Trimming the fat could do with a start in Iraq, where we've wasted hundreds of billions.
Some examples:
On 12 April 2004, the Coalition Provisional Authority in Erbil in northern Iraq handed over $1.5 billion in cash to a local courier. The money, fresh $100 bills shrink-wrapped on pallets, which filled three Blackhawk helicopters, came from oil sales under the UN’s Oil for Food Programme, and had been entrusted by the UN Security Council to the Americans to be spent on behalf of the Iraqi people. The CPA didn’t properly check out the courier before handing over the cash, and, as a result, according to an audit report by the CPA’s inspector general, ‘there was an increased risk of the loss or theft of the cash.’ Paul Bremer, the American pro-consul in Baghdad until June last year, kept a slush fund of nearly $600 million cash for which there is no paperwork: $200 million of this was kept in a room in one of Saddam’s former palaces, and the US soldier in charge used to keep the key to the room in his backpack, which he left on his desk when he popped out for lunch. Again, this is Iraqi money, not US funds.
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Within six months of the invasion, Waxman’s committee had evidence that the Texas-based Halliburton corporation was being grossly overpaid by the American occupation authorities for the petrol it was importing into Iraq from Kuwait, at a profit of more than $150 million. Waxman and his assistants found that Halliburton was charging $2.64 a gallon for petrol for Iraqi civilians, while American forces were importing the same fuel for $1.57 a gallon.
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The GAO report of July 2004 found that in the first nine months of the occupation, KBR was allowed a free hand in Iraq: a free hand, for example, to bill the Pentagon without worrying about spending limits or management oversight or paperwork. Millions of dollars’ worth of new equipment disappeared. KBR charged $73 million for motor caravans to house the 101st Airborne Division, twice as much as the army said it would cost to build barracks itself; KBR charged $88 million for three million meals for US troops that were never served. The GAO calculated that the army could have saved $31 million a year simply by doing business directly with the catering firms that KBR hired. In June 2004, the GAO continued, ‘by eliminating the use of LOGCAP and making the LOGCAP subcontractor the prime contractor, the command reduced meal costs by 43 per cent without a loss of service or quality.’
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KBR’s response has been to tough it out. The company wrote to the auditors saying that its position regarding the meals ‘had been misquoted as well as misinterpreted’. The auditors, the corporation said, knew full well that KBR had ‘established a Tiger Team that is actively researching and analysing the facts and circumstances surrounding each of its DFAC subcontracts’. ‘Tiger Teams’ are in-house investigative units. KBR’s Tiger Team stayed at the five-star Kuwait Kempinski Hotel, where its members ran up a bill of more than $1 million. This outraged the army, whose troops were sleeping in tents at a cost of $1.39 a day. The army asked the Tiger Team to move into tents. It refused. As to how the Tiger Team ‘actively researched and analysed the facts’, we have the sworn testimony that a KBR employee gave to Congressman Waxman’s committee: ‘The Tiger Team looked at subcontracts with no invoice and no confirmation that the products contracted for were being used. Instead of investigating further, they would recommend extending the subcontract.’
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One of KBR’s contracts was for transporting supplies between American bases. Fleets of new Mercedes Benz trucks, costing $85,000 each, travelled up and down Iraq’s central highways every day, accompanied by armed US military escorts. If there were no goods to transport, KBR dispatched empty lorries anyway, and billed accordingly. The lorries didn’t carry replacement air and oil filters, essential when driving in the desert. They didn’t even carry spare tyres. If one broke down, it was abandoned and destroyed so no one else could use it, and left burning by the roadside. For fear of ambush, KBR drivers were told not to slow down. ‘The truck in front of the one I was riding ran a car with an Iraqi family of four off the road,’ a KBR employee told Waxman’s committee. ‘My driver said that was normal.’
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Pilfering was rife. Millions of dollars in cash went missing from the Iraqi Central Bank. Between $11 million and $26 million worth of Iraqi property sequestered by the CPA was unaccounted for. The payroll was padded with hundreds of ghost employees. Millions of dollars were paid to contractors for phantom work: $3,379,505 was billed, for example, for ‘personnel not in the field performing work’ and ‘other improper charges’ on a single oil pipeline repair contract. An Iraqi sports coach was paid $40,000 by the CPA. He gave it to a friend who gambled it away then wrote it off as a legitimate loss. ‘A complainant alleged that Iraqi Airlines was sold at a reduced price to an influential family with ties to the former regime. The investigation revealed that Iraqi Airlines was essentially dissolved, and there was no record of the transaction.’ Most of the 69 criminal investigations the CPA-IG instigated related to alleged ‘theft, fraud, waste, assault and extortion’. It also investigated ‘a number of other cases that, because of their sensitivity, cannot be included in this report’. At around this time, 19 billion new Iraqi dinars, worth about £6.5 million, were found on a plane in Lebanon which had been sent there by the American-appointed Iraqi interior minister.
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What’s happened to the rebuilding of Iraqi society, and real governance based on transparency and accountability? In the few weeks before Bremer left Iraq, the CPA handed out more than $3 billion in new contracts to be paid for with Iraqi funds and managed by the US embassy in Baghdad. The CPA inspector general, now called the Special Inspector General for Iraq Reconstruction, has just released an audit report on the way the embassy has dealt with that responsibility. The auditors reviewed the files of 225 contracts totalling $327 million to see if the embassy ‘could identify the current value of paid and unpaid contract obligations’. It couldn’t. ‘Our review showed that financial records . . . understated payments made by $108,255,875’ and ‘overstated unpaid obligations by $119,361,286’. The auditors also reviewed the paperwork for a further 300 contracts worth $332.9 million. ‘For 198 of 300 contracts, documentation was not available . . . to indicate that contract execution was monitored for performance and payment . . . Files did not contain evidence that goods and services had been received for 154 contracts, that invoices had been submitted for 169 contracts, or that payments had been made for 144 contracts.’
Sadly, many of the above examples are of U.S. occupiers mishandling not just U.S. money but Iraqi money. We're getting bilked ourselves, and at the same time bilking the new Iraqi nation we are supposed to be building.
porkbusters
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