$9B Goes Missing In Iraq

Profiteering from the Iraq war is not a surprise, especially in light of the Bush administration's pandering to the military-industrial complex. But some Democratic lawmakers are concerned that profiteering may have achieved stratospheric dimensions in the case of the $9 billion that is missing from the sale of Iraqi oil. This money was to have been used for humanitarian aid and reconstruction for Iraq.

It seems no one is watching the store. The fund was transferred to Iraqi government ministries, which lacked the proper financial controls, security and staff to keep close tabs on the money flow.

Nevertheless, the Democrats would like to prod the Bush administration to show its concern over the loss. You can do a lot with $9 billion, but it's only a drop in the bucket in terms of spending in Iraq. The war there is costing the United States more than $50 billion a year.

Rep. Dennis Kucinich, D-Ohio, has led the move to seek accountability for the missing funds after Stuart W. Bowen, the special inspector general appointed by the U.S. occupation authority, reported the disappearance last Jan. 30.

The audit spurred the Democratic Policy Committee -- which serves as a clearinghouse for all Democratic offices on Capitol Hill -- to hold hearings Feb. 14 on the management by the Coalition Provisional Authority of billions in Iraqi oil revenue.

The panel found that no banking system was implemented in Iraq, although "a lot of dinars and American dollars" were in circulation. The money was stashed in the basement of CPA headquarters and released from time to time to contractors.

The Democrats have also asked U.S. Attorney General Alberto Gonzales to convene a grand jury to look into the problem.

The CPA is accused of failing to properly account for the money funneled through the Development Fund for Iraq for Iraqi humanitarian aid and reconstruction. The DFI was set up by the U.N. and placed under the control of the CPA.

Kucinich said "not a single penny of the $9 billion could be accounted for" in the Bowen audit. The loss occurred when the United States controlled Iraq's oil profits from May 2003 until June 2004.

Rep. Henry Waxman, D-Calif., accused the Republican Congress of ignoring auditors who "have raised red flags about the administration's stewardship of the Iraqi funds."

Senate Democratic Leader Harry Reid, D-Nev., told the policy panel that he was "perplexed and disturbed" by what has happened with the reconstruction.

"We are close to 24 months into this conflict with Iraq, and the administration still can't seem to get it right," he said.

Reid said that a report last December by the Center for Strategic and International Studies -- an independent think tank dealing with political and economic issues -- found that more than 30 percent of the reconstruction money "is being lost to corruption, fraud and mismanagement."

The inspector general found insufficient managerial, financial, salary and contract controls. In one Iraqi ministry, 8,026 guards were officially on the payroll, but the presence of only 602 guards could be validated.

Kucinich wondered what the unaccounted employees were being paid to do and whether they even exist.

He said the CPA contracting office did not provide oversight of Iraqi ministry procurement or contracting operations, with little or no internal controls. Nor did it provide data on executed contracts.

The Ohio congressman asked a series of rhetorical questions: "What might have this $9 billion gone towards? Personal corruption? A money-laundering scheme? A back-door way of funding covert operations?"

Could some of the money have used to pay for ballot stuffing in last month's Iraqi election?

Franklin Willis -- former senior aviation official for Iraq's Ministry of Transportation and Communication under the CPA -- said American overseers treated Iraqi money more casually than they did U.S. funds.

Several contracts are now under criminal investigation, Willis said.

Some witnesses likened the atmosphere in Iraq to the Wild West, where cash was handed out without proper accounting.

L. Paul Bremer, former CPA administrator of the Iraqi interim government, was obviously stung by Bowen's scathing report.

It "does not meet the standards Americans have come to expect of the inspector general," he said, claiming it had many "factual errors."

Both Bremer and the Defense Department -- which controlled the CPA -- complained that the report did not acknowledge that the Western-style budgeting could not be immediately implemented in a wartime atmosphere. Iraqis are well acquainted with official corruption. But Americans should be showing them a better way.