A 'fraud' bigger than Madoff
Senior US soldiers investigated over missing Iraq reconstruction
billions
By Patrick Cockburn in Sulaimaniyah, Northern Iraq
Monday, 16 February 2009
In what could turn out to be the greatest fraud in US history, American
authorities have started to investigate the alleged role of senior
military officers in the misuse of $125bn (£88bn) in a US -directed
effort to reconstruct Iraq after the fall of Saddam Hussein. The exact
sum missing may never be clear, but a report by the US Special Inspector
General for Iraq Reconstruction (SIGIR) suggests it may exceed $50bn,
making it an even bigger theft than Bernard Madoff's notorious Ponzi
scheme.
"I believe the real looting of Iraq after the invasion was by US
officials and contractors, and not by people from the slums of Baghdad,"
said one US businessman active in Iraq since 2003.
In one case, auditors working for SIGIR discovered that $57.8m was sent
in "pallet upon pallet of hundred-dollar bills" to the US comptroller
for south-central Iraq, Robert J Stein Jr, who had himself photographed
standing with the mound of money. He is among the few US officials who
were in Iraq to be convicted of fraud and money-laundering.
Despite the vast sums expended on rebuilding by the US since 2003, there
have been no cranes visible on the Baghdad skyline except those at work
building a new US embassy and others rusting beside a half-built giant
mosque that Saddam was constructing when he was overthrown. One of the
few visible signs of government work on Baghdad's infrastructure is a
tireless attention to planting palm trees and flowers in the centre
strip between main roads. Those are then dug up and replanted a few
months later.
Iraqi leaders are convinced that the theft or waste of huge sums of US
and Iraqi government money could have happened only if senior US
officials were themselves involved in the corruption. In 2004-05, the
entire Iraq military procurement budget of $1.3bn was siphoned off from
the Iraqi Defence Ministry in return for 28-year-old Soviet helicopters
too obsolete to fly and armoured cars easily penetrated by rifle
bullets. Iraqi officials were blamed for the theft, but US military
officials were largely in control of the Defence Ministry at the time
and must have been either highly negligent or participants in the fraud.
American federal investigators are now starting an inquiry into the
actions of senior US officers involved in the programme to rebuild Iraq,
according to The New York Times, which cites interviews with senior
government officials and court documents. Court records reveal that, in
January, investigators subpoenaed the bank records of Colonel Anthony B
Bell, now retired from the US Army, but who was previously responsible
for contracting for the reconstruction effort in 2003 and 2004. Two
federal officials are cited by the paper as saying that investigators
are also looking at the activities of Lieutenant-Colonel Ronald W Hirtle
of the US Air Force, who was senior contracting officer in Baghdad in
2004. It is not clear what specific evidence exists against the two men,
who have both said they have nothing to hide.
The end of the Bush administration which launched the war may give fresh
impetus to investigations into frauds in which tens of billions of
dollars were spent on reconstruction with little being built that could
be used. In the early days of the occupation, well-connected Republicans
were awarded jobs in Iraq, regardless of experience. A 24-year-old from
a Republican family was put in charge of the Baghdad stock exchange
which had to close down because he allegedly forgot to renew the lease
on its building.
In the expanded inquiry by federal agencies, the evidence of a small-
time US businessman called Dale C Stoffel who was murdered after leaving
the US base at Taiji north of Baghdad in 2004 is being re-examined.
Before he was killed, Mr Stoffel, an arms dealer and contractor, was
granted limited immunity from prosecution after he had provided
information that a network of bribery – linking companies and US
officials awarding contracts – existed within the US-run Green Zone in
Baghdad. He said bribes of tens of thousands of dollars were regularly
delivered in pizza boxes sent to US contracting officers.
So far, US officers who have been successfully prosecuted or unmasked
have mostly been involved in small-scale corruption. Often sums paid out
in cash were never recorded. In one case, an American soldier put in
charge of reviving Iraqi boxing gambled away all the money but he could
not be prosecuted because, although the money was certainly gone, nobody
had recorded if it was $20,000 or $60,000.
Iraqi ministers admit the wholesale corruption of their government. Ali
Allawi, the former finance minister, said Iraq was "becoming like
Nigeria in the past when all the oil revenues were stolen". But there
has also been a strong suspicion among senior Iraqis that US officials
must have been complicit or using Iraqi appointees as front-men in
corrupt deals. Several Iraqi officials given important jobs at the
urging of the US administration in Baghdad were inexperienced. For
instance, the arms procurement chief at the centre of the Defence
Ministry scandal, was a Polish-Iraqi, 27 years out of Iraq, who had run
a pizza restaurant on the outskirts of Bonn in the 1990s.
In many cases, contractors never started or finished facilities they
were supposedly building. As security deteriorated in Iraq from the
summer of 2003 it was difficult to check if a contract had been
completed. But the failure to provide electricity, water and sewage
disposal during the US occupation was crucial in alienating Iraqis from
the post-Saddam regime.
http://www.independ
madoff-1622987.
Monday, 16 February 2009
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