August 25, 2004

"While much of the media is focused on the pitched battle over the control of the holy shrine in Najaf, a bigger scandal is brewing in Iraq that may well have an equally important effect on the future of the U.S. occupation."

The election in November 2004 is not a national
referendum on Sen. Johh F. Kerry (D-Mekong Delta)or
the Vietnam war or the Death Penalty or whether a pro-Choice Roman Catholic has the right to receive holy communion or a Constituional Amendment on Gay Marriage, it is a national referendum on the CHARACTER,
CREDIBILITY, COMPETENCE and CORRUPTION of this
illegitimate regime...and the American people know
it...despite the distractions and distortions
perpetrated by "US mainstream news media" to serve the
special interests of its Corporatist overlords...

Pratap Chatterjee, AlterNet: While much of the media
is focused on the pitched battle over the control of
the holy shrine in Najaf, a bigger scandal is brewing
in Iraq that may well have an equally important effect
on the future of the U.S. occupation.
A team of auditors was dispatched to Iraq in late
January this year after a string of internal reports
showed that the military was wasting billions of
dollars of taxpayer money. They have issued eleven
reports since June 25, almost all of which have
pointed to the misuse of the money allocated for
reconstruction, be it Iraqi or Congress-appropriated
funds.
According to two of these reports issued in late July
by Stuart Bowen, the auditor-inspector general of the
Coalition Provisional Authority (CPA), not only have a
full one-third of the items purchased by the Pentagon
gone MIA (including the pricey generator), but a
whopping. $1.9 billion or more of Iraqi oil revenue
has also mysteriously disappeared.

Cleanse the White House of the Chicken Hawk Coup and
Its War-Profiteering Cronies, Show Up for Democracy in
2004: Defeat Bush (again!)

http://alternet.org/waroniraq/19620/


The Thief of Baghdad
By Pratap Chatterjee, AlterNet
Posted on August 23, 2004, Printed on August 25, 2004
http://www.alternet.org/story/19620/
Missing: One giant generator owned by the United
States military. Estimated cost: $734,863

Last seen: Somewhere in Iraq.

While much of the media is focused on the pitched battle over the control of the holy shrine in Najaf, a bigger scandal is brewing in Iraq that may well have an equally important effect on the future of the U.S. occupation.

A team of auditors was dispatched to Iraq in late
January this year after a string of internal reports
showed that the military was wasting billions of
dollars of taxpayer money. They have issued eleven
reports since June 25, almost all of which have
pointed to the misuse of the money allocated for
reconstruction, be it Iraqi or Congress-appropriated
funds.

According to two of these reports issued in late July
by Stuart Bowen, the auditor-inspector general of the
Coalition Provisional Authority (CPA), not only have a
full one-third of the items purchased by the Pentagon
gone MIA (including the pricey generator), but a
whopping. $1.9 billion or more of Iraqi oil revenue
has also mysteriously disappeared.

Embarrassed military authorities did eventually track
down the missing generator and much of the money, both
of which seemed to have ended up with none other than
Halliburton. As it turns out they weren't missing
after all; it's just that Dick Cheney's former
employer had misplaced or conveniently forgotten to
turn in the receipts to the correct people.

But the Pentagon was not able to explain just how
Halliburton gained possession of Iraqi funds when
neither the United States Congress nor the Iraqi
government authorized their transfer to Halliburton in
the first place. Worse yet, the man who authorized the
allocation CPA chief Paul Bremer had already
quietly left Iraq just as the reports were being
released.

Yet days after the much-touted "transfer of
sovereignty," the White House revealed an even more
startling detail about the reconstruction effort: In
over a year, the CPA had managed to spend just 2
percent of the $18.4 billion earmarked for the
immediate reconstruction of Iraq. And not a penny was
spent on the two areas where the Iraqi people were
suffering the most: healthcare or water and
sanitation.

So what is really going on? Is the United States
spending too much or too little money in Iraq?

To answer that question, we need to separate the
apples from the pears and the oranges.

Other People's Money

There are three treasure chests that the Occupation
authorities are allowed to dip their hands into. The
$87 billion appropriation that Congress granted to the
Bush administration in September 2003 was divided into
two funds: the bigger chunk, some $65 billion, for
military operations and $18.4 billion for
reconstruction. The Development Fund of Iraq (a.k.a.
the revenues accrued from the sale of Iraqi oil) is
the third treasure chest.

Treasure Chest No. 1 was quickly spent after the
invasion on hiring Halliburton to supply the soldiers.
In fact, the Pentagon has reportedly exceeded this
allotment by an estimated $12 billion. This
appropriation has been the source of most of the money
spent in Iraq. It is also the money that has been
subjected to a series of careful audits by the Defense
Contract Audit Agency, the General Accounting Office
(the investigative arm of Congress), and Stuart
Bowen's team of auditors in Baghdad all of whom have
fiercely criticized Halliburton for its pricing and
spending practices.

The CPA barely touched the $18.4 billion allocated by
Congress for reconstruction (Treasure Chest No.
2)because of stringent bidding and oversight
requirements to prevent fraud or waste. Many of the
reconstruction bills were instead paid for with
revenue from the sale of Iraqi oil (Treasure Chest No.
3). Some of this money was spent on Halliburton for
the repair of the oil infrastructure; some was simply
handed out in cash to local people by soldiers in
return for favors such as rebuilding offices or
building football fields.

A New York Times article in late June 2004, described
the lax oversight of this money thus:


"The teams have become famous in Iraq for the way they
have spread across the country, commissioning repairs
and paying for them from satchels bulging with $100
bills shipped by plane from a Federal Reserve vault in
East Rutherford, New Jersey. At least $1 billion has
been distributed in this fashion by some estimates
more than $2 billion. 'The military commanders love
that program, because it buys them friends,' said an
administration official, referring to the cash
distribution. 'You want to hire everybody on the
street, put money in their pockets and make them like
you. We have always spent Iraqi money on that.'"

So here is what it all means:

One, the U.S. taxpayers spent a lot of money on the
soldiers, but the Pentagon paid Halliburton to do the
work. The company billed the military top dollar
knowing that the brass would look the other way. The
gravy train finally ground to a halt when two brave
members of Congress inquired about the results of the
internal audit.

Two, almost none of the money that American taxpayers
provided for reconstruction was spent because the
rules were too stringent for the CPA's taste.

And three, we dished out Iraqi money to companies like
Halliburton like it was going out of style because the
United States government knew that neither Congress
nor the United Nations would ask us difficult
questions about what we were doing with other people's
money. Equally importantly, Bush officials were
worried that the new Iraqi government might ask us
difficult questions about their money once they gained
any modicum of power. So they were eager to spend the
money while they could.

In other words, despite access to billions of dollars
for reconstruction, the CPA has done little to serve
the interests of either the American taxpayer or the
Iraqi people. The reconstruction effort has, however,
been a cash bonanza for companies like Halliburton.

The Billion-dollar Corporate Expense Account

Halliburton has been the biggest beneficiary of the
CPA and Pentagon's liberal spending policies the
company alone got $3.9 billion last year to repair oil
fields and provide food, laundry, sanitation and
transportation services to the military.

Where did the money go? Whistle-blowers from the
company have sent testimony to Congress detailing the
many wasteful practices: paying $100 for a bag of
laundry; abandoning $85,000 trucks for the lack of a
spare tire. Meanwhile, other companies like Science
Applications International Corporation of San Diego
were shipping armored Humvees for company executives
on specially chartered jets and paying themselves $200
an hour to run a U.S. propaganda television station
that no one was watching.

An internal Pentagon audit completed two weeks ago and
reported in the Wall Street Journal earlier this month
found that Halliburton failed to adequately account
for "more than $1.8 billion" it has received so far
for providing logistical support to troops in Iraq and
Kuwait.

When challenged by military auditors to account for
its missing equipment and receipts, the Houston-based
Halliburton told the Pentagon that it did not have
enough staff to keep track of the $400 million it was
spending in Iraq an explanation that the Defense
Department was surprisingly quick to accept. Linda
Theis, a spokeswoman for the Army Materiel Command,
told reporters, "It was the pace. It was the magnitude
of this contract."

In statements to the press, on the other hand,
Halliburton flatly denies any problems with its
accounting procedures. Randy Harl, president of
Kellogg, Brown and Root, the Halliburton subsidiary
that conducts the work in Iraq, said, "In general, we
have found that the subcontractors are properly
billing on the basis provided in the subcontracts. We
are operating in a remote, hostile and ever-changing
environment in Iraq. In such an environment, there are
bound to be challenges. Any issues related to billings
will not only be resolved quickly and responsibly, but
also resolved in such a way that it will not affect
any services provided to our soldiers."

But in written testimony submitted to Congress,
Halliburton's own auditor, Marie de Young, revealed
that the company's internal auditors (nicknamed the
"Tiger Team") were not doing their job properly. De
Young, who was hired in December 2003 to help oversee
Operation Iraqi Freedom contracts, told Congress:


When the Tiger Team examined a subcontract, they just
checked to make sure that all the forms were in the
file. ... They didn't assess the reasonableness of the
price or consult with site managers. The team's sole
purpose was to close as many subcontracts as possible,
under the mistaken assumption that everything that was
closed prior to the arrival of the government audit
team would be exempt from further scrutiny.

De Young also made clear the company's intentions: "I
had been advised by subcontract administrators who
quit the company that employees get moved around when
they get too close to the truth. ... Ironically, other
previous managers who tolerated bad practices were
promoted to better paying jobs in Iraq or Houston or
Jordan."

The final touch of irony: Halliburton housed the Tiger
Team at the five-star Kempinski Hotel in Kuwait,
paying each of them a whopping $10,000 per month for
their troubles. At the time, U.S. soldiers were
required to live in tents at a cost of $1.39 a day.
When the military asked Halliburton employees to move
into the tents, they refused.

Crimes and Consequences

The audit reports have produced little real action on
the part of the Pentagon thus far. Last Monday,
Halliburton announced that the Pentagon had told the
company that it plans to withhold 15 percent ($60
million) of its monthly payment until they find all
the missing receipts. But the Pentagon reversed its
decision the very next day, announcing that it will
give the company more time to find the missing paper
work and prove their costs before imposing the
penalty. Halliburton has already been granted extra
time twice.

The audits may also not have much effect on the future
of the reconstruction effort, which remains grim.
Bremer's departure in June was only one in an exodus
of occupation officials and contractors, derisively
labeled by a U.S. soldier as "The League of Frightened
Gentleman," fleeing the dangerous situation in Iraq.
The German engineers hired to repair the Daura power
plant in Baghdad left behind enormous disassembled
machines strewn across the plant floor. "They didn't
contact me," said Bashir Khalif Omir, the plant
director at the time. "They took their luggage at
midnight and they left."

When Bremer caught his jet plane out of Iraq, two
heavily armed Blackwater private military watched his
back, rifles pointed menacingly at camera crews. There
were no flowers from an adoring Iraqi public, not even
anything similar to the dramatic lift-off from the
roof of the U.S. embassy in Saigon marked the occasion
just a quiet, top-secret escape to freedom (and a
lucrative book contract). But Bremer left behind a
nation that was not just more dangerous but also
poorer for his efforts.

2004 Independent Media Institute. All rights
reserved.
View this story online at:
http://www.alternet.org/story/19620/

Posted by richard at August 25, 2004 11:05 AM