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Questions About 'Missing Billions' in Iraq
U.K.'s Channel 4 airs program about Coalition Provisional Authority incompetence
William Pollard (will789)     Print Article 
Published 2006-03-22 14:33 (KST)   
On March 20th, Channel 4 in the UK aired a program - "Iraq's Missing Billions" -- reporting on how billions of dollars may have gone unaccounted for from the Coalition Provisional Authority (CPA) during the early years of the occupation. The video includes shots of actual bundles of U.S. dollars as delivered from the Federal Reserve. All transactions were for cash, which makes an audit record hard to determine.

Ali Fadhil, a doctor based in Iraq, reported from a hospital in Diwaniyah where a "total refurbishment" had been promised, but still was lacking basic supplies. Fadhil explained how a priority for grand projects had left few resources for smaller items that would have been more useful. He also showed video from his flat, which was wrecked by an American "special task force unit" in January. Although Fadhil was released, the video was taken away and not returned. This was reported in the Guardian, which made the program for Channel 4.

The Guardian has also published an article by Fadhil and Callum Macrae, who directed the program. This is online, but so far there is no video on the Channel 4 Web site.

The U.S.$23 billion was entrusted to the CPA by the United Nations. It included money from the sale of Iraq's oil and all bank accounts held outside Iraq. The bills weighed 363 tons.

The statements in the program are backed up by other sources. A main example for how things went wrong is the company Custer Battles, hired originally for security at Baghdad airport and later for replacing the Iraqi currency. The expected civilian flights did not happen, but they were still paid for by security. The CPA had a high priority for replacing the currency with notes that did not have an image of Saddam Hussein. Custer Battles contracted to arrange this for a percentage added to costs. The Providence Journal, from Rhode Island, has reported that there will be a second court case about the airport security following a verdict on the banknotes.

John E. Mulligan reported
In that verdict, the jury accepted the accusers' charge that Custer Battles presented more than 35 separate bills or statements to the Coalition Provisional Authority that were false -- including a number of backdated and forged invoices or leases for goods and services. Each violation was punishable by an $11,000 penalty.

The jury assessed damages for the false claims at $3 million -- the maximum allowed by the rules that U.S. District Court Judge T.S. Ellis III set for the trial. That award was automatically tripled to $9 million under the terms of such lawsuits under the Civil War-vintage False Claims Act.
The Dispatches program included an interview with Alan M. Grayson, the lawyer for two whistleblowers who sued Custer Battles under the federal False Claims Act. The impression from the commentary was that legal action from government to recover money was limited by reluctance to describe the policy problems in Iraq. The False Claims Act dates from the time of Abraham Lincoln's struggle against profiteers during the American Civil War. Mulligan quotes an explanation from Taxpayers Against Fraud:
Lincoln's Law let private citizens sue alleged defrauders of the government and keep 50 percent of any recovery from the defendant. That provision was weakened by Congress during World War II. Private false-claims suits under the act were rare until the mid-1980s when a fresh round of defense-spending scandals -- symbolized by notorious reports of a toilet seat billed to the Pentagon at $600 -- spurred fresh amendments to the law.
According to the Providence Journal report, the case about airport security will go to trial later this year.

The Dispatches program drew attention to an apparent pressure to spend money as the CPA came to an end. One official was "given nearly $7 million and told to spend it in seven days. He told our auditors that he felt that there was more emphasis on the speed of spending the money than on the accountability for that money," said Ginger Cruz, the deputy inspector general for Iraqi reconstruction. Of the $23 billion paid over to the Federal Reserve by the U.N., $3.5 billion was paid to the new Iraqi government.

Fadhil was able to interview Ambassador Dan Speckhard, Director of the Iraq Reconstruction Management Office, who said, "Most of the concerns about misspent money have to do with what happened two years ago or before. When you look for evidence of current problems, only a tiny proportion is involved. It is useful to evaluate problems so that we can avoid them in the future. It's a little bit like water under the bridge at this point in terms of what we need to be focusing on for Iraq."

A different view came from Frank Willis, a senior official in the CPA from July to December 2003. He was ready to apologize. "I'm sorry. Our opportunity has gone. We blew it."

Ginger Cruz was interviewed for the Channel 4 program and gave the impression that investigations will continue. In general remarks about the CPA, she said, "there wasn't adequate planning in place." In November 2005, the Washington Post reported the arrest of Robert Stein, who worked for the CPA, and Philip Bloom, who ran several companies. The charges related to $546,000 in illegal payments for steering more than $13 million in contracts. Ginger Cruz told the Washington Post that the office of the inspector general was working on 50 other potential criminal cases on the spending of U.S. and Iraqi funds in the war zone. "There's more to come."
©2006 OhmyNews
Other articles by reporter William Pollard

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