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View Full Version : Great article on the gigacorruption perpetrated by Cheney's Halliburton in Iraq



Yoghurt Sothoth
25-10-2005, 01:10 PM
Really monstrous stuff:

http://www.informationclearinghouse.info/article9678.htm

Blood and Gravy

By Chris Floyd

08/05/05 "Moscow Times" -- -- It's easy to forget sometimes -- amid all the lofty talk of geopolitics, of apocalyptic clashes between good and evil, of terror, liberty, security and God -- that the war on Iraq is "largely a matter of loot," as Kasper Gutman so aptly described the Crusades in that seminal treatise on human nature, "The Maltese Falcon." And nowhere is this more evident than in the festering, oozing imposthume of corruption centered around the Gutman-like figure of Vice President Dick Cheney.

Yes, it's once more unto the breach with Halliburton, the gargantuan government contractor that still pays Cheney, its former CEO, enormous annual sums in "deferred compensation" and stock options -- even while he presides over a White House war council that has steered more than $10 billion in no-bid Iraqi war contracts back to his corporate paymaster. This is rainmaking of monsoon proportions. Indeed, the company's military servicing wing announced a second-quarter profit spike of 284 percent last week -- a feast of blood and gravy that will send Cheney's stock options soaring into the stratosphere.

But although Halliburton has already entered the American lexicon as a byword for rampant cronyism, the true extent of its dense and deadly web of graft is only now emerging, most recently in a remarkable public hearing that revealed some of the corporation's standard business practices in Iraq: fraud, extortion, brutality, pilferage, theft -- even serving rotten food to U.S. soldiers in the battle zone.

By piecing together bits from the fiercely suppressed reports of a few honest Pentagon auditors and investigators, a joint House-Senate minority committee (the Bushist majority refused to take part) has unearthed at least $1.4 billion in fraudulent overcharges and unsourced billing by Cheney's company in Iraq. Testimony from Pentagon whistleblowers, former Halliburton officials and fellow contractors revealed the grim picture of a rogue operation, power-drunk and arrogant, beyond the reach of law, secure in the protection of its White House sugar daddy.

One tale is particularly instructive: Halliburton's strenuous efforts to prevent a company hired by the Iraqis, Lloyd-Owen International, from delivering gasoline into the conquered land from Kuwait for 18 cents a gallon. Why? Because LOI's cost-efficient operation undercuts Halliburton's highway-robbery price of $1.30 a gallon for the exact same service.

But how is Halliburton able to interfere with the sacred process of free enterprise? Well, it seems that Cheney's firm, a private company, has control over the U.S. military checkpoint on the volatile Iraq-Kuwait border, and it also has the authority to grant -- or withhold -- the Pentagon ID cards that are indispensable for contractors operating in Iraq. (Even contractors who, like LOI, are working for the supposedly sovereign Iraqi government.) Halliburton used these powers to block LOI's access to the military crossing -- which provides quick, safe delivery of the fuel -- for months. Then the game got rougher.

In June, Cheney's boys blackmailed LOI into delivering some construction materials to a Halliburton project in the friendly confines of Fallujah: no delivery, no "golden ticket" Pentagon card, said Halliburton. They neglected to tell LOI that convoys on the route had been repeatedly hit by insurgents in recent days. And sure enough, LOI's delivery trucks were ripped to shreds just outside a Halliburton-operated military base. Three men were killed and seven wounded. But that's not all. An e-mail obtained by investigators revealed that Halliburton brass had expressly prohibited company employees from offering any assistance to the shattered convoy.

Halliburton extended this milk of human kindness to its food services as well. The firm had to bring in Turkish and Filipino guest workers to feed U.S. soldiers, because the happily liberated Iraqis couldn't be trusted not to blow up their benefactors. The Cheneymen treated these coolies as befitted their lowly station: They packed them into tents with sand floors and no beds, and literally fed them scraps from the garbage. When the peons complained, Halliburton sacked the subcontractor, who had been buying bargain produce and meat from the locals, and hired an American crony to ship in food all the way from Philadelphia.

U.S. soldiers weren't treated much better. Employees testified that Halliburton brass had ordered them to serve spoiled and rotten food to soldiers, day in and day out. Meanwhile, Halliburton brass were reserving choice cuts for the big beer-soaked barbecues they threw for themselves two or three times a week. They also billed the taxpayer for 10,000 "ghost meals" per day at a single base: The food was phantom, but the rake-off was real. Meanwhile, any employee who made noises about exposing the fraud to auditors was threatened with transfer to a red-hot fire zone, like Fallujah or Saddam's hometown, Tikrit.

All of this criminal katzenjammer -- and much, much more -- was authorized at the highest levels, as top procurement brass and Pentagon officials confirmed. Cheney's office kept tabs on Halliburton's bids while Pentagon warlord Don Rumsfeld "violated federal law," the committee noted, by directly intervening in the procurement process to eliminate all possible rivals and to make sure Cheney's employer got the guaranteed-profit gig. Rumsfeld's office also removed oversight procedures for the dirty deals and ignored repeated warnings from Pentagon auditors about Halliburton's blatant, persistent, pervasive fraud. And the money keeps rolling in. Just last month, Don and Dick ladled another $1.75 billion dollop of pork gravy into Halliburton's bowl.

For this they have made a holocaust in the desert sands, sacrificing tens of thousands of innocent lives: for cheap, greasy graft; for grubby pilfering; for the personal profit of Richard B. Cheney and the whole pack of Bushist jackals gorging themselves on blood money.

Annotations

Halliburton's Questioned and Unsupported Costs in Iraq Exceed $1.4 Billion
House-Senate Minority Staff Repot, June 27, 2005

Halliburton Overcharges in Iraq: Transcript of Hearing
Federal News Service, June 27, 2005

Halliburton announces 284 percent increase in war profits
Halliburton Watch, July 25, 2005 http://www.halliburtonwatch.org/news/earnings072205.html

Contract Abuse Alleged in Iraq
Los Angeles Times, June 28, 2005

Cheney's Boundless War Profiteering
The Age (Australia), July 30, 2005

redcrescent
25-10-2005, 09:33 PM
What filth. And this isn't even a tenth of what is really going on. Speaking of Cheney, I read the other day that there is a little-known law in the US that forbids the President and VP to both be from the same state, so Cheney (a Texan) changed his residence status or whatever to somewhere in Wyoming.

Oh, and wasn't the Halliburton subsidiary Kellogg, Brown and Root (KBR) given no-bid contracts for post-Katrina reconstruction work, too?

The beat goes on...

Paul Hotflush
26-10-2005, 10:34 AM
For this they have made a holocaust in the desert sands, sacrificing tens of thousands of innocent lives: for cheap, greasy graft; for grubby pilfering; for the personal profit of Richard B. Cheney and the whole pack of Bushist jackals gorging themselves on blood money.

I have no problem with the actvitities of unscrupulous companies (of which Halliburton is clearly one) being highlighted, but the above is just pitiful. I can't stand it when journalists and commentators resort to this kind of evangelical rubbish. It drags the valuable stuff down.

HMGovt
26-10-2005, 10:59 AM
I have no problem with the actvitities of unscrupulous companies (of which Halliburton is clearly one) being highlighted, but the above is just pitiful. I can't stand it when journalists and commentators resort to this kind of evangelical rubbish. It drags the valuable stuff down.

Yes, too much Galloway and not enough Chomsky.

Paul Hotflush
26-10-2005, 11:32 AM
I'd say Chomsky is no stranger to hysterical rants himself.

k-punk
26-10-2005, 11:57 AM
Which bit, precisely, is OTT and not directly warranted by the facts?

Paul Hotflush
26-10-2005, 12:07 PM
the facts?

As defined by whom? The Guardian? (http://www.guardian.co.uk/comment/story/0,3604,1593599,00.html ) ;)

craner
26-10-2005, 06:15 PM
It's the Moscow Times for fuck's sake.

I think this, for example, was over the top

For this they have made a holocaust in the desert sands, sacrificing tens of thousands of innocent lives: for cheap, greasy graft; for grubby pilfering; for the personal profit of Richard B. Cheney and the whole pack of Bushist jackals gorging themselves on blood money

It's not quite as simple as that, chum.

k-punk
26-10-2005, 06:29 PM
It's the Moscow Times for fuck's sake.

I think this, for example, was over the top

For this they have made a holocaust in the desert sands, sacrificing tens of thousands of innocent lives: for cheap, greasy graft; for grubby pilfering; for the personal profit of Richard B. Cheney and the whole pack of Bushist jackals gorging themselves on blood money

It's not quite as simple as that, chum.

Yes, that was the original claim .... Now --- are you disputing the facts in the article? If so, then fair enough. If not, then the last sentence, whilst somewhat purple, is hardly unwarranted....

a holocaust in the desert sands, sacrificing tens of thousands of innocent lives check

for cheap, greasy graft; for grubby pilfering check

for the personal profit of Richard B. Cheney and the whole pack of Bushist jackals gorging themselves on blood money check

the fact that it's gilded over by neo-imperialist rhetoric only makes it worse...

HMGovt
26-10-2005, 06:33 PM
It's the Moscow Times for fuck's sake.

I think this, for example, was over the top

For this they have made a holocaust in the desert sands, sacrificing tens of thousands of innocent lives: for cheap, greasy graft; for grubby pilfering; for the personal profit of Richard B. Cheney and the whole pack of Bushist jackals gorging themselves on blood money

It's not quite as simple as that, chum.

At heart, it is that simple. Even in the best light, it's a blatant grab for oil and regional domination that would have pleased and sustained Hitler.

k-punk
26-10-2005, 07:08 PM
Not just money to be made from oil though.... as the article makes clear, there's plenty to be raked off from 'reconstructing' the Iraqi economy too....

trouble is, that both the neo-con neo-imperialist rationale and the cynical exploitation one are in effect, and both are bad...

zhao
26-10-2005, 11:15 PM
At heart, it is that simple.

it really is isn't it.

HMGovt
27-10-2005, 12:23 AM
it really is isn't it.

Elaborate and elucidate.

Paul Hotflush
27-10-2005, 11:37 AM
Even in the best light, it's a blatant grab for oil and regional domination that would have pleased and sustained Hitler.

FFS.

HMGovt
27-10-2005, 12:53 PM
FFS.

AYRTS? IA?

For Cheney's Sake

sufi
27-10-2005, 04:19 PM
...but, is there not some longstanding interweb convention that whoever brings up the nazis in any unrelated debate is automatically conceding defeat for reductio ad absurdum in extremis???

HMGovt
27-10-2005, 05:16 PM
...but, is there not some longstanding interweb convention that whoever brings up the nazis in any unrelated debate is automatically conceding defeat for reductio ad absurdum in extremis???

Well aware of that. But in this case, where we're talking about unlawful invasion of another country to grab oil and subjugate brown people, to the cheers of a wilfully ignorant and woefully misinformed domestic population, the comparison is warranted.

Paul Hotflush
28-10-2005, 11:22 AM
...but, is there not some longstanding interweb convention that whoever brings up the nazis in any unrelated debate is automatically conceding defeat for reductio ad absurdum in extremis???

Yes, clearly this is the case.

rewch
28-10-2005, 02:12 PM
...but, is there not some longstanding interweb convention that whoever brings up the nazis in any unrelated debate is automatically conceding defeat for reductio ad absurdum in extremis???

yup... godwin's law (http://en.wikipedia.org/wiki/Godwins_Law)

HMGovt
28-10-2005, 02:25 PM
yup... godwin's law (http://en.wikipedia.org/wiki/Godwins_Law)

Reminder: Debate is idiot distraction.

craner
31-10-2005, 01:26 AM
Cheney is War-profettering...true. Yes. we know this.

On all other points, my friend, no check.

Hallburton extract oil. And they're corrupt.

Oil in Iraq, meanwhile, is still nationalised.

Iraq is not a desert. Politically or phyiscally.

Etc.

We could get into this.

Don't think that Robert Fisk or Jaun Cole ae The Authoritities.

It's easy, and convenient and it's a

big

mistake

D84
31-10-2005, 02:30 AM
I'm sorry Oliver, but what part of this *doesn't* check???


a holocaust in the desert sands, sacrificing tens of thousands of innocent lives CHECK

for cheap, greasy graft; for grubby pilfering CHECK

for the personal profit of Richard B. Cheney and the whole pack of Bushist jackals gorging themselves on blood money CHECK

Haven't tens of thousands of people died in Iraq?? And for what good reason??

So you think you know better than Robert Fisk or Juan Cole? How much more arrogant can a person get? Maybe Tony Blair really does have all the answers...

I am recusing myself from further comment in this thread.

craner
31-10-2005, 02:33 PM
I am recusing myself from further comment in this thread

Uh, why? Why are you doing that? Why should anybody care anyway?

You presume rather too much, I think.

It's not arrogant to point out that there's another story in Iraq (many, in fact) besides the Fisk/Cole grindhouse that's subsumed most of our media.

For every her (http://riverbendblog.blogspot.com/) there's him (http://www.iraqthemodel.blogspot.com/). He's important.

There's what's happening in the regions not plagued by the levels of violence witnessed in Baghdad, Basra and the Sunni triangle; most of the regions, in fact.

There's also the untold story of Iran's counter-occupation.

The ongoing struggle for a federal constitution, and the document itself, still the most progressive in the Middle East.

The triumph of the Kurds.

And so on.

A lot of stories not being told.

I don't think it's arrogant to say this.

Reducing the struggle to Cheney's kleptomania or Halliburton corruption is a self-serving reduction; it's stupid and fallacious. Believe it or not, this is a lot bigger than Cheney and Halliburton.

It's arrogant of you to think you have any right to excise yourself from the argument in such a way.

bassnation
31-10-2005, 04:48 PM
Reducing the struggle to Cheney's kleptomania or Halliburton corruption is a self-serving reduction; it's stupid and fallacious. Believe it or not, this is a lot bigger than Cheney and Halliburton. .

yes, it is bigger - the repurcussions and the loss of life is going to run for decades at the very least. the road to hell is paved with good intentions - and contrary to your spin, we don't even have that.

Diggedy Derek
01-11-2005, 06:22 PM
Although I almost entirely agree with the thrust of the article, I think it's a very poorly written one. There aren't many supporting quotes in there. For instance the bit about "an email obtaintained expressly forbid Haliburton contractors...."- why isn't there some text from this email, or some more detail about it?

Also, those inserted quotes annoy me- the sort of "10000 'ghost meals'" stuff. If it doesn't explain what it means by a ghost meal, it becomes rather too rhetorical. It would be like me saying "this article was poorly researched, almost certainly written by a 'money-grabbing' freelancer". Where are those quotes coming from, and what are they doing?

Perhaps the detail is elsewhere, in those links, because it's not really in the article itself. I do agree with the thrust of it, but that's another matter.

craner
03-11-2005, 11:26 PM
Well now, look, all of you (judging by experience, and excepting Scottdisco and Peasall) could do worse than read, for example, his latest (http://www.nationalreview.com/rubin/rubin200511010821.asp). Rubin's been travelling outside the Green Zone for over 12 months, so I guess his counts as, uh, "informed comment" (Yo! Juan! Iraq Air flies daily to Baghdad from Dubai, Amman and Istanbul! It's easy! Go be expert!) (oh, by the way, according to a couple of (hey, guess what!) Shi'ite friends of mine, your book was rubbish! Oops!)

Here's Rubin, with a nice send-off:

Daily reports of violence suggest Iraq is tearing apart at the seams. Ethnic strife remains a possibility, but it need not happen. While the Bush administration has been inept at making its case, the White House has little for which to apologize. Iraqis debate. They tolerate dissent. Politicians hash out compromise. The constitution may not be ideal, but it is fair. Meanwhile, tens of millions of Saudis, Syrians, Iranians, Tunisians, and Egyptians still struggle under dictatorships. They lack a free press. While self-described liberal bloggers pillory the White House, they ignore the plight of Lotfi Hajji, president of the Tunisian Syndicate of Journalists; Ayachi Hammami, secretary general of the Tunis Section of the Tunisian League for Human Rights; or Nejib Chebbi, secretary general of the Progressive Democratic party, all of whom are conducting a hunger strike in Tunisia to win the same press freedoms now enjoyed by 25 million Iraqis. Libyan dissident Fathi el-Jahmi continues to rot in prison for demanding that Libyan strongman Muammar Qaddafi allow contested, multiparty elections. If only Arianna Huffington, Juan Cole, The Nation, or the New York Times would focus some of their attention on these dissidents' plights, the world might be a better place.

craner
03-11-2005, 11:46 PM
I also look forward to the long-awaited vindication and due accord paid to Kanan Makiya, not just by Rubin and Hitch, but also in George Packer's forthcoming book Assassins' Gate.

http://images.amazon.com/images/P/0520214390.01.LZZZZZZZ.jpg

http://www.libreriauniversitaria.it/data2/images/BUS/300/966/1860649661.jpg

http://images.amazon.com/images/P/039303108X.01.MZZZZZZZ.jpg

Go and read!

HMGovt
11-11-2005, 02:58 PM
Money for Nothing

Billions of dollars have disappeared, gone to bribe Iraqis and line contractors’ pockets.

By Philip Giraldi

10/18/05 " American Conservative " -- -- The United States invaded Iraq with a high-minded mission: destroy dangerous weapons, bring democracy, and trigger a wave of reform across the Middle East. None of these have happened.

When the final page is written on America’s catastrophic imperial venture, one word will dominate the explanation of U.S. failure—corruption. Large-scale and pervasive corruption meant that available resources could not be used to stabilize and secure Iraq in the early days of the Coalition Provisional Authority (CPA), when it was still possible to do so. Continuing corruption meant that the reconstruction of infrastructure never got underway, giving the Iraqi people little incentive to co-operate with the occupation. Ongoing corruption in arms procurement and defense spending means that Baghdad will never control a viable army while the Shi’ite and Kurdish militias will grow stronger and produce a divided Iraq in which constitutional guarantees will be irrelevant.

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 U.S. 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.

Some of the corruption grew out of the misguided neoconservative agenda for Iraq, which meant that a serious reconstruction effort came second to doling out the spoils to the war’s most fervent supporters. The CPA brought in scores of bright, young true believers who were nearly universally unqualified. Many were recruited through the Heritage Foundation website, where they had posted their résumés. They were paid six-figure salaries out of Iraqi funds, and most served in 90-day rotations before returning home with their war stories. One such volunteer was Simone Ledeen, daughter of leading neoconservative Michael Ledeen. Unable to communicate in Arabic and with no relevant experience or appropriate educational training, she nevertheless became a senior advisor for northern Iraq at the Ministry of Finance in Baghdad. Another was former White House Press Secretary Ari Fleischer’s older brother Michael who, though utterly unqualified, was named director of private-sector development for all of Iraq.

The 15-month proconsulship of the CPA disbursed nearly $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. Most of the money was flown into Iraq on C-130s in huge plastic shrink-wrapped pallets holding 40 “cashpaks,” each cashpak having $1.6 million in $100 bills. Twelve billion dollars moved that way between May 2003 and June 2004, drawn from accounts administered by the New York Federal Reserve Bank. The $100 bills weighed an estimated 363 tons.

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.

The contracts were especially attractive because no work or results were necessarily expected in return. It became popular to cancel contracts without penalty, claiming that security costs were making it too difficult to do the work. A $500 million power-plant contract was reportedly awarded to a bidder based on a proposal one page long. After a joint commission rejected the proposal, its members were replaced by the minister, and approval was duly obtained. But no plant has been built.

Where contracts are actually performed, their nominal cost is inflated sufficiently to provide handsome bribes for everyone involved in the process. Bribes paid to government ministers reportedly exceed $10 million.

Money also disappeared in truckloads and by helicopter. The CPA reportedly distributed funds to contractors in bags off the back of a truck. In one notorious incident in April 2004, $1.5 billion in cash that had just been delivered by three Blackhawk helicopters was handed over to a courier in Erbil, in the Kurdish region, never to be seen again. Afterwards, no one was able to recall the courier’s name or provide a good description of him.

Paul Bremer, meanwhile, had a slush fund in cash of more than $600 million in his office for which there was no paperwork. One U.S. contractor received $2 million in a duffel bag. Three-quarters of a million dollars was stolen from an office safe, and a U.S. official was given $7 million in cash in the waning days of the CPA and told to spend it “before the Iraqis take over.” Nearly $5 billion was shipped from New York in the last month of the CPA. Sources suggest that a deliberate attempt was being made to run down the balance and spend the money while the CPA still had authority and before an Iraqi government could be formed.

The only certified public-accounting firm used by the CPA to monitor its spending was a company called North Star Consultants, located in San Diego, which was so small that it operated out of a private home. It was subsequently determined that North Star did not, in fact, perform any review of the CPA’s internal spending controls. Today, no one can account for billions of those dollars or even suggest how the money was spent. And as the CPA no longer exists, there is also little interest in re-examining its transparency or accountability.

Bremer escaped Baghdad by helicopter two days before his proconsulship expired to avoid a possible ambush on the road leading to the airport, which he had been unable to secure. He has recently been awarded the Presidential Medal of Freedom, an honor he shares with ex-CIA Director George “Slam-dunk” Tenet.

Considerable fraud has been alleged regarding American companies, much of which can never be addressed because the Bush administration does not regard contracts with the CPA as pertaining to the U.S. government, even though U.S. taxpayer dollars were involved in some transactions.

Many of the contracts for work in Iraq were awarded on a cost-plus basis, in which an agreed-upon percentage of profit would be added to the actual costs of performing the contract. Such contracts are an invitation to fraud, and unscrupulous companies will make every effort to increase their costs so that the profits will also increase proportionally.

Halliburton, Vice President Dick Cheney’s former company, has a no-bid monopoly contract with the Army Corps of Engineers that is now estimated to be worth $10 billion. In June 2005, Pentagon contracting officer Bunny Greenhouse told a congressional committee that the agreement was the “most blatant and improper contracting abuse” that she had ever witnessed, a frank assessment that subsequently earned her a demotion.

HMGovt
11-11-2005, 02:59 PM
Halliburton has frequently been questioned over its poor record keeping, and critics claim that it has a history of overcharging for its services. In May 1967, a company called RMK/BRJ could not account for $120 million in materiel sent to Vietnam and was investigated several times for overcharging on fuel. RMK/BRJ is now known as KBR or Kellogg, Brown and Root, the Halliburton subsidiary that has been the focus of congressional, Department of Defense, and General Accountability Office investigations. Defense Contract Audit Agency auditors have questioned Halliburton’s charges on a $1.6 billion fuel contract, claiming that the overcharges on the contract exceed $200 million. In one instance, the company charged the Army more than $27 million to transport $82,000 worth of fuel from Kuwait to Iraq. Halliburton has also been accused of billing the Army for 42,000 daily meals for soldiers, though it was only actually serving 14,000. In another operation, KBR purchased fleets of Mercedes trucks at $85,000 each to re-supply U.S. troops. The trucks carried no spare parts or even extra tires for the grueling high-speed run across the Kuwaiti and Iraqi deserts. When the trucks broke down on the highway, they were abandoned and destroyed rather than repaired.

Responding to complaints, Halliburton refused to permit independent auditing and inspected itself using so-called “Tiger Teams.” One such team stayed at the five-star Kuwait Kempinski Hotel while it was doing its audit, running up a bill of more than $1 million that was passed on to U.S. taxpayers.

Another U.S. firm well connected to the Bush White House, Custer Battles, has provided security services to the coalition, receiving $11 million in Iraqi funds including $4 million in cash in a sole-source contract to supply security at Baghdad International Airport. The company had never provided airport security before receiving the contract. It also received a $21 million no-bid contract to provide security for the exchange of Iraqi currency. It has been alleged that much of the currency “replaced” by Custer Battles has never been accounted for. The company also allegedly took over abandoned Iraqi-owned forklifts at the airport, repainted them, and then leased them back to the airport authority through a company set up in the Cayman Islands. Custer Battles reportedly set up a number of shell companies in offshore tax havens in Lebanon, Cyprus, and the Cayman Islands to handle the cash flow.

Two former company managers turned whistleblowers have charged that the company defrauded the U.S. government of at least $50 million. The Bush administration’s Justice Department has only reluctantly, and under pressure from a Newsweek exposé, supported the rights of the plaintiffs in the case. The White House has indicated that it is not interested in assisting other investigations of fraud in Iraqi contracting, preferring to regard the CPA as a “multinational entity” and thereby limiting its vulnerability in American courts.
Another American contractor, CACI International, which was involved in the Abu Ghraib interrogations, was accused by the GAO in April 2004 of having failed to keep records on hours of work that it was billing for and of routinely upgrading employee job descriptions so that more could be charged per employee per hour. Both are apparently common practices among contractors in Iraq, and audits routinely determine that there is little in the way of paperwork to support billings. The GAO report also confirms that many private security contractors in Iraq have been charging the U.S. government exorbitant fees for their services, frequently because the contracts allow security costs to be rolled into the overall cost of the contract without being itemized. In one case, contract security guards were effectively being billed at $33,000 per guard per month while the average rate for a security specialist worked out to between $13,000 and $20,000 per month.

The CPA also spread its largesse around the U.S. armed forces, distributing over $600 million in cash to four regional commanders to fund reconstruction projects as part of the Commanders’ Emergency Response Program. An audit of one region disclosed that 80 percent of the funds could not be accounted for, and more that $7 million in cash was missing. It is widely believed that many of the contracting agents working under the regional commands literally stole the money. In one reported instance, an American contracting officer doubled the price of a multimillion-dollar contract and brazenly explained that the extra money would be for his retirement fund.

Unfortunately, the corruption of the occupation outlived the departure of Paul Bremer and the demise of the CPA. A recent high-level investigation of the Iraqi interim government concluded that the corruption is now so pervasive as to be irreversible. One prominent businessman estimates that 95 percent of all business activity involves some form of bribery or kickback. The bureaucrats and fixers who live off of bribery are referred to by ordinary Iraqis as “Ali Babas,” named after the character in The Thousand and One Nights who was able to access riches from a treasure cave by saying “open sesame.” For the average Iraqi businessman, there was formerly only one hand out, that of Saddam’s designated minion. Now every hand is out. The educated and entrepreneurial are leaving the country in droves, as is most of the beleaguered Christian minority. Huge government appropriations are approved by Iraqi lawmakers and then simply disappear. Meanwhile, life for the average Iraqi does not improve, and oil production, water supplies, and electricity generation are all at lower levels than they were when the U.S. took control in 2003. The only thing that everyone knows is that all the money is gone and daily life in Iraq is worse than it was under Saddam Hussein.

The undocumented cash flow continued long after the CPA folded. Over $1.5 billion was disbursed to interim Iraqi ministries without any accounting, and more than $1 billion designated for provincial treasuries never made it out of Baghdad. More than $430 million in contracts issued by the Petroleum Ministry were unsupported by any documentation, and $8 billion were given to government ministries that had no financial controls in place. Nearly all of it disappeared, spent on “payroll,” wages for “ghost employees” in the Ministries of the Interior and Defense. In one case, an Army brigade receiving money to support 2,200 men was found to have fewer than 300 effectives. 602 actual guards at the Ministry of the Interior were billed as more than 8,200 for payroll purposes.

Iraqi Airways carried 2,400 employees even though it had not operated for over a year and had no planes. The airline itself was sold to an unidentified buyer without any paperwork to show for how much it was sold and what assets were included. It has been alleged that the buyer might well have been Pentagon favorite Ahmad Chalabi.

Nearly all payrolls in the national guard and national police were also inflated, leading to uncertainty over how large the security forces actually were—still an open question. Absentees from the nominal rolls of police and soldiers provided by government ministries are believed to number in the tens of thousands, and as the United States Congress has figured out, frequently cited figures on available trained manpower are largely imaginary.

Even the “coalition of the willing” partners have been quick to cash in. Polish helicopters purchased as part of a $300 million deal with arms maker Bumar Ltd. were found to be obsolete, largely unflyable, and were actually rejected by the Iraqis. Bullets purchased from Poland by the Defense Ministry cost three times the normal international price. Five Polish peacekeepers have been arrested for demanding $90,000 in bribes. Both British and American soldiers have also demanded bribes from shopkeepers and travelers.

In yet another instance of take-it-while-you-can, a senior Interior Ministry official flew to Beirut in a helicopter accompanied by $10 million in newly printed Iraqi dinars. He has yet to return. Interim Iraqi President Iyad Allawi’s Defense Minister Hazem Shaalan transferred $500 million to a bank account in Lebanon, allegedly to buy weapons, in a case that continues to be murky. Shaalan is reportedly vacationing abroad and has not returned to Iraq. A Bremer favorite at the Defense Ministry, Ziad Tareq Cattan, was responsible for a number of shady arms-procurement deals. A warrant has been issued for his arrest, an unusual occurrence, and he is avoiding detention by staying with family in Erbil in Kurdistan.

Countless billions will never be accounted for, and the full cost of corruption has yet to be tallied. Sources report that much of the money that was designated for the development of a national army and police force is actually going to units that are exclusively Kurd or Shi’ite in expectation of a day of reckoning over the country’s oil supplies. The Kurds have made no secret of their desire to continue their autonomy-bordering-on-independence and have stated that they regard Kirkuk as their own. The Shi’ites have possession of the oil-producing region to the south and are using their control of the Interior Ministry to fill police ranks with their own pro-Iranian Badr Brigade members as well as militiamen drawn from radical cleric Moqtada al-Sadr’s Mehdi Army. The Sunnis are the odd men out, virtually guaranteeing that, far from becoming the model democracy the U.S. set out to build, Iraq will descend deeper into chaos—aided in no small part by the culture of corruption we helped to fortify.

Philip Giraldi, a former CIA Officer, is a partner in Cannistraro Associates, an international security consultancy.

rewch
11-11-2005, 04:40 PM
gigacorruption? no... teracorruption? maybe... petacorruption? definitely... yottacorruption? oh yes... (giga, tera, peta &c. (http://en.wikipedia.org/wiki/Petabyte) )

that makes sobering reading gov... thank you