Thursday, January 18, 2007

Bush Administration Iraq Corruption

One article after another over the last weeks has been discussing President Bush’s proclaimed new Iraq strategy. More or less all have ignored the elephant in the war room – corruption. Coincidently, one day before Bush’s Address to the Nation on January 10, 2007, United States Government Accountability Office released a 114-page report titled “Securing, Stabilizing, and Rebuilding Iraq: Key Issues for Congressional Oversight.”

In this post I summarize the parts related to corruption in that report.

Since 2001, Congress has appropriated about $495 billion to US agencies for military and diplomatic efforts in support of the global war on terrorism; the majority of this amount has gone to stabilize and rebuild Iraq.

Between the beginning of Operation Iraqi Freedom in 2003 and September 30, 2006, DOD had reported costs of about $257.5 billion for military operations in Iraq.[1] In addition, as of October 2006, about $29 billion had been obligated for Iraqi reconstruction and stabilization efforts.

Blaming on DOD cost reports and budgets to limit transparency, GAO says that “Without transparent and accurate cost reporting, Congress and DOD will continue to not have reliable information on how much the war is costing, sufficient details on how appropriated funds are being spent, or the historical data needed to consider future funding needs.”

Lost in Corruption

GAO says that “As of December 2006, Multinational Force-Iraq (MNF-I) had trained and equipped approximately 323,000 Iraqi security forces.” For that the United States has provided about $15.4 billion.

Now read the following numbers carefully: “MNF-I has issued about 480,000 weapons, 30,000 vehicles, and 1.65 million pieces of gear (uniforms, body armor, helmets, and footwear), among other items, to the Iraqi security forces as of October 2006.” All those for 323,000 people!

Meanwhile, DOD was facing (however temporary) shortages of body armor because of acquisition delays related to the lack of key materials[2] and distribution problems in some areas. Many had to purchase body armor from their own pockets.

Not surprisingly, GAO was puzzled: “It is currently unclear what accountability measures, if any, DOD has chosen to apply to the train-and-equip program for Iraq, as DOD officials have expressed differing opinions on this matter.”

For example, “DOD and MNF-I may not be able to account for Iraqi security forces’ receipt of about 90,000 rifles and about 80,000 pistols which were reported as issued before early October 2005,” but were not recorded during earlier phases of the train-and-equip program for Iraq.. Thus, DOD and MNF-I may be unable to ensure that Iraqi military forces and police received all of the equipment that the coalition procured or obtained for them.”[3]

Weren’t they required to provide the serial numbers of all small arms procured for Iraqi forces? Well, if serial numbers were registered Americans would realize that insurgents and death squads are probably using the weapons given DOD. Well, I should be fair. Looting was also widespread in conventional munitions storage sites in Iraq, because they were not secured from the beginning by the American sources. Don’t ask why.

Corruption in Iraq

This is kind of self evident but GAO underlines that “Corruption in Iraq is reportedly widespread and poses a major challenge to building an effective Iraqi government….. A World Bank report notes that corruption undermines the government’s ability to make effective use of current reconstruction assistance…. For example…. the Iraqi government pays salaries to nonexistent, or “ghost employees,” that are collected by other officials. According to U.S. officials 20 percent to 30 percent of the Ministry of Interior staff are” those ghosts. Note also according to Transparency International Iraqi government is the world’s second most corrupt government.

As of August 2006, the government of Iraq had spent, on average, 42% of its $34 billion budget[4] and yet there is almost no improvement on anything whatsoever. Where all the money goes then? I guess nobody knows.

GAO tracks some of them: “Provincial governments do not provide an accounting of the funds they receive ($2 billion in 2006); The Kurdistan Regional Government receives block grants from the central government but does not provide budget execution reports to the central government; Reconciliation of government accounts is impossible because…the Ministry of Finance has limited information on the activities of Iraq’s donors.” Also, “Iraq’s procurement procedures and practices are not in line with generally accepted public procurement practices…”

Moreover, according to Captain Gary Felicetti[5] “Corruption is widespread and deeply rooted, with local police chiefs said to frequently take a cut of their officers’ salaries.…The selection and screening of new recruits and leaders has been problematic and often based on cronyism and personal loyalties. Others have been required to pay bribes to obtain an appointment.…. Merit-based selection for leadership training, or assignment to special units, is still a foreign concept.”

How about the DOD Contractors?

The DOD has “relied extensively on contractors to undertake major reconstruction projects and provide logistical support to its troops in Iraq. For example, DOD has responsibility for a significant portion of the more than $30 billion in appropriated reconstruction funds and has awarded and managed many of the large reconstruction contracts, such as the contracts to rebuild Iraq’s oil, water, and electrical infrastructure, and to train and equip Iraqi security forces. Further, U.S. military forces in Iraq have used contractors to a far greater extent than in prior operations to provide interpreters and intelligence analysts, as well as more traditional services such as weapons systems maintenance and base operations support.”

GAO is convinced that because “information on the number of contractor employees or the services they provide is not aggregated by any organization” DOD “cannot develop a complete picture of the extent to which it relies on contractors to support its operations.” GAO gives a very good example: “an Army official estimated that about $43 million is lost every year on free meals provided to contractor employees at deployed locations who also receive a per diem food allowance.”

GAO also says that “DOD is also at risk of being unable to monitor and assess contractor performance.” This is partly proof of the fact that “about 29 percent of DOD’s planned construction program was incomplete as of October 2006.” Well, DOD should be asked why it now uses more Iraqi firms as contractors.

That is why GAO puts it bluntly that “improved contract management is a prerequisite to having good outcomes is a match between well-defined requirements and available resources.”

I guess in the future we will see more headlines about DoD contractors, such as the ones we see today, for example on BearingPoint (formerly KPMG Consulting) and on Halliburton.

Not finished. On January 16, 2007, U.S. government prosecutors announced charges against Benon V. Sevan, former head of the United Nations oil-for-food program, accusing him of receiving $160,000 in kickbacks from sales of Iraqi oil under the government of Saddam Hussein. Sevan was accused together with Ephraim Nadler, the brother of Leia Boutros-Ghali, the wife of the former secretary general of the United Nations, Boutros Boutros-Ghali.[6] The Volcker commission concluded that the United Nations needed "thoroughgoing reform" of its management.


The following sentence in the GAO report indeed gives all the meat we need for a conclusion: “The U.S. government lacks a plan that integrates current efforts to improve Iraq’s capacity to provide security and deliver essential services.”

In sum, instead of dealing with time varying polemics such as “We’re winning!”, “We’re not winning!”, “We’re not losing!” the US policymakers should spend their efforts on constructive suggestions on ending this war which has timewise already lasted longer and soon in monetary terms will cost more than the Vietnam war.

PS. The GAO Report has a very good chapter on Iraqi oil.

[1] $38.8 billion in FY 2003, $57.2 billion in FY 2004, $72 billion in FY 2005 and $83.3 billion in FY 2006. DOD spent an additional $6.1 billion for operations in Iraq that was not included in DOD’s reported costs. All these figures do not include training and equipping of Iraqi security forces (military and police); and administrative expenses.
[2] “DOD also faced the challenge of supplying sufficient amounts of armor for Army and Marine Corps trucks….Deficiencies in supply support for U.S. ground forces have resulted in shortages of critical items, such as armored vehicle track shoes, lithium batteries, and tires,” because of “inaccurate supply forecasts, insufficient and delayed funding and delayed acquisitions, ineffective distribution.”
[3] The Multinational Security Transition Command-Iraq (MNSTC-I) “property books contain records for about 90,000 rifles and about 90,000 pistols issued to Iraqi forces as of September 22, 2005. These numbers incorporate records MNSTC-I recently recovered from earlier phases of the train-and-equip program for Iraq. However, the former MNSTC-I commander reported that about 180,000 rifles and about 170,000 pistols were issued during the same time frame.”
[4] Note that fiscal year in Iraq starts on January 1.
[5] Captain Gary Felicetti, “The Limits of Training in Iraqi Force Development”, Parameters, Winter 2006-07, pp. 71-83.
[6] Julia Preston, “Ex-chief of UN oil-for-food program is charged”, International Herald Tribune, January 17, 2007.

Tags: Department of Defense, Corruption, Iraq


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