September 11, 2005
I have come to the conclusion that even if I live to
be 100, I will never be able to track down every
Bush-connected profiteer involved in this phony war on
terror scheme. According to a report released in March
2005, by Transparency International (TI), an
international organization that focuses on matters of
corruption, Iraq could become "the biggest corruption
scandal in history."
"I can see all sorts of levels of corruption in Iraq,"
report contributor Reinoud Leenders told the Christian
Science Monitor, "starting from petty officials asking
for bribes to process a passport, way up to
contractors delivering shoddy work and the kind of
high-level corruption involving ministers and high
officials handing out contracts to their friends and
clients."
One of the top ten crooks, has got to be Ahmed
Chalabi. A former banker in Jordon, Chalabi was
forced to flee the country in 1989 before he could be
arrested for his involvement in a $200 million
financial scam. He was later tried and found guilty in
his absence, and sentenced to 22 years in prison for
more than 30 charges of theft, embezzlement, misuse of
depositor funds, and currency speculation.
However, a little criminal history obviously didn't
bother the Bush gang, because Chalabi was one of the
first Iraqis flown into Iraq by the Pentagon during
the 2003 invasion, supposedly so he could solidify his
political base, which pretty much has proved to be
non-existent.
By now, I cannot believe that anyone could possibly
doubt Chalabi's role in the plot to take over Iraq. He
was very much in the loop from day one, according to a
March 17, 2005, report by BBC's Newsnight which said,
"the Bush administration made plans for war and for
Iraq's oil before the 9/11 attacks sparking a policy
battle between neo-cons and Big Oil." Insiders told
Newsnight that the planning began "within weeks" of
Bush taking office.
An Iraqi-born oil industry consultant, Falah Aljibury,
told Newsnight that he took part in secret meetings in
California, Washington and the Middle East. He
described a State Department plan for a forced coup
d'etat. Aljibury said that he had even interviewed
potential successors for Saddam on behalf of the Bush
administration.
However, "The industry-favored plan was pushed aside
by yet another secret plan," wrote Newnight, "drafted
just before the invasion in 2003, which called for the
sell-off of all of Iraq's oil fields."
The sell-off plan was given the OK at a secret meeting
headed by none other that Ahmed Chalabi, shortly after
the invasion of Baghdad, according to Robert Ebel, a
former Energy and CIA oil analyst. He attended the
London meeting at the request of the State Department,
Ebel told Newsnight.
Falah Aljibury contends that it was the plan to sell
off Iraq's oil, which ultimately led to the insurgency
and attacks on US occupying forces. "We saw an
increase in the bombing of oil facilities, pipelines,
built on the premise that privatization is coming," he
reported.
Of course it probably didn't help matters when the
Iraqis were forced to watch as Halliburton's fortunes
increased with money from the Development Fund for
Iraq, through the award of 5 no-bid contracts, by the
Coalition Provisional Authority, to the tune of $222
million, $325 million, $180 million, and a total of
$194 million for the last two, which I just happened
to find listed back in the Appendix to a July 28,
2004, report by the CPA Inspector General, titled
"Comptroller Cash Management Controls over the
Development Fund for Iraq."
The CPA Office of the Inspector General (CPA-IG) was
established by Congress on November 6, 2003, to serve
as "as an independent, objective evaluator of the
operations and activities of the CPA," according to
the official web site. The CPA-IG reported directly to
Administrator Paul Bremer, although it had independent
authority to conduct audits and investigations without
the Administrator’s approval.
A report in January 2005, by CPA Inspector General,
Stuart Bowen, concluded that occupation authorities
accounted poorly for $8.8 billion in Iraqi funds. "The
CPA did not implement adequate financial controls,"
Bowen said.
That was definitely an understatement. A former CPA
senior adviser, Franklin Willis, compared Iraq to the
"Wild West," saying he delivered one $2 million
payment to one company, Custer Battles, in bricks of
cash.
"We called Mike Battles in and said, 'Bring a bag',"
Willis said in testimony before Congress in February
2005.
Custer was another piece of work. Two former employees
turned whistleblowers filed a law suit against the
company with a complaint that said among other things,
that Custer Battles double-billed for salaries and
repainted the Iraqi Airways forklifts they found at
the Baghdad airport, which Custer was hired to secure,
and then leased them back to the US government. The
two former employees, Pete Baldwin and Robert Isakson,
claim Custer swindled the CPA out of about $50
million.
Bush was quick to criticize the UN over millions of
dollars stolen from the Oil-for-Food Program under
Saddam. But the CPA, as the successor to Oil-for-Food
Program, aka Development Fund for Iraq, involves the
swindling of billions of dollars.
And Custer represents only one crooked contractor. The
investigation by the CPA-IG which resulted in the
Comptroller Cash Management Report, determined that
when it came to Iraqi cash, proper accountability was
not maintained, physical security was inadequate,
records were incomplete, and fund managers’
responsibilities were not assigned properly.
The auditors who participated in the investigation
were unable to reconcile financial statements for the
DFI, in large part due to the CPA’s decision to use
cash basis accounting, which is more difficult to
track than accrual accounting.
The investigators also found poor oversight of the
fund managers who were responsible for transferring
payments. While examining 15 disbursement locations,
the auditors found that officials routinely failed to
properly document advances to paying agents and
receipts. For example, officials at 14 of the sites
did not even maintain a register of cleared receipts.
In examining 26 paid receipts, they found 25 had no
supporting invoices, and all 26 were missing one or
more of the required signatures.
They determined that of $400 million available for
disbursement, as much as $50 million was handed out
without proper receipts. "During the review, we found
that there were no supporting receipts for some
invoices; receipts were cleared with limited
explanations of services or materiel received; and
funds were disbursed for services that were
contradictory to the allowable expenses," the
Inspector General said in the report.
Similarly, a United Nations sanctioned audit concluded
that about half of the $5 billion in Iraq
reconstruction funds could not be accounted for
because of poor financial controls, according to the
"Development Fund of Iraq-Report of Factual Findings
in connection with Disbursements from January 1, 2004
to 28 June 2004, by the International Advisory and
Monitoring Board, in September 2004
Until the summer of 2004, the CPA refused to release
the names of companies that were awarded contracts
paid for with Iraqi funds. Although information was
available about US funded contracts, there was no
public information available about companies paid with
Iraqi money. In August 2004, information was finally
made available for contracts valued at more than $5
million. But to this day, no details have been
released about contracts worth less than $5 million.
An analysis of the data released in August 2004,
showed that the CPA had awarded 85% of the contracts
to US and UK firms. By contrast, Iraqi companies
received a mere 2% of the contracts paid for with
Iraqi funds.
A March 18, 2004 audit report by the Department of
Defense Office of the Inspector General, titled,
"Acquisition: Contracts Awarded by the Coalition
Provisional Authority by the Defense Contracting
Command-Washington," determined that the CPA and its
predecessor, the Office for Reconstruction and
Humanitarian Assistance (ORHA), had circumvented
federal contracting procedures since the early days of
the occupation.
The audit found that federal procurement rules were
not followed in 22 of 24 contracts awarded by the
Defense Contracting Command and that defense
department personnel conducted "inadequate
surveillance" on more than half of the contracts; did
not "perform or support price reasonableness
determinations;" and allowed activity that was
"out-of-scope" of the original contracts.
The audit said that the DoD cannot be assured that it
either "provided the best contracting solution or paid
fair and reasonable prices for the goods and services
purchased" during the reconstruction process.
However, not only did the CPA fail to follow DoD
reporting rules, it failed to follow its own rules.
CPA regulation Number 2 required the CPA to retain an
independent certified public accounting firm to ensure
that the Development Fund of Iraq was being used
transparently and for the benefit of the Iraqi people.
But instead of hiring a certified public accounting
firm, the CPA awarded a $1.4 million contract to North
Star Consultants, a financial services firm, to review
its internal controls for the DFI. In the end,
neither North Star, nor any other firm, ever performed
a review, because the Comptroller "verbally modified
the contract and employed the contractor to primarily
perform accounting tasks in the Comptroller’s office,"
the report said.
In response to the report, the CPA claimed the reason
that North Star did not perform a review was because
the contract was not signed until shortly before the
CPA was dissolved. Although it acknowledged that the
contract "should have been modified to reflect the
change," the CPA did not bother to explain why it
would award a contract to review its control of the
DFI if the organization was about to be dissolved.
The truth is, that the CPA' shabby accounting
procedures left all doors open to fraud, waste,
bribery, and the misappropriation of funds, and nobody
will ever be able to figure out what exactly happened
to the Iraqi money.
But the fact remains that Halliburton received 60% of
all contracts paid for with Iraqi money, even after it
was proven time and time again that its projects
involved fraud on every front, from paying over $6
million in kickbacks to a Kuwaiti contractor; to
charging for three times as many meals as the company
actually served to soldiers; to spending millions on
laundry and monogrammed towels; to running up costs by
driving empty trucks back and forth across Iraq; to
leasing overpriced vehicles from Kuwaiti purchasing
offices.
In 2003, Halliburton was delivering gasoline, through
the Kuwait subcontractor, Altanmia Commercial
Marketing Company, for an average price of $2.65 per
gallon. In the spring of 2004, the contract was
canceled and the new Iraqi Interim government gave an
identical contract to Lloyd Owens International, a
British company that manages 700 trucks from 7
separate subcontractors, which left Halliburton
resentful toward the new company because of losing the
contract.
LOI and its partners, Geotech Environmental Services
of Kuwait, only charged 18 cents a gallon to haul the
gasoline to the same sites.
An oversight hearing on "Waste, Fraud, and Abuse in
U.S. Government Contracting in Iraq" was held on June
27, 2005, conducted by Senator Byron Dorgan of North
Dakota, chairman of the Democratic Policy Committee.
Alan Waller, CEO of Lloyd Owens International, and his
business partner, Gary Butters, flew to the US to
testify at the hearing.
Waller said that over the past year while working in
southern Iraq, he had encountered only one Halliburton
worker and that every fuel station set up to provide
gasoline to the Iraqis was in bad shape, including
those that Halliburton was supposed to have repaired.
"As Lloyd-Owen delivers fuel to nearly every refinery
or depot in southern Iraq, we find ourselves
frequently encountering examples of poor equipment, no
equipment or complaints from Iraqi staff," Waller
said.
Waller and Butters told lawmakers at the hearing that
every morning the drivers of 120 trucks who line up at
the Kuwait-Iraq border to deliver gasoline have to
cross the border at dawn because if they wait too
long, KBR employees who patrol the border during the
day, will subject them to far-reaching inspections and
effectively shut down the operation.
The LOI also reported that on June 9th, 2005, a convoy
of LOI trucks that was on its way to deliver
construction materials for a Halliburton dining
facility at an army base near Fallujah, came under
attack and 3 drivers were presumed dead and six trucks
had to be abandoned.
The surviving drivers limped to a military base,
expecting to get help from the Halliburton staff
running the facility, but instead got the cold
shoulder. When the drivers tried to leave Iraq, they
hit a roadside bomb and another man was killed.
Waller said Halliburton employees were instructed not
to help the drivers and that the company had failed to
warn LOI that two other convoy had been attacked in
the same area the previous week.
At the start of the hearing, Congressman, Henry
Waxman, (D-CA), introduced a new study based mostly on
confidential reports originating from the Defense
Contract Audit Agency (DCAA).
The study revealed that overall, Halliburton had
received roughly 52% of the $25.4 billion that has
been paid out to private contractors in Iraq. The 52%
was divided between two different contracts. The
first, known as LOGCAP, was to provide logistical
support like cooking and cleaning for the troops, and
was outsourced to civilian workers, for which
Halliburton had been paid $8.6 billion.
On the LOGCAP contract, the company was paid for its
actual costs, plus an additional commission of between
1 to 3 percent, depending on its performance.
The "Restoring Iraq Oil" contract covered the repair
of Iraqi oil fields in the immediate aftermath of the
2003 invasion and imports of consumer fuel. The RIO
contract is now complete and ended up costing $2.5
billion. A second RIO contract is now underway.
New evidence of fraud and contract abuse, was released
right before the hearing and showed that KGB:
1) Had overcharged or presented questionable bills
for close to $1.5 billion, almost four times the
previous amount disclosed.
2) Had lost 12 pre-fabricated bases worth over $75
million which could have housed as many as 6,600
soldiers.
3) Had billed $152,000 to provide a movie library for
2,500 soldiers
4) Had billed inconsistently across the board. Eg,
Video cassette players cost $300 in some instances,
and $1000 in others; the company charged $2.31 for
towels on one day and $5 for the same towels on
another.
Rory Maryberry, a former Halliburton contractor, who
worked at the dining facilities at the largest
military base in Iraq, also testified at the hearing.
Mayberry said the company charged the government for
serving 20,000 meals a day when it was only serving
10,000 and that he was sent to a more dangerous post
as punishment for speaking to auditors.
In a video-taped deposition testimony played at the
hearing, Mayberry told how Halliburton would sometimes
supply food that was more than a year past the
expiration date or that had spoiled due to poor
refrigeration. The few times the military refused to
accept the spoiled food, Maryberry said truckers were
told to deliver it to the next base in the hope that
they would escape scrutiny.
He said that Halliburton was also supposed to serve
600 meals to Turkish and Filipino workers in Iraq, and
"although KBR charged for this service, it didn't
prepare the meals. Instead, these workers were given
leftover food in boxes and garbage bags after the
troops ate. Sometimes there were not leftovers to give
them," he said.
According to Mayberry, "Iraqi drivers of food convoys
that arrived on the base were not fed. They were given
Meals Ready to Eat, with pork, which they couldn't eat
for religious reasons."
"As a result, the drivers would raid the trucks for
food," he said.
The star witness at the hearing was Bunnatine
Greenhouse, a former math teacher, who moved up the
latter to become the highest ranked civilian employee
in the Army Corps of Engineers, responsible for
signing off on Iraq contracts. She testified that her
superiors forced her to sign no-bid contracts for
Halliburton on the eve of the invasion of Iraq.
She filed a complaint against her superiors for
harassment but the harassment has not ceased. She said
Pentagon attorneys had to tried to talk her out of
testifying at the hearing three days before the
hearing date.
"I have agreed to voluntarily appear at this hearing
in my personal capacity because I have exhausted all
internal avenues to correct contracting abuse I
observed while serving this great nation as the United
States Army Corps of Engineers senior procurement
executive," Greenhouse said. "In order to remain true
to my oath of office, I must disclose to appropriate
members of Congress serious and ongoing contract abuse
I cannot address internally," she said.
"I can unequivocally state that the abuse related to
contracts awarded to KBR represents the most blatant
and improper contract abuse I have witnessed during
the course of my professional career," she said in her
testimony.
Members of Congress at the hearing reacted strongly to
Greenhouse's revelations. "This testimony doesn't just
call for Congressional oversight -- it screams for
it," Senator Dorgan said.
Hover, I have not heard of any oversight hearings in
response to Greenhouse's testimony. Instead, about a
short time after the hearing I read the August 29,
2005 New York Times which said: "A top Army
contracting official who criticized a large,
noncompetitive contract with the Halliburton Company
for work in Iraq was demoted Saturday for what the
Army called poor job performance."
"The official, Bunnatine H. Greenhouse," the Times
wrote, "has worked in military procurement for 20
years and for the past several years had been the
chief overseer of contracts at the Army Corps of
Engineers, the agency that has managed much of the
reconstruction work in Iraq."
In fact, none of testimony by any witness phased the
top brass at the Pentagon one bit. On May 1, 2005, the
Army quietly awarded the company a new contract worth
nearly $5 billion to continue on with its wonderful
logistical support of the soldiers in Iraq, and last I
knew, the contract is as good as money in the bank for
KBR.
But then what the hell. People have been nagging
Halliburton of war profiteering for over 40 years. In
1966, a Republican member of the House of
Representatives from Illinois, demanded to know about
the 30-year association between Halliburton Chairman
George R. Brown and Lyndon B. Johnson. Brown had
contributed $23,000 to the President’s Club while the
Congress was considering whether to continue another
multimillion-dollar Brown & Root Services project,
according a report by the Center for Public Integrity,
on August 2, 2001.
"Why this huge contract has not been and is not now
being adequately audited is beyond me. The potential
for waste and profiteering under such a contract is
substantial," the indignant Republican Congressman,
Donald Rumsfeld said.
In 1982, the GAO reported that the company lost
accounting control of $120 million and that its
security was so poor that millions of dollars worth of
equipment had been stolen.
For those readers who may hoping that the millions of
tax dollar spent on all the investigations and
hearings discussed in this report might result in a
turn-around by contractors in Iraq, here is a
discomforting tidbit. According to the July 15, 2005
Boston Globe, "The federal government's chief
investigator yesterday blasted the Pentagon for its
''atrocious financial management," saying the Defense
Department was not able to give federal oversight
officials a full accounting of the $1 billion being
spent each week on the war in Iraq."
I'm not sure whether the Americans or the Iraqis are
picking up the tab for the billion a week, but I think
it must the Iraqis in light of the latest announcement
by officials in Iraq. On September 9, 2005, the
Guardian reported that, "Key rebuilding projects in
Iraq are grinding to a halt because American money is
running out and security has diverted funds intended
for electricity, water and sanitation, according to US
officials."
There are an estimated 20,000 foreign security
contractors currently in Iraq, with some being paid
more than $1,000 a day. According to IG, Stuart Bowen,
$5 billion of the $18.4 billion appropriated by
Congress for reconstruction, has been diverted to
security.
A GAO report said that "attacks, threats and
intimidation against project contractors and
subcontractors" were to blame.
For those wondering what kind of bang the Iraqis got
for their big bucks, some areas of Iraq still only get
less than four hours of electricity a day. The
estimated cost of providing enough electricity for the
country by 2010 is $20 billion, according to the
Guardian.
Water and sanitation projects have been hit hard.
According to a report published early this month by
the GAO, so far, $2.6 billion has been spent on water
projects, but that amount equals only half the sum
allocated for the work, because the remainder was
spent for security and other uses.
A quarter of the $200 million worth of completed water
projects handed over to the Iraqi authorities no
longer work properly because of "looting, unreliable
electricity or inadequate Iraqi staff and supplies,"
the GAO report said. There has be a surge in cases of
dehydration and diarrhea among children and the
elderly.
Shortages of fuel have produced lines a mile long at
gas stations. Crude oil production is averaging around
2.2 million barrels a day, still below its pre-war
peaks, according to the Brookings Institution in
Washington.
As for Halliburton, it is currently facing a number of
investigations for overcharging in Iraq, according to
a report released in March 2005, by Rep Henry Waxman
(D-CA).
But hey, what better choice could Bush have made than
for Halliburton to get the $700 million reconstruction
contract to repair the damage caused by Katrina? I
mean, look what the firm has done for the Iraqis.
And just think how thankful the Iraqis must feel
toward Bush, especially the ones who have managed to
stay alive.
Evelyn Pringle
epringle05@yahoo.com
(Evelyn Pringle is a columnist for Independent Media
TV and an investigative journalist focused on exposing corruption)
Courtesy and Copyright © Evelyn Pringle
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