- "U.S. officials used virtually no
financial controls payments were made from the back of a pickup truck and
cash was stored in unguarded sacks in Iraqi ministry offices..."
-
- With Halliburton receiving over half
the value of the Iraq reconstruction contracts, all calls for accountability
have automatically been dismissed as a partisan attack on the vice president
or an element of the anti-war agenda that threatens undermine troop morale...
-
- President Bush just sent Congress a request
for another $72.4 billion for the Iraq war and occupation. Instead of writing
another blank check, Congress should commit itself to a thorough investigation
of the incompetence and corruption that has undermined the reconstruction
mission. At the same time that it demands that the administration provide
a clearer overall strategy in Iraq, Congress should establish a permanent
committee on war profiteering and corruption modeled after the one Harry
Truman chaired during World War II.
-
- The president's own administration officials
report that the reconstruction of Iraq has been botched. In early February,
the Special Inspector General for Iraq Reconstruction, Stuart Bowen, released
a report to the Senate Armed Services Committee that describes a significant
gulf between the aims of U.S. reconstruction officials and what they will
be able to accomplish. What Bowen called a "reconstruction gap"
mostly affects three sectors essential to the success of Iraq's reconstruction:
water, electricity and oil.
-
- After an investment of billions, Bowen
reports that slightly more than a third of all water projects planned will
ever actually be completed. Currently, two of three Iraqis are left with
no potable water; only one in five has sewerage. Furthermore, recent figures
suggest that at 4,000 megawatts, nation-wide electrical generating capacity
is below pre-war levels and far below the goal of 6,000 MW. Instead of
rebuilding several steam-turbine power stations-- as Iraqi engineers and
managers recommended--the CPA's crony contractors chose to build new natural
gas and diesel-powered combustion-turbine stations, despite the fact that
Iraq doesn,t have adequate supplies of either. As a result of this arrogance
and neglect, billions were wasted while the electricity in Baghdad is on
for just a few hours each day.
-
- Meanwhile, at 2.6 million barrels per
day, crude oil production is significantly short of the goal of 3 MBPD.
Liquefied petroleum gas has fared worse, with the CPA adding just 500 tons
per day to existing production capacity, when the goal was to add 1,800
tons daily.
-
- Given these and other shortfalls, it
should be alarming that very little of the $72 billion that Bush is requesting
would go to finish these jobs. Worse, Bowen warns that "the Iraqi
government is not yet prepared to take over the near or long-term management
and funding of infrastructure."
-
- The problems are not simply technical
and bureaucratic: there are also signs of massive corruption. In its 2005
report, Transparency International, which tracks governmental corruption
around the globe, warned that post-war Iraq could be "the biggest
corruption scandal in history."
-
- To be sure, much of the corruption plaguing
the reconstruction of Iraq involves Iraqis rather than U.S. companies or
officials. Last September, Iraq's finance minister Ali Allawi warned that
between $1.3 and $2.3 billion of government funds had disappeared. But
the U.K.-based Independent also reported that "government officials
in Baghdad even suggest that the skill with which the robbery was organized
suggests that the Iraqis involved were only front men, and rogue elements,
within the U.S. military or intelligence services may have played a decisive
role behind the scenes."
-
- Although Bowen claims corruption "is
not a pervasive problem on the U.S. side of the reconstruction," his
own investigators uncovered a brazen case involving four Americans (including
two CPA employees) operating in southern Iraq. The bribery and kickback
scheme involved millions and seized assets including vehicles, real estate,
and weapons. An operation that corrupt could only occur because, according
to Frank Willis, a top CPA official, the CPA's accounting system was "nonexistent."
CPA employees were too busy tossing around football-sized $100,000 bricks
of 100 bills inside the Green Zone to worry about what was going on outside
where the money was eventually distributed.
-
- "With so much cash arriving in Iraq,
you might think that extensive precautions would be taken," says Rep.
Henry Waxman, D-Calif. "But exactly the opposite happened: U.S. officials
used virtually no financial controls
- payments were made from the back of
a pickup truck and cash was stored in unguarded sacks in Iraqi ministry
offices"
-
- So far, the only effort to hold contractors
accountable for illegal or incompetent actions has been in the courts.
On February 13th, arguments began in the first high-profile civil fraud
case filed against an Iraq war contractor. Two whistleblowers are charging
Custer Battles LLC with using sham invoices and offshore shell companies
to defraud taxpayers of $50 million while performing security work.
-
- Bowen, whose office is busy with another
57 ongoing investigations, says the CPA lost track of about $9 billion
dollars worth of contracts. So clearly the Custer Battles case is not an
isolated example. From this case and from reports by the inspector general
for Iraq reconstruction, it is clear that past appropriations came with
little oversight.
-
- Yet the Republican-controlled Congress
has shown little interest in contrast to its interest in the U.N. oil-for-food
scandal. In November, Sen. Byron Dorgan, D-N.D., offered an amendment to
the 2006 Defense Appropriations bill which would have established a special
investigative committee like Truman's famous WW II committee. But the proposal
went down 53 to 44, almost purely along partisan lines.
-
- With Halliburton receiving over half
the value of the Iraq reconstruction contracts, all calls for accountability
have automatically been dismissed as a partisan attack on the vice president
or an element of the anti-war agenda that threatens undermine troop morale.
-
- During Dorgan's speech, Sen. John Ensign,
R-Nev., intervened with a surprise announcement on the floor: "
- As the chairman of the Readiness Subcommittee,
I plan on holding hearings on exactly this. I plan on pulling that curtain
back If it happens to be it is embarrassing to the administration, we are
going to find out the truth on this -- just like Harry Truman went after
those cost-plus contracts in those days."
-
- When Ensign finally held his hearing
earlier this month, no other Republicans were present. A cynic might say
that he is merely going through the motions to try to take the issue off
the table before the fall elections. Yet if Ensign were to drill deeper
than his investigation has gone so far, he would probably find that the
contractors like Halliburton have not only bilked taxpayers, but some of
their actions have undermined the military's overall mission.
-
- This lack of oversight isn't only a fiscal
concern; it also has dangerous implications for U.S. troops. Two ex-employees
of Kellogg, Brown & Root--a subsidiary of Halliburton--for example,
have charged the Army's number one contractor with exposing U.S. troops
to contaminated water from the Euphrates .
-
- "I don't know how many [troops]
might have gotten sick as a result," says Ben Carter, one of the two
KBR whistleblowers, who has 20 years of experience working as a water purification
expert. "I can't know, because Halliburton apparently has no records
and refuses to acknowledge there might be a problem."
-
- Numerous leads remain unexplored, and
Bowen cannot be expected to investigate them all. The current Congress's
token efforts should be measured against that of Truman's committee, which
issued held hundreds of hearings and issued 51 separate reports.
-
- Because the issue has as much to do with
fiscal responsibility as it does with protecting American troops, Congress
should provide for much greater oversight before giving Bush and Rumsfeld
another $72 billion check. The incompetence, cronyism, and corruption witnessed
in Katrina-related contracts underscores the need for much greater oversight.
-
- Legislation requiring contractor accountability
should apply the lessons of Iraq to all federal contracts. Not only do
we need to crack down on the kind of cronyism that puts incompetent people
in the wrong places, and no-bid contracts like those given to Halliburton,
but clear criminal sanctions are needed for war profiteering as well as
new protections for those brave enough to blow the whistle. All of this
and a vigilant Congress willing to investigate is needed to create a shift
in contracting culture.
-
- _____
-
- Charlie Cray is the director of The
Center for Corporate Policy in Washington, D.C., and co-author of The People's
Business: Controlling Corporations and Restoring Democracy (Berrett-Koehler,
2004).
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