Iraq's Missing Billions

Last night Channel 4 screened its current affairs investigative program Dispatches with a 45 minute long report on Iraq's missing reconstruction billions. I had previously watched a much shorter Newsnight report, but Dispatches beat them to it in terms of depth and variety of material presented.

The documentary tells the story of how the Coalition Provisional Authority (CPA), which took over the Iraqi Government's function after the invasion and collapse of the regime, set about funding the reconstruction effort. Under the leadership of Ambassador Paul L. Bremner, Presidential Envoy to Iraq, the CPA obtained $23 billion of Iraq's money from frozen bank accounts, moneys from the oil for food program and other assets, to fund the reconstruction of Iraq. The money transferred to the CPA in the US was turned into $1 million "bricks" of brand-new, crisp $100 bills and now ready to be dispatched to the various contractors, mainly American Companies, to become the beneficiaries of reconstruction contracts.

By the time the CPA had finished with the money and the power-transfer to the new Iraqi Government was to take place, they had $3 billion of it left, to hand back to Iraq. $20 billion had been spent on reconstruction. Remember, all $23 billion was Iraqi money to start with... So far, so good?

Then follows a tale of the $1 million money bricks being handed over with a swiftness, lack of transparency or control that's bedazzling.

A local doctor, Dr Ali Fadhil, took us round a number of medical facilities, where conditions defied belief. It's clear that these must have been fairly state-of-the-art facilities in the seventies and eighties but that the years of Saddam under the sanctions had taken a very heavy toll. The most basic of medical supplies are missing and we're not even talking "big equipment" either. No, basic medical supplies in a hospital north of Baghdad that was supposed to have received a $400 million refit are still completely lacking. Instead the new flooring leaks really badly and wasn't even sealed properly. The Iraqi representative of the Amirican contractor responsible tried to prevent the film crew from filming...

Outside in the gardens of the same hospital, open sewage runs close to the facilities and the smell was observable throughout most of the facilities. Incubators for premature infants have to be routinely shared by more than one baby. Oxygen levels in the incubators cannot be adjusted and are unknown. Several incubators had to patched up with makeshift tubing and plasters. Breathing masks for the infants were absent or in short supply.

Predictably, the medical profession was also largely de-Baathified and predictably it's left Iraq with a shortage of health administrators and managers. These people, now unemployed and unemployable could be easy recruiting targets for Saddamist insurgents, when otherwise they could have played a vital role in Iraq's health sector.

A number of Americans involved at high level with the allocation of funds to reconstruction and security Companies were unequivocal in their condemnation. Moneys had been awarded in a very cavalier, hasty, poorly planned way. Cronyism without any doubt played also a big part. Halliburton admitted at one point to over-billing more than $200 million, yet were ordered to pay back only $3 million. All in all, the money was spent inefficiently and without the required degree of transparency. Predictably when such astronomical amounts of cash are laying around, some of the cash was also simply stolen...

The story of one of the smaller contractors, Custer and Battles, is symptomatic for the mentality that existed amongst the many soldiers of fortune with regards to Iraq's reconstruction funds.

But as if things really couldn't get much worse, they did somehow. In the weeks and days leading up to the transfer of power and the dismantling of the CPA, things literally went into overdrive. It appeared that the CPA wanted to spend as much of the remaining money as possibly. At one point a shipment of an estimated $3 billion (3,000,000,000) was shipped out to Iraq for new contracts. Someone else was told to spend $7 million in seven days... And so after that last surge in spend-thrift, only $3 billion were left of Iraq's reconstruction pot. It's with this money that Iraq has now to continue its own efforts. Guess it's always easy to badly spend someone else's money...

A fellow blogger made some notes about the program:

US contractors were 'immune' from Iraqi law
"We played football with the bricks of cash"
"American law was suspended. Iraqi law was suspended."
"Where did all the money go? Not on vital medical equipment." Dr Ali Fadhil
"We went more for big ticket, showy items." Dr Richard Garfield
'Spend $7million in 7 days' - American-controlled CPA's rush to spend Iraq's money before handing over to the interim government

More detailed transcripts via this link here.

War? What is it good for? Absolutely nothing...For an absolute racket, that's what it's good for...

Keywords: Iraq, war, Halliburton, reconstruction