staff had an opportunity to speak with Mr. Willis before he came to DC to testify. He
told us that Iraq was like the "wild west," awash in brand- new $100 bills. He also explained that
CPA's cash transfers to Iraqi ministries "for the most part were done on faith" because CPA
couldn't confirm that the employees being paid actually worked at the ministries and couldn't
track the funds. I look forward to his testimony here today.
Accountability and transparency are long overdue. I hope this hearing is just the
beginning of Congressional oversight of the Administration's inept stewardship of Iraqi funds.