Follow the money....

...if you can.

At the end of the Iraq war, vast sums of money were made available to the US-led provisional authorities, headed by Paul Bremer, to spend on rebuilding the country. By the time Bremer left the post eight months later, $8.8bn of that money had disappeared. Ed Harriman on the extraordinary scandal of Iraq's missing billions

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The "financial irregularities" described in audit reports carried out by agencies of the American government and auditors working for the international community collectively give a detailed insight into the mentality of the American occupation authorities and the way they operated. Truckloads of dollars were handed out for which neither they nor the recipients felt they had to be accountable.

The auditors have so far referred more than a hundred contracts, involving billions of dollars paid to American personnel and corporations, for investigation and possible criminal prosecution. They have also discovered that $8.8bn that passed through the new Iraqi government ministries in Baghdad while Bremer was in charge is unaccounted for, with little prospect of finding out where it has gone. A further $3.4bn appropriated by Congress for Iraqi development has since been siphoned off to finance "security".

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The IAMB first spent months trying to find auditors acceptable to the US. The Bahrain office of KPMG was finally appointed in April 2004. It was stonewalled.

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There appears to have been good reason for the Americans to stall. At the end of June 2004, the CPA would be disbanded and Bremer would leave Iraq. There was no way the Bush administration would want independent auditors to publish a report into the financial propriety of its Iraqi administration while the CPA was still in existence and Bremer at its head still answerable to the press. So the report was published in July.

The auditors found that the CPA didn't keep accounts of the hundreds of millions of dollars of cash in its vault, had awarded contracts worth billions of dollars to American firms without tender, and had no idea what was happening to the money from the Development Fund for Iraq (DFI), which was being spent by the interim Iraqi government ministries.

   Guardian article

They must have had some idea. They knew what American firms they were handing the contracts to. And they had pockets themselves. They weren't keeping track of the money for some reason.

When the Iraqi Governing Council asked Bremer why a contract to repair the Samarah cement factory was costing $60m rather than the agreed $20m, the American representative reportedly told them that they should be grateful the coalition had saved them from Saddam. Iraqis who were close to the Americans, had access to the Green Zone or held prominent posts in the new government ministries were also in a position personally to benefit enormously. Iraqi businessmen complain endlessly that they had to offer substantial bribes to Iraqi middlemen just to be able to bid for CPA contracts. Iraqi ministers' relatives got top jobs and fat contracts.

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Pilfering was rife. Millions of dollars in cash went missing from the Iraqi Central Bank. Between $11m and $26m worth of Iraqi property sequestered by the CPA was unaccounted for. The payroll was padded with hundreds of ghost employees. Millions of dollars were paid to contractors for phantom work. Some $3,379,505 was billed, for example, for "personnel not in the field performing work" and "other improper charges" on just one oil pipeline repair contract.

Most of the 69 criminal investigations the CPAIG instigated related to alleged theft, fraud, waste, assault and extortion. It also investigated "a number of other cases that, because of their sensitivity, cannot be included in this report".

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At the same time, the IAMB discovered that Iraqi oil exports were unmetered. Neither the Iraqi State Oil Marketing Organisation nor the American authorities could give a satisfactory explanation for this. "The only reason you wouldn't monitor them is if you don't want anyone else to know how much is going through," one petroleum executive told me.

Yeah, they had an idea what was happening to the money.

Both Saddam and the US profited handsomely during his reign. He controlled Iraq's wealth while most of Iraq's oil went to Californian refineries to provide cheap petrol for American voters. US corporations, like those who enjoyed Saddam's favour, grew rich. Today, the system is much the same: the oil goes to California, and the new Iraqi government spends the national wealth with impunity.

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And so it continues. The IAMB's most recent audit of Iraqi government spending talks of "incomplete accounting", "lack of documented justification for limited competition for contracts at the Iraqi ministries", "possible misappropriation of oil revenues", "significant difficulties in ensuring completeness and accuracy of Iraqi budgets and controls over expenditures" and "non-deposit of proceeds of export sales of petroleum products into the appropriate accounts in contravention of UN Security Council Resolution 1483".

In the absence of any meaningful accountability, Iraqis have no way of knowing how much of the nation's wealth is being used for reconstruction and how much is being handed out to ministers' and civil servants' friends and families or funnelled into secret overseas bank accounts. Given that many Ba'athists are now back in government, some of that money may even be financing the insurgents.

....but hey, do what you want....you will anyway.