Much was promised before the invasion of Iraq that the money to finance it would come from Iraq, specifically its oil fields. Of course that was another of the miscalculations from the Bush administration.
But there was some Iraqi money to work with – from oil and frozen assets of the Hussein regime The Coalition Provisional Authority (aka Paul Bremer) said Iraqi money would be spent with Iraqi companies.
But the CPA never released information about specific contracts and the identities of companies that won them, citing security concerns, so it has been impossible to know whether these promises were kept.
The CPA has said it has awarded about 2,000 contracts with Iraqi money. Its inspector general compiled records for the major contracts, which it defined as those worth $5 million or more each. Analysis of those and other records shows that 19 of 37 major contracts funded by Iraqi money went to U.S. companies and at least 85 percent of the total $2.26 billion was obligated to U.S. companies. The contracts that went to U.S. firms may be worth several hundred million more once the work is completed.
And guess who ahead of the line – Dick Cheney’s Haliburton.
There was little control of Iraqi money.
…the CPA at times violated its own rules, authorizing Iraqi money when it didn’t have a quorum or proper Iraqi representation at meetings, and kept such sloppy records that the paperwork for several major contracts could not be found. During the first half of the occupation, the CPA depended heavily on no-bid contracts that were questioned by auditors. And the occupation’s shifting of projects that were publicly announced to be financed by U.S. money to Iraqi money prompted the Iraqi finance minister to complain that the “ad hoc” process put the CPA in danger of losing the trust of the people.
Kellogg Brown & Root Inc., a subsidiary of Halliburton, was paid $1.66 billion from the Iraqi money, primarily to cover the cost of importing fuel from Kuwait. The job was tacked on to a no-bid contract that was the subject of several investigations after allegations surfaced that a subcontractor for Houston-based KBR overcharged by as much as $61 million for the fuel.
And the leading Iraqis who were working with the U.S. had little say in how Iraqi money was spent and that much of it was awarded through no-bid contracts.
Critics of the CPA accused the occupation authority of using Iraqi money to bypass U.S. contracting rules on competition, oversight and monitoring for controversial projects.
“With American firms charging 10 times as much as Iraqi firms for construction work, with sole-source contracts being awarded, with allegations of money-wasting . . . is it likely that the CPA was doing its best to ensure Iraqi money was spent in Iraqi interests? It doesn’t look like it,” said Anthea Lawson, an analyst for Christian Aid, a nonprofit group that has been investigating the spending of Iraqi oil money.
Svetlana Tsalik, director of the Iraq Revenue Watch project of the Open Society Initiative think tank, said there were few clear distinctions between which pot of money — U.S. or Iraqi — the CPA would use to pay for reconstruction. “Whenever it had expenses that looked unpalatable for the U.S. public they would just dip into Iraqi funds,” Tsalik said.
…In most cases, to spend congressionally appropriated funds, CPA officials had to coordinate with officials in Washington, keep detailed records, advertise contracts widely and conform to waiting periods for bids to come in. Some of the money was held up by a turf war between the Pentagon and the State Department over who controlled the reconstruction.
It was simpler to use the Iraqi money.
The bottom line, politically, is that the Bush administration used Iraqi funds, without approval of the emerging Iraqi leadership and without competitive bidding, to pay Haliburton and other companies for projects they knew would be difficult to get through Congress, or at least would have brought to light more unsavory business practices by Dick Cheny.
I have visions of Tony Soparano’s back room of the Ba-Da-Bing.
The CPA’s inspector general found in audits released last week that the occupation failed to establish “effective funds controls and accountability” for hundreds of millions of dollars that were held in cash. In fact, the investigative unit said, the keys to one of the safes that held the cash was “kept in the disbursing officer’s unattended backpack.”