When Bremer Ruled Baghdad
By EVELYN PRINGLE
When President Bush announced "Mission Accomplished," and
the end of the war in May 2003, he also said we would help
the citizens of Iraq rebuild their country. "Now that
the dictator's gone," he stated, "we and our coalition
partners are helping Iraqis to lay the foundations of a free
economy."
Apparently he was referring to the Coalition Provisional Authority
that took up residence in Saddam's luxurious palace in May
2003, with the newly appointed King, Paul Bremer. The CPA was
granted the authority to award reconstruction contracts in
Iraq and it used that authority to implement what will go down
in the history books as the most blatant war profiteering scheme
of all time.
In large part, the masterminds of the reconstruction disaster
that would occur after the CPA took over Iraq were Secretary
of Defense, Donald Rumsfeld, and Undersecretary of Defense,
Douglas Feith.
But to ensure control of the contracting process on the ground
in Iraq, Bush filled the top slots of the CPA with the administration
cronies. For instance, a friend of Cheney's, Peter McPherson,
took a leave of absence as president of Michigan State University
to serve as Bremer's economic deputy.
The leader of the CPA's private development sector was Thomas
Foley, an old college classmate of Bush, who served as finance
chairman for his Presidential campaign in Connecticut and also
raised more than $100,000 for Bush.
Relatives of the administration were also given jobs, such
as Ari Fleischer's brother Michael, and Simone Ledeen, the
daughter of Michael Ledeen. Cheney's daughter Liz, also did
a short stint. However, it should be noted that none of them
lounged around for too long in what soon became a hellhole
in Iraq.
On May 16, 2003, the CPA issued its first regulation and described
its authority in no uncertain terms stating:
"The CPA is vested with all executive, legislative, and
judicial authority necessary to achieve its objectives, to
be exercised under relevant U.N. Security Council resolutions,
including resolution 1483 (2003), and the laws and usages of
war. This authority shall be exercised by the CPA Administrator."
With one swipe of the pen, Bremer granted himself the authority
to run the government ministries, appoint Iraqi officials and
award contracts for reconstruction. Next he fired 500,000 Iraqis,
most of them soldiers, but pink slips also went out to many
doctors, nurses, teachers and other public employees as well.
For the most part, the CPA financed its activities with billions
of dollars that belonged to the Iraqis. On May 22, 2003, a
UN Security Council passed a resolution that directed the proceeds
from Iraqi oil to be placed in a Development Fund for Iraq,
and the CPA was granted authority to control the fund and decide
which profiteers would get contracts.
During the year that Bremer controlled the purse strings,
the Iraqi Development Fund received $20.2 billion, including
$8.1 billion from the UN's oil-for-food program, $10.8 billion
from Iraqi oil, and the rest from repatriated funds, vested
assets and donations.
The CPA accounting system was cash and carry and a steady
stream of cash was flown into Bagdad from the US. Inspector
General, Stuart Bowen later said that he knew of one $2 billion
flight.
A report released by the House Government Reform Committee
in February 2007, shows that in the 13 months that Bremer ruled,
from May 2003 to June 2004, the Federal Reserve Bank in New
York shipped nearly $12 billion in a cash to Iraq.
One can only imagine the Bank service charges associated with
these shipments because to accomplish this feat, according
to the Democratic chairman of the Reform Committee, Henry Waxman,
the cash weighed 363 tons and the Bank had to count and pack
281 million individual bills, including more than 107 million
$100 bills, and then load them onto wooden pallets to be shipped
to Bagdad on C-130 cargo planes.
Inspector Bowen later said that he determined that some of
this cash went to pay salaries for thousands of "ghost
employees" and Iraqi civil servants who did not exist.
Within a few months of the CPA's arrival in Iraq reports of
corruption in the contracting process began appearing in the
media. A British adviser to the Iraqi Governing Council told
the BBC that officials in the CPA were demanding bribes of
up to $300,000 in return for contracts.
Reports of flat out-fraud remained steady throughout Bremer's
reign in Iraq. One audit showed that the CPA Ministry of Finance
could not provide documentation for about $17 million spent
on employee salaries in February 2004, and a CPA Advisor to
the Ministry of the Interior said the Ministry was paid for
8,602 guards but only 602 could be verified.
A CPA advisor to the Ministry of Finance was so concerned
about payroll corruption that he submitted a formal complaint
that stated in part: "Of the 1.6 million government employees
currently on payroll, credible estimates put the number of
ghost workers at somewhere between 250,000-300,000 employees."
An October 2004, audit performed for the International Advisory
and Monitoring Board, created by the UN to monitor the spending
of Iraqi money, found one case where a payment of $2.6 million
was authorized by a CPA senior adviser to the Ministry of Oil,
and auditors were unable to obtain an underlying contract or
any evidence that the services had been rendered.
The auditors in this group found 37 cases where files could
not be located for contracts worth $185 million all total.
In another 52 cases, there was no record that goods had been
received for a total of $87.9 million.
People on the ground in Iraq said that doing business with
the CPA was reminiscent of the Wild West. Former CPA employees
told a congressional committee that sackfuls of cash were tossed
around like footballs. Franklin Willis, showed pictures of
himself and others holding up bundles of $100 notes totaling
$2 million, which he said was used to pay the contractor Custer
Battles. "We told them to come in and bring a bag," Willis
said.
He also testified that millions of dollars in $100 bills were
stored in the basement of the CPA offices and distributed to
favored contractors with little accounting discipline. For
instance, in the year that the CPA ruled, Custer was awarded
contracts worth more than $100 million.
Two former Custer employees ended up filing a lawsuit under
the Federal False Claims Act, saying Custer had swindled $50
million from the CPA with scams like double-billing for salaries
and repainting the forklifts found at the Baghdad airport and
then leasing them back to the US government.
The employees said the CPA paid the Custer $15 million to
provide security for Iraq's civilian airline, when no services
were needed because the airline was grounded during the time
covered by the contract.
These employees said they kept informing the CPA about Custer's
fraudulent conduct for more than a year and when they asked
why the firm continued to get contracts, they were told: "Battles
is very active in the Republican party, and speaks to individuals
he knows in the Whitehouse almost daily."
In June 2004, the Government Accounting Office estimated that
more than $1 billion in had been wasted due to illegal overcharges
by contractors since the war began. A later audit by the Iraqi
government found that as much as $1.27 billion was lost to
accounting irregularities between June 2004 and February 2005.
Inspector Bowen cited two examples of poor oversight in a
November 3, 2005 interview on National Public Radio where $28
million was paid to build 5 power plants and $1.8 million was
paid to rebuild a library, but the work was never performed
and the money
"
simply disappeared," he said.
A recent report by Bowen says DynCorp was paid $43.8 million
for a residential camp for police training personnel and has
been empty for months and that the company may also have billed
$18 million in other unjustified costs.
About $4.2 million, he says, was improperly spent on 20 VIP
trailers and an Olympic-size pool and an additional $36.4 million
in spending for weapons such as armored vehicles, body armor
and communications equipment that cannot be accounted for.
Not surprisingly, Cheney's Halliburton remained the top profiteer
under Bremer's rule. A July 23, 2004, audit conducted by Bowen,
showed the company had received 60% of all contracts paid for
with Iraq money, including 5 no-bid contracts worth $222 million,
$325 million, $180 million, and the last 2 together totaled
$194 million for the last two. In comparison, the audit showed
that the CPA awarded only 2% of the reconstruction contracts
to Iraqi companies.
In one example of blatant fraud, an audit found that Halliburton
was charging for more than 41,000 meals a day for soldiers
when only about 14,000 were served.
By the fall of 2003, the country was realizing that the rational
for war was based on lies and that the only ones drawing any
benefits were the profiteers. So when Bush asked Congress for
another $20 billion for the CPA, Bremer was summoned to Washington
to explain where all the money was going and of course he testified
in full stonewall mode.
Before the Appropriations Committee on September 22, 2003,
Bremer said the CPA had detailed records of all its receipts
and outlays that could be audited by Congress. But when he
testified before the Armed Services Committee 3 days later
he said the Office of Management and Budget was responsible
for maintaining the CPA records and that Congress would have
to go to the White House to access the records.
That arrogant assertion went over like a lead balloon with
many members of Congress. Senator Robert Byrd said he was outraged
over the inability to monitor CPA spending. "There is
no reason why any arm of the executive branch charged with
making such significant spending decisions," he said, "should
not be working directly with Congress."
"When we're talking about handing over another $20 billion
to the CPA," he said, "there is a real need for Congress
to confirm that the CPA has its finances in order and that
it is managing the taxpayer's money responsibly."
"We don't even know how much of the $20 billion," Byrd
said, "will flow to government contractors in Iraq."
"Whatever the amount is," he noted, "we know
that the size and scope of the profits being made will be enormous."
"Former Bush Administration officials," he warned
fellow Senators, "are even setting up consulting firms
to act as middlemen for contractors hoping to take part in
the bonanza."
"Are we turning the U.S. Treasury into a grab bag for
favorite campaign contributors to be financed at taxpayer expense?" he
asked.
The answer was yes, and what a grab bag it was. Media reports
revealed that Bush's ex-campaign manager and Feith's former
law partner had set up consulting firms to profit off the war
by lining up contracts for clients through their partners in
crime within the CPA.
Other reports revealed that contracts worth $407 were awarded
to a firm called Nour that was formed less than 2 months after
the war began. The names linked to the profits from Nour, among
many others, included former Secretary of Defense, William
Cohen, Ahmad Chalabi via a $2 million kickback, his nephew
Salam Chalabi as the attorney handling the deal, and the money
trail even led to the First Brothers, Marvin and Jeb Bush.
But come to find out, Doug Feith the ringleader on the ground
in Washington, had awarded a batch of no-bid contracts to a
favored company the month before the war began for the purpose
of controlling the media in post-war Iraq.
In October 2003, the Center for Public Integrity obtained
copies of 7 contracts awarded to the San Diego-based Science
Applications. The total value of the contracts was redacted
but the Center was able to determine that they were all awarded
in February 2003, and called for the work to be directed by
Feith.
However, the Center's most stunning discovery was that when
the contracts were awarded, Feith's top deputy at the time,
Christopher "Ryan" Henry, had been a senior vice
president at SAIC until October 2002.
In addition, one of SAIC's board members was Army General,
Wayne Downing, who ran counterterrorism in the Bush administration
for almost a year after 9/11, and had even went to the CIA
with Cheney to discuss intelligence on Iraq. Downing had also
served as an advisor to Ahmed Chalabi and the Iraqi National
Congress, and was well-known advocate for a war against Saddam.
Some of the SAIC contracts required that specific persons
referred to as "executive management consultants" be
hired and the pay range listed went as high as $209 and $273
per hour. The Center said congressional sources estimated the
value of the media contract as $38 million for the first year
and as high $90 million in 2004.
The SAIC had no special expertise to justify the award of
these contracts. One company executive, quoted in the media,
said the firm's only credential for setting up an independent
media, supposedly modeled after the BBC, was military work
in "informational warfare"-signal jamming, "perception
management," and the like.
Under these contracts, the Iraq Media Network (IMN) was established
and journalist, Mark North, who covered the Iraq invasion for
National Public Radio, was hired to train Iraqi journalists
to report for the IMN.
In one of the many Congressional hearings, North testified
about the control of the IMN by the CPA and said CPA officials
regularly directed and censored the activities of the news
station and provided "a laundry list of CPA activities" to
cover in the news reports instead of stories about security
or the lack of electricity and jobs
While testifying, he also described the CPA's shabby treatment
of Iraqi employees and its refusal to pay their wages. "For
the first two months," North said, "the local staff
of about 200 journalists and technicians were not paid their
salaries."
When the staffers went on strike in attempt to get paid, he
said, the CPA told the Iraqis to get back to work or the US
Army would remove them from the studios.
All total, the CPA had control of Iraqi money for one year
between June 2003 and June 2004, but unfortunately no auditors
arrived to take a look at the agency's spending until April
2004, two months before the CPA's rule was scheduled to end.
And as so often happens when it comes to giving solid advice
or warnings, the senior Senator from Virginia was absolutely
right. It was far too late for audits, because the CPA and
its gang of profiteers had already robbed the Iraqis blind.
The favored companies enjoyed a fraud-free-all. For instance,
Halliburton said it had lost over $60 million worth of government
property including trucks, office furniture and computers.
Inspector Bowen reported that 6,975 items valued at $61.1 million
were lost, and in June 2005, the Defense Contract Audit Agency
reported that the Halliburton had overcharged or presented
questionable bills for close to $1.5 billion.
In the end, Bowen's audit concluded that "the CPA's internal
controls for approximately $8.8 billion in DFI funds disbursed
to Iraqi ministries through the national budget process failed
to provide sufficient accountability for the use of those funds."
As of February 2007, according to Bowen, audits of the CPA
have resulted in 300 criminal and civil investigations, 5 arrests
and convictions, and another 23 cases are currently under prosecution
at the DOJ, and he is working on 76 on-going investigations.
One of the convictions involved Robert Stein, a former CPA
comptroller and funding officer, who recently pleaded guilty
to 5 felony counts including conspiracy, money laundering,
and bribery in stealing more than $2 million of reconstruction
funds and taking more than $1 million in kickbacks to rig the
bids on contracts that exceeded $8 million.
The whistleblower case against Custer Battle went to trial
and a jury found that Custer had committed 37 acts of fraud
and filed $3 million in false claims, and rendered a verdict
with a $10 million penalty. However, the verdict was overturned
by Republican appointed US District Court Judge TS Ellis III,
who ruled that the CPA was not a US entity and therefore the
false claims act does not apply to it.
In the ruling, the judge said Custer's accusers "failed
to prove that the U.S. government was ever defrauded. Any fraud
that occurred was perpetrated instead against the Coalition
Provisional Authority, formed to run Iraq until a government
was established."
Legal experts say this ruling is great news for the CPA and
contractors because from now on anyone charged with any act
of fraud related to the Iraqi money doled out by the CPA in
Bagdad will use it in attempt to avoid civil or criminal prosecution.
Evelyn Pringle can be reached at: evelyn-pringle@sbcglobal.net
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