From The Philadelphia Inquirer, 7/15/05:
http://www.philly.com/mld/inquirer/news/front/12135711.htm
Iraq arms scandal unfolds
Vendors allegedly charged millions for shoddy war goods and gave
kickbacks to Baghdad officials.
By Hannah Allam
Inquirer Foreign Staff
BAGHDAD -
The Iraqi Defense Ministry has squandered more than $300 million
buying faulty and outdated military equipment in what appears to be a
huge web of corruption that flourished for a year or longer, U.S. and
Iraqi military officials said this week.
Defense Minister Saadoun al-Duleimi confirmed an investigation was
under way into vendors vastly overcharging for substandard equipment,
including helicopters, machine guns and armored vehicles, and kicking
back money to Iraqi Defense Ministry buyers.
The defective equipment has jeopardized the lives of Iraq's embattled
security forces and exposed a lack of oversight for one of the
country's most crucial rebuilding projects.
Officials of Iraq's recently elected government have fired the main
suspects in the scandal, and several former defense overseers are
under investigation for possible criminal charges, Duleimi said in an
interview this week.
"I view corruption as an incubator for terrorism," said Duleimi, who
took office in May and is not implicated in the scandal.
"If you can't defend against corruption, you can't defend against
terrorism."
Lt. Gen. David H. Petraeus is the senior U.S. officer in charge of
training and equipping Iraqi forces.
He declined to comment on the allegations, saying it was a matter for
the sovereign government of Iraq to resolve.
The kickbacks took place under American-appointed Iraqi supervisors.
Duleimi said investigators were looking at more than 40 questionable
contracts that allegedly sent a huge chunk of the ministry's annual
budget into the pockets of senior Iraqi defense officials and their
foreign business partners.
Other Iraqis familiar with the cases said there may be more fraudulent
contracts involving many more millions of dollars.
Investigators are looking at purchases dating back to the June 28,
2004, transfer of sovereignty from American administrator L. Paul
Bremer 3d to the caretaker government of U.S.-backed Prime Minister
Ayad Allawi.
Many Iraqi administrators hired under Bremer's Coalition Provisional
Authority kept their jobs after the handover of the ministry, but
after that the U.S. military no longer had the final say in awarding
contracts.
Americans still ran the show behind the scenes, said several Iraqi
bureaucrats involved with the ministry at the time.
The Iraqis said it was implausible that U.S. officials, who held daily
briefings with Iraqi defense chiefs, did not catch wind of the alleged
wrongdoing.
One American military official said that with the need to get the
Iraqi military equipped as quickly as possible and with money being
thrown at problems without a lot of oversight, it was inevitable that
many of the transactions would take place in a gray area.
The official spoke on condition of anonymity because he was not
authorized to discuss an open investigation.
In one case, a team of Iraqi defense inspectors traveled to Poland to
check on what it understood to be a fleet of refurbished transport
helicopters that cost the government more than $100 million.
What the inspectors found were 24 Soviet-era helicopters, each one
about 30 years old and way past its prime.
Disgusted, the Iraqi team refused the aircraft and returned to Baghdad
empty-handed, with neither helicopters nor the money paid up front for
them.
This incident, related by Iraqi and American officials, was confirmed
by Duleimi.
"You could say the helicopters were out of order," he said.
Other disastrous purchases include a shipment of sleek MP5 machine
guns, costing about $3,500 apiece, that are now believed to be
Egyptian-made knockoffs worth $200 each on the street, according to
American and Iraqi officials familiar with the contracts under
scrutiny.
In another case, defense officials bought expensive armored personnel
carriers to protect Iraqi troops on trips through perilous areas.
The vehicles leaked so much oil that they broke down after only a few
miles.
Eventually all were parked as too dangerous to use, the officials
said.
Many of the deals were brokered by former Iraqi exile Ziad Tareq
Cattan, who was hired by the Coalition Provisional Authority in 2004
and quickly rose from district councilman to be the Iraqi Defense
Ministry's chief weapons buyer.
Cattan, who oversaw the ministry's acquisitions, logistics and
infrastructure portfolio, was known as a man who flew around the world
spending millions of dollars in government cash with little
accountability.
Iraqi defense officials said he sometimes submitted scraps of paper as
receipts for multimillion-dollar weapons deals and was notorious for
charging a 10 percent "finder's fee" for the contracts he negotiated.
"There is no doubt he took advantage of opportunities," said John
Noble, senior Western adviser to the Defense Ministry.
"Certainly millions, possibly even hundreds of millions," of dollars
were lost through Cattan's business ventures, Noble said.
Cattan was fired last month.
U.S. military officials said he had tried to flee the country but was
stopped.
Knight Ridder, the parent company of The Inquirer, obtained a copy of
an Iraqi court's arrest warrant filed against him July 7 on charges
related to abuse of an employer's funds.
The warrant ordered Cattan "to the aforementioned court as soon as
possible."
Cattan phoned the Knight Ridder Baghdad Bureau yesterday, saying he
was in Irbil, the capital of the semiautonomous Kurdish region in
northern Iraq.
In an hour-long phone interview, Cattan denied the allegations against
him, saying they were made up by Americans angry that he questioned
their training procedures for Iraqi troops and by newly elected Shiite
Muslim leaders jealous of a rival Sunni Muslim in such an important
ministry post.
He denied taking a 10 percent finder's fee for contracts.
Cattan said he spent 27 years in Europe before returning to Iraq two
days before the war began in 2003.
He said he was handpicked by Bremer's Coalition Provisional Authority
and was flown to Washington in January 2004 for special training in
rebuilding the Defense Ministry.
"We assisted this ministry when Bremer was here," he said.
"We built this ministry with our hands. We built this army from zero
to 100,000."
Cattan was kept on after the return of sovereignty put Allawi, a
secular Shiite, in charge of the government.
But all along, Cattan said, it was Americans who controlled the
ministry's purse strings and weapons procurement.
He said it would have been impossible for him to commit the alleged
fraud with American generals managing every aspect of the ministry.
"We could do nothing in the ministry without decisions from the
generals," he said.
Cattan said he planned to return to Baghdad next week to answer
charges in the arrest warrant.
He said he looked forward to continuing his work on rebuilding Iraq
and had not ruled out running in the next election.
"They want to destroy my reputation, destroy my position," Cattan
said.
"If they have one document that shows one cent of corruption, show me.
They can prove nothing."
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Scandal scandal scandal. No matter where you look.
Harry
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