The Missing Billions

Amy Goodman and Democracy Now! try their best to "follow the money."

Just weeks after the invasion of Iraq, the Bush administration began airlifting planeloads of cash to Baghdad for use by U.S. occupation officials. $12 billion in US currency was shipped in just over a year. But where did the money go? To date, at least $9 billion cannot be accounted for.

Last month, Democracy Now! interviewed the investigative journalist team of Donald Barlett and James Steele. They published a shocking expose in Vanity Fair tracking how the money went from the Federal Reserve to Iraq.

So Amy Goodman asked Alan Greenspan if he was aware of the missing money at the time and if so, did he investigate. And he answered.

ALAN GREENSPAN: Well, let me say that what we were involved in was essentially endeavoring to create a viable currency for the central bank of Iraq. And what we did do was -- I think very successfully -- create what is a viable financial system, even under the circumstances that currently exist. [...]The issue which you are referring to had nothing to do with the Federal Reserve in any of our relationships with the central bank.

AMY GOODMAN: Well, they are talking about, in one day, for example, the East Rutherford operation center of the Federal Reserve Bank of New York, 100 Orchard Street in East Rutherford, a tractor-trailer truck pulling up, and though accustomed to receiving and shipping large quantities of cash, the vault had never before processed a single order of this magnitude: $2.4 billion in $100 bills. But ultimately, again, $9 billion of $12 billion gone missing in Iraq.

ALAN GREENSPAN: I am not familiar with any such evidence. And it was certainly not brought to my attention. I, frankly, find it very unlikely that those orders of magnitude were involved in any of the numbers that we were dealing with. [...] There’s been, I’ve seen, several reports fairly recently in which that sort of mistake was being made. But what I can tell you is that no such numbers of any order of magnitude of the type you are discussing came to the attention of the Federal Reserve.

Journalist Naomi Klein finds that claim highly dubious.

I would just add that it’s quite surprising, actually, that Mr. Greenspan is unaware of this scandal around Iraq's missing billions, because Paul Bremer had to testify before Congress and was asked directly about those missing billions. It’s been the subject of very high-level investigations. There is a huge paper trail around it. So this is hardly a secret [...]

And, Don Barlett and Jim Steele, two of the nation's top investigative journalists for Vanity Fair, agree.

DONALD BARLETT: One of the problems is that Mr. Greenspan speaks in a language that is unknown to most of us. He's done this for years in a kind of economic doublespeak which goes unchallenged. But in this particular case, Mr. Greenspan is flat wrong. Jim had obtained a lot of this information, which came from Mr. Greenspan's Federal Reserve Bank .

[...]

JAMES STEELE: One of the most significant things that's part of this whole process, the fact that they don't know where this came from, where these numbers came from, all of these came, numbers from the Federal Reserve Bank of New York, which is a -- if not a branch, it's certainly part of the Federal Reserve system, which Chairman Greenspan headed for so long. And the Federal Reserve Bank of New York provided these to various US government agencies, various congressional committees. There are literally thousands of pages of documents that led to the statistics that we used in our article [...] So the Federal Reserve system certainly was intimately involved in processing this cash from the very beginning.

Once it got to Iraq, which is the point we made in our story, that's where everything vanished, where there was absolutely no oversight, where there was no follow-up, where -- and the idea that this went into creating a viable system over there is almost comical, because when you look at some of the records in Iraq, you see that much of this money went to the Ministry of Finance, which in turn turned this over to various Iraqi banks. But exactly where it went from there, nobody to this day knows.

To the tune of about 9 billion dollars out of 12. Comical? Ludicrous! Outrageous!

Oh well. It’s only money.

So, did Alan Greenspan really not know? Is the Brooklyn Bridge still for sale?

But wait. That’s not all.

DONALD BARLETT: [B]ack through the 1990s, there was a mutual fund, so to speak, in the Bahamas called Evergreen Security, which was selling its certificates around the world, especially in the US. [...] Evergreen Security had been run for the most part by Patrick Thomson, a resident of the Bahamas, for a long time. And it was nothing more than a Ponzi scheme, and in the end more than $200 million disappeared. Well, it was to Mr. Thomson that this very mysterious Thomas Howell in La Jolla, California, turned to create a company for him called NorthStar. And a few years later, lo and behold, NorthStar is retained by the Pentagon to make sure the money in Iraq, the $12 billion, and billions more, does not go missing, which, of course, it did go missing.

JAMES STEELE: When we looked into the background of NorthStar, come to find out this is not your normal accounting or auditing operation. It operates out of a private house in a suburb of San Diego. All attempts to interview the individual, Thomas Howell, who apparently heads NorthStar, failed. He would talk to us a couple times, but said that his hands were tied. The Pentagon would have to give him approval to talk, and they did not.

[...]

But what does it say to us about the way, in part, we run this war over there, that the Pentagon and the Coalition Provisional Authority turned to a company, whose ostensible -- one of its functions running out of that address is home remodeling, to supervise what's going to happen to billions of dollars being airlifted from this country to Iraq? It may be almost a metaphor for the way we run that whole operation over there.

Let me guess, Patrick Thomson and Thomas Howell have “connections” to the Bush Administration?

JUAN GONZALEZ: And were you ever able to trace the way or the connection between these individuals at NorthStar and the contracting agencies in the government that gave them this contract?

DONALD BARLETT: No. The only thing is that it is crystal clear, and Paul Bremer insisted, that this was a Pentagon arrangement and that he had no say over this whatsoever and that NorthStar was basically a creature of the Pentagon, in terms of supposedly tracking this money. And again, you're talking about a company set up by a person involved in a $200 million stock scam. It just raises all kinds of questions, you know, as to why the Pentagon would utilize such a resource.

Doesn’t it just?

AMY GOODMAN: So you have an accounting firm created by a mysterious La Jolla man by an equally mysterious Bahaman resident who specializes in setting up offshore entities used to launder money, concealing assets, avoiding taxes, a man who presided over a securities firm from which $200 million was disappeared. [...] How has the press followed up on this expose?

DONALD BARLETT: This is interesting. I mean, NorthStar, the company's identity was hanging out there. It's been hanging out there for a long time. But basically no one has looked at it. And it goes beyond the news media. It also goes to the heart of congressional investigating committees, of government -- nobody's interested. And that really raises red flags in our mind as to why you wouldn't be curious about a company assigned the task of making sure billions don't disappear, and they disappear.

As the law might ask, what could a reasonable person conclude?

You can read Vanity Fair's Billions Over Baghdad here.

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