From The Guardian, 2/8/05:
http://www.guardian.co.uk/comment/story/0,3604,1407964,00.html
Fraud and corruption
The US occupation regime helped itself to $8.8 bn of mostly Iraqi
money in just 14 months
George Monbiot
Tuesday February 8, 2005
The Guardian
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 organisation.
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 programme, 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] programme'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 programmes 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 channelled Iraqi oil into a company he favoured, 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 programme 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 programme 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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Hellooooo, Republican hypocrites, can't hear you.
Harry
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