Thursday, October 20, 2005

Pentagon agency charged with fraud watch left Iraq 'a year ago'

From Christian Science Monitor:

Pentagon agency charged with fraud watch left Iraq 'a year ago'
Meanwhile, new report shows Iraq most corrupt country in Middle East.
By Tom Regan csmonitor.comThe Pentagon agency in charge of investigating abuse and fraud in the spending of Department of Defense funds in Iraq actually "quietly left" the country a year ago. The Knight Ridder Washington Bureau reports that both government and public experts say this decision has left large gaps in "the oversight of how more than $140 billion is being spent."
The Defense Department's inspector general sent auditors into Iraq when the war started more than two years ago to ensure that taxpayers were getting their money's worth for everything from bullets to meals-ready-to-eat.
The auditors were withdrawn in the fall of 2004 because other agencies were watching spending, too. But experts say those other agencies don't have the expertise, access and broad mandate that the inspector general has – and don't make their reports public. That means that the bulk of money being spent in Iraq doesn't get public scrutiny, leaving the door open for possible waste, fraud and abuse, experts say.The revelation comes the same day that the annual Transparency International Global Corruption Report was published. That index showed that Iraq is the most corrupt country in the Middle East.

In a special section of the report on corruption In Iraq, Transparency International says that corruption – which thrives in a context of confusion and change – has been identified as one of the main obstacles to "getting Iraq back on its feet."
Almost unanimously, Iraqi businessmen complain about bribery affecting virtually all government operations. Contractors alleged that inspectors checking up on the refurbishment of schools by Iraqi companies in September 2003 were bribed to turn a blind eye to shoddy or unfinished work. Iraqi protestors amassing in front of the gates of the ‘green zone’, the CPA headquarters in Baghdad, routinely mentioned corruption on their banners. In Nasariya, Sunni Muslim clerics expressed their anger over what they believed was widespread corruption in the CPA and local authorities. Foreign company workers said they witnessed corruption ‘everywhere and on all sides’.Last month, CNN reported that large-scale corruption in Iraq's ministries, particularly the defense ministry, "has led to one of the biggest thefts in history with more than $1 billion going missing," according to Iraq's finance minister. Corruption in the bidding and awarding of contracts, and in the administration of public offices, "is one of the most frequent accusations made by Iraqis against their government and foreign firms operating in the country."
Some of the worst allegations of impropriety concern the purchasing of military equipment by the defense ministry under the previous government, including more than $230 million spent on 28-year-old second-hand Polish helicopters.
"If you compare the amount that was allegedly stolen of about $1 billion compared with the budget of the ministry of defense, it is nearly 100 percent of the ministry's (procurement) budget that has gone (missing)," [Finance Minister Ali Allawi] said. Most of the questionable contracts are said to have been signed under the previous government, headed by Iyad Allawi, which served from June 28, 2004 until late February this year.In an article to be published in the Oct. 24 edition of The American Conservative, but currently available on its website, Philip Giraldi (a former CIA Officer and a partner in Cannistraro Associates, an international security consultancy) writes that billions of dollars have disappeared in Iraq. Mr. Giraldi alleges that the US-led Coalition Provisional Authority (CPA), which was in charge in Iraq until last year, bears a huge responsibility for what has happened.
The American-dominated Coalition Provisional Authority could well prove to be the most corrupt administration in history, almost certainly surpassing the widespread fraud of the much-maligned UN Oil for Food Program. At least $20 billion that belonged to the Iraqi people has been wasted, together with hundreds of millions of US taxpayer dollars. Exactly how many billions of additional dollars were squandered, stolen, given away, or simply lost will never be known because the deliberate decision by the CPA not to meter oil exports means that no one will ever know how much revenue was generated during 2003 and 2004.Mr. Giraldi writes that during the 15-month leadership of the CPA, it distributed $20 billion, "two-thirds of it in cash, most of which came from the Development Fund for Iraq that had replaced the UN Oil for Food Program and from frozen and seized Iraqi assets."
Once in Iraq, there was virtually no accountability over how the money was spent. There was also considerable money “off the books,” including as much as $4 billion from illegal oil exports. The CPA and the Iraqi State Oil Marketing Board, which it controlled, made a deliberate decision not to record or “meter” oil exports, an invitation to wholesale fraud and black marketeering.
Thus the country was awash in unaccountable money. 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.In a sign of how issues like corruption, and the originally unforeseen need for heavy security in Iraq, are affecting rebuilding efforts, The Washington Post reports that Stuart W. Bowen Jr., special inspector general for Iraq reconstruction, Tuesday told Congress that there is a "reconstruction gap" in the country. Mr. Bowen said that administration promises to use $18 billion provided by Congress to "rebuild water, electricity, health and oil networks to prewar levels or better are running into cold reality." Bowen said the administration will be able to provide "something less than that."
The hearing came with uncertainty over who will be watching over future spending in Iraq. Bowen's office could disappear as soon as next year, though pending legislation would extend its life. [The State Department's inspector general, Howard J. Krongard,] said he has not yet received funding for 2006 to provide oversight in Iraq. And the Defense Department's acting inspector general, Thomas F. Gimble, revealed that his office does not have a single staff member in Iraq.
Rep. Christopher Shays (R) of Connecticut, chairman of the national security subcommittee, said that while the recent constitutional referendum was an "auspicious" sign for Iraq, problems with the reconstruction are damaging "prospects for success."


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