You deserve better than tyranny and corruption ... - George W. Bush, April 2003
Fighting government corruption is important in any country, but doubly important today in Iraq. If public officials steal or abuse their position here they are not just stealing, they are undermining confidence in the new Iraq's democratic government. - L. Paul Bremer, October 2004
In May 2002, a quasi-governmental group dominated by desk-bound neocons, groups of Iraqi exiles and Bush officials called the Future of Iraq Project began producing a massive report on how to piece back together post-war Iraq.
With $5 million of U.S. money to spend on itself, the group's "plan" for dealing with endemic corruption in Iraq was to insist on an "Iraqi Government Code of Ethics" built around these words: "Honesty, integrity, and fairness are the fundamental values for the people of Iraq."
With the news out of Washington on the future of corruption investigations in Iraq, those words ring hollow today.
More on the jump.
We can spend a lot of time kicking around which is worse, the naiveté or the sheer ignorance of sloganeering as a political strategy, but one thing stands out today: No one has yet devised a snappy slogan for dealing with endemic corruption by U.S. contractors and government officials in Iraq.
Philip Giraldi, a security consultant and former CIA operative wrote a year ago in, of all places, The American Conservative magazine: "When the final page is written on America's catastrophic imperial venture, one word will dominate the explanation of U.S. failure--corruption. ... The American-dominated Coalition Provisional Authority could well prove to be the most corrupt administration in history"
And how does the Bush administration deal with the viral outbreak of corruption and the disappearance on billions of dollars that marked the U.S. government's Coalition Provisional Authority's tenure in Baghdad?
News of the most recent atrocity arrived today via the New York Times:
Investigations led by a Republican lawyer named Stuart W. Bowen Jr. in Iraq have sent American occupation officials to jail on bribery and conspiracy charges, exposed disastrously poor construction work by well-connected companies like Halliburton and Parsons, and discovered that the military did not properly track hundreds of thousands of weapons it shipped to Iraqi security forces.
Mr. Bowen's office has inspected and audited taxpayer-financed projects like this prison in Nasiriya, Iraq.
And tucked away in a huge military authorization bill that President Bush signed two weeks ago is what some of Mr. Bowen's supporters believe is his reward for repeatedly embarrassing the administration: a pink slip.
The order comes in the form of an obscure provision that terminates his federal oversight agency, the Office of the Special Inspector General for Iraq Reconstruction, on Oct. 1, 2007. The clause was inserted by the Republican side of the House Armed Services Committee over the objections of Democratic counterparts during a closed-door conference, and it has generated surprise and some outrage among lawmakers who say they had no idea it was in the final legislation.
What was the sin that signed the death warrant for the Iraq Inspector General's investigative office? Hard to tell this soon, but we recognize the name Halliburton and note as well that the agency has referred 25 cases of contracting abuse in Iraq to the DOJ for criminal prosecution and has roughly 89 open criminal investigations.
Corruption takes many forms, but, as has been demonstrated so clearly in recent months, political and moral corruption can be just as corrosive as the monetary variety.
Yet, there is little doubt that the botched adventure in Iraq has at its center money ... lots of it.
A little history may be instructive.
That Iraq was awash in what one commentator called "unaccountable money" in the days and weeks following the invasion is established fact.
In its 15-month tenure in Iraq, the CPA spread nearly $20 billion around, by some accounts nearly two-thirds of it in cash. Famously, most of that "unaccountable cash" arrived in Iraq shrinkwrapped on wooden pallets in the bellies of C-130 planes. In a one-year period beginning in May 2004, 363 tons of $100 bills came into Iraq that way, drawn from the New York Federal Reserve Bank. Translated into dollars, those 363 tons of c-notes amounted to $12 billion.
And now the Bush administration is desperate to stop the investigation into the corrupt sewers that became the final resting place for those billions.
How did U.S. corruption become endemic in Iraq? Greed certainly, but incompetence and cronyism have to be factored in as well.
Most of that shrinkwrapped $12 billion and much of the money wasted in Iraq came from the Development Fund for Iraq that had replaced the UN Oil for Food Program and from frozen and seized Iraqi assets. Once it arrived in Iraq, accountability over how the money was spent became an early casualty of the war. Yet, lack of accountability was hardly an unexpected development along the banks of the veritable river of money flowing into the country.
An estimated $4 billion of the cash earmarked for "rebuilding" the country came from illegal oil exports, the result of an agreement reached between the CPA and the Iraqi State Oil Marketing Board.
In his American Conservative piece, Philip Giraldi reported that, "In 2004 British sources report that the CPA contracts that were not handed out to cronies were sold to the highest bidder, with bribes as high as $300,000 being demanded for particularly lucrative reconstruction contracts. The contracts were especially attractive because no work or results were necessarily expected in return."
How did this culture of corruption, Baghdad Branch, come about and why is this administration suddenly anxious to shut down investigations of it?
One answer to the first part of the question may be that the influence of the neocon agenda, which advocated spreading around the spoils of war as a way to ensure loyalty by our new Iraqi partners, overwhelmed common sense and good management practices. Another answer may lie on the quality of the administration surrogates sent to Iraq to run the post-Mission Accomplished program:
Giraldi again:
The CPA brought in scores of bright, young true believers who were nearly universally unqualified. Many were recruited through the Heritage Foundation website, where they had posted their résumés. They were paid six-figure salaries out of Iraqi funds, and most served in 90-day rotations before returning home with their war stories. One such volunteer was Simone Ledeen, daughter of leading neoconservative Michael Ledeen. Unable to communicate in Arabic and with no relevant experience or appropriate educational training, she nevertheless became a senior advisor for northern Iraq at the Ministry of Finance in Baghdad. Another was former White House Press Secretary Ari Fleischer's older brother Michael who, though utterly unqualified, was named director of private-sector development for all of Iraq.
The consequences of the widespread criminal behavior now well-documented in Iraq, whether it was willful or the result of simple cronyism and incompetence, is serious for both Iraqis and Americans.
Consider the case of Philip Bloom, an American businessman who pleaded guilty in April to federal charges of conspiracy, bribery, and money laundering for illegally obtaining millions of those shrinkwrapped dollars in 2003 and 2004. His plea, it's been reported, is likely to lead directly to American military officers who dipped into the dollars as well.
The Christian Science Monitor reported in April, shortly after Bloom's plea became public, that he had provided investigators with thousands of pages of documents and that those were expected to a wider probe.
A United States official in Iraq said documents and other evidence in the case also cast strong suspicion on a range of other officials who ran the Coalition Provisional Authority's local headquarters from the Babil Hotel in Hillah.
"It just seems like everybody associated with that place, there was just a dark cloud hovering over that hotel," said the official, who spoke on condition of anonymity because he was not authorized to discuss the case publicly.
The Sydney Morning Herald reports that Bloom used "money, sex and designer watches" to help gain more than $8 million in reconstruction contracts.
The scheme began in January 2004, when Bloom began paying bribes to Robert Stein, a civilian contractor who controlled $US82 million in reconstruction funds as the comptroller for the coalition's headquarters in Hillah. Stein, who had a previous conviction for fraud when he was hired, pleaded guilty to accepting bribes in February. He funnelled money and favours from Bloom to other officials in Hillah, all of whom helped direct contracts to a group of companies controlled by Bloom, court documents say.
Two officers in the US Army Reserve, Lieutenant-Colonel Michael Wheeler and Lieutenant-Colonel Debra Harrison, have already been arrested in connection with the case and more arrests are expected, investigators said.
The Herald also reports that the contracts that Bloom received included plans for refurbishing a police academy in Hillah and a library in Karbala. Government audits later showed that the work was either never done or else done in a shoddy manner.
Or, more illustrative of what the future of corruption investigations in Iraq are likely to look like, consider the case of Custer Battles, a Virginia-based contracting firm named after the two Americans who ran it.
Custer Battles was caught, among other illegalities it committed, double-billing for salaries, repainting Iraqi Airways forklifts at Baghdad airport that Custer Battles was contracted to secure, then leasing them back to the U.S. government as well as creating a series of sham companies it used to defraud the U.S. government of inflated salaries and costs for work it never did.
The response?
A request by the Pentagon that Custer Battles be banned from further work in Iraq under U.S. government contract.
Worse, in March, in a civil case brought by two former employees, a federal jury found Custer and Battles guilty of 37 fraudulent acts costing the U.S. government $3 million. In one particularly brazen instance, Mike Battles, one of the owners, defended himself against charges that 34 of the 36 trucks he procured under contract for the U.S. didn't run by telling military officials that his contract didn't specify that the trucks be operative and, therefore, he'd fulfilled the contract terms.
So, where was the aggrieved party, the United States government, and its lawyer, Alberto Gonzalez, in all of this? Gonzalez and his client refused to join the suit, even after numerous requests from the trial judge and even Sen. Charles Grassley (R-Iowa), eventually persuading the judge to toss out the verdict because the CPA was a "multinational institution" and, therefore, the U.S. government was not technically defrauded.
A couple of weeks ago, on the heels of the Bush administration's quiet killing of the Iraq Inspector General's office, Deputy Attorney General Paul McNulty announced the formation of a major interdepartmental unit to track corruption and fraud, including, he said, fraud in Iraq. We only wish for optimism. Hopefully, in the weeks and months ahead, we will learn why a successful investigative operation was shut down in near secret fashion, only to be replaced by Gonzalez's operation, whose track record on dealing with corruption in Iraq is so weak as to be negligible.
In the meantime, author and Iraq expert Patrick Cockburn, on tour in October promoting his new book, "The Occupation," told an interviewer this:
Corruption is at an extraordinary level. You know, you had billions of dollars spent when the Americans were directly ruling Iraq. The so-called Coalition Provisional Authority spent, I think, $8.8 billion on reconstruction.
And again I climb on top of the roof of my hotel and look across Baghdad to see if I can find any cranes. You know, usually if you're having any construction in any city you can see the odd crane, and I could see palm trees, but not a single crane.
So where did the money go?
Well a great deal of it was simply stolen.