The Multiple Billion Dollar Question in Iraq: where are the billions?

Monday, January 23, 2006 at 10:08 AM

So where the heck did the billions go?  You know, the billions that we spent to rebuild Iraq.  Lots of people are wondering now.  According to Buzzflash, the Iraqis themselves have some questions. The Washington Post has some questions.

Remember the old Pepsodent jingle?
"You'll wonder where the yellow went,
when you brush your teeth with Pepsodent."

Time for a 21st century update:
"You'll wonder where the billions went,
when you elect George Bush your president."

First the more extensive WaPo story:

"Finding out what happened to Iraq's $37 billion in oil-financed reconstruction funds -- its stacks of plastic-wrapped hundred-dollar bills popping up all over the country like play money -- has taken investigators down many paths, including one to the Defense Ministry office of Ziyad al Qattan."

The short version is that L. Paul Bremer, Iraq's first post-Saddam leader, received a huge infusion of funds, in cash, and began spending it on rebuilding efforts.  All told, counting funds supplied by the U.S., by other countries, and by Iraq's sale of oil, more than $60 billion was pegged for reconstruction costs alone.

Back at the beginning of the occupation, the UN had amassed some $37 billion in funds belonging to Iraq. When the Bush administration asked for custody of the money, the Development Fund for Iraq (DFI) was created and placed under the control of the CPA. Loads of cash started arriving in Baghdad on giant C-17 cargo planes. "Pallets packed with crisp, enumerated $100 bills were unloaded, trucked to the capital and then dispatched by convoy around Iraq to pay the bills..In all, $12 billion in U.S. currency was flown into Iraq before a banking system was set up to handle wire transfers of the fund."

The CPA was responsible, but had few safeguards,  The Pentagon oversaw the CPA but...well, you know who rules the roost at the Pentagon.

Today, the World Bank has estimated the country needs another $40 billion in reconstruction money.  So you can see why Iraq's Commission on Public Integrity is trying to determine how much of the CPA-distributed cash was stolen or misspent, and how much went for legitimate projects. The commission's spokesman, Ali Shabot, and American officials all think that many of the missing millions (they still don't know the amount) "was stolen in 2003, when the CPA exercised few safeguards, and in 2004, when Interim Prime Minister Iyad Allawi ruled Iraq without the benefit of financial oversight laws that later became part of the new constitution in 2005."

The Commission would love to talk to a guy named Ziyad al Qattan who served as Iraq's Defense Minister at the time, but that's a bit difficult because he's thought to be hiding out in Warsaw (Poland was, after all, a member of the "coalition of the willing").

Among the many known incidents of theft, fraud, and similar reconstructive activities chronicled in the Post's story are:

--The CPA gave one ministry enough to pay 8,026 guards, but only 602 actually existed.

--Another agency received payroll money for 1,471 guards, but only 642 stood duty.

--A CPA comptroller outside of Baghdad maintained a disbursement safe, but kept the key in an unsecured backpack and the disbursement officer often left the premises, leaving the safe open.

--Halliburton received $1.6 billion in DFI money for fuel and oil field repairs, of which Pentagon auditors say $218 million were overcharges.

--In the CPA's South-Central Region headquarters in the city of Hillah, a cast of characters suspected of stealing many millions included US military officers, a CPA field agent and a flamboyant American businessman named Philip H. Bloom.

Which, in all likelihood, leads to story number two from Buzzflash:

The Daily Star of Lebanon reports that "IRAQ NEEDS $20 BILLION TO REHABILITATE ELECTRICTY SECTOR" to solve a chronic electricity crisis after U.S. reconstruction funds failed to do the job. The Iraqi electricity minister, Mohsen Shlash, said "The American donation is almost finished and it was not that effective. They did a few power plants, yes, but that definitely is not worth $4.7 billion." The minister added that some of the work carried out was worth just one-tenth of the money being spent.

In yet another probably related story, the Islamic Republic News Agency (IRNA), from Iran reported that Iran and Iraq were discussing the implementation of a signed agreement that including expediting the building of nine electricity transfer plants. The electricity sector is described as "the highlight of the two neighbors' cooperation....Iran has
allocated one billion dollars to the reconstruction of Iraqi infrastructural projects."