Fuelling suspicion: the coalition and Iraq's oil billions /28.06.04
The US-controlled coalition in Baghdad is handing over power to an Iraqi government without having properly accounted for what it has done with some $20 billion of Iraq's own money, says a new report published by Christian Aid.
An audit, reportedly critical, of the coalition’s handling of Iraqi revenues is not going to be delivered until mid-July – after the coalition has ceased to exist.
Christian Aid believes this situation is in flagrant breach of the UN Security Council resolution that gave control of Iraq’s oil revenues and other Iraqi funds to the Coalition Provisional Authority (CPA).
‘For the entire year that the CPA has been in power in Iraq, it has been impossible to tell with any accuracy what the CPA has been doing with Iraq’s money,’ said Helen Collinson, head of policy at Christian Aid.
Resolution 1483 of May 2003 said that Iraq’s oil revenues should be paid into the Development Fund for Iraq (DFI), that this money should be spent in the interests of the Iraqi people, and be independently audited. But it took until April 2004 to appoint an auditor – leaving only a matter of weeks to go through the books.
Early reports of the audit indicate strong criticisms of the CPA’s handling of Iraq’s money. But the CPA is not going to be around to be held accountable.
In the run-up to the handover, nearly $2 billion of Iraq’s money has been hastily allocated. The new Iraqi government will be committed to these spending decisions.
Iraq’s oil represents huge potential wealth. With half of the population still unemployed, the Iraqi people need to be able to see that the oil revenues are being spent to alleviate poverty and to improve their lives.
• Christian Aid's 'Fuelling suspicion' report on target with independent audit results /19.07.04 • Press release /28.06.04
• Iraq: The Missing Billions In October 2003 Christian Aid revealed that an astonishing $4 billion of Iraq's oil revenues and other funds were unaccounted for. Iraq: The Missing Billions called for much greater clarity and for a thorough audit - which even at that time was months overdue.
By Rajiv Chandrasekaran Washington Post Foreign Service Sunday, July 4, 2004
BAGHDAD, July 3 -- The U.S. government has spent 2 percent of an $18.4 billion aid package that Congress approved in October last year after the Bush administration called for a quick infusion of cash into Iraq to finance reconstruction, according to figures released Friday by the White House.
The U.S.-led occupation authorities were much quicker to channel Iraq's own money, expending or earmarking nearly all of $20 billion in a special development fund fed by the country's oil sales, a congressional investigator said.
Only $366 million of the $18.4 billion U.S. aid package had been spent as of June 22, the White House budget office told Congress in a report that offers the first detailed accounting of the massive reconstruction package. --
There we go, thats the one I was thikning of specifically. So as of June 22 last year, only 2% of US-provided funds had been spent or allocated. So, Tal, what is the PRESENT percentage of US-provided funds specifically that has been allocated or spent?
By Gareth Smyth and Thomas Catan Financial Times June 22, 2004
United Nations-mandated auditors have sharply criticised the US occupation authority for the way it has spent more than $11bn in Iraqi oil revenues and say they have faced "resistance" from coalition officials. In an interim report, obtained by the Financial Times, KPMG says the Development Fund for Iraq, which is managed by the US-led Coalition Provisional Authority and channels oil revenue into reconstruction projects, is "open to fraudulent acts".
The auditors criticise the CPA's bookkeeping and warn: "The CPA does not have effective controls over the ministries' spending of their individually allocated budgets, whether the funds are direct from the CPA or via the ministry of finance." The findings come after US complaints about the UN's administration of the oil-for-food programme under Saddam Hussein. According to the CPA, the Development Fund for Iraq has taken in $20.2bn since last May and has disbursed $11.3bn, with $4.6bn left in outstanding commitments.
One adviser to a member of the recently disbanded Iraqi Governing Council said the report raised the fear that no audit of the CPA's work would ever be completed. "If the auditors don't finish by June 30, they never will, because the CPA staff are going home," he said. "I lament the lack of transparency and lack of involvement by Iraqis."
The KPMG auditors are answerable to the International Advisory and Monitoring Board, set up by the UN Security Council in May last year to oversee coalition spending from the development fund. The account contains oil revenues, frozen assets and money left over from the UN's oil-for-food programme. The watchdog comprises representatives of the World Bank, International Monetary Fund and Arab Fund for Social and Economic Development. It spent much of last year battling with occupation administrators over the watchdog's remit. Officials said they were able to begin working in earnest only in April.
In their first interim report, KPMG said it had "encountered resistance from CPA staff". CPA staff told KPMG they were overworked and had given them a "low priority". The UN decided this month that responsibility for the Development Fund for Iraq will pass to the Iraqi interim government and be monitored by the IAMB. The panel also intends to widen its scrutiny of past CPA spending by examining reports and audits by the Pentagon's inspector general and the General Accounting Office, an official said.
IAMB officials were meeting in Paris on Monday and were not available for comment. Some of KPMG's most damning criticisms were of the State Organisation for Marketing Oil, responsible for the sale of Iraq's most crucial asset. Oil sales, which go into the US-controlled fund, have topped $10bn since the overthrow of Saddam Hussein. SOMO's only record of barter transactions was "an independent database, derived from verbal confirmations gained by SOMO staff", the report found.
The CPA declined to address the KPMG report, saying only that it "has been and will continue to discharge its responsibilities under the Iraqi Development Fund". One Iraqi minister due to take office on June 30 told the FT he and many colleagues felt "let down by how the CPA has controlled resources".
Nearly $9 billion of money spent on Iraqi reconstruction is unaccounted for because of inefficiencies and bad management, according to a watchdog report published Sunday. An inspector general's report said the U.S.-led administration that ran Iraq until June 2004 is unable to account for the funds. "Severe inefficiencies and poor management" by the Coalition Provisional Authority has left auditors with no guarantee the money was properly used," the report said. "The CPA did not establish or implement sufficient managerial, financial and contractual controls to ensure that [Development Fund for Iraq] funds were used in a transparent manner," said Stuart W. Bowen Jr., director of the Office of the Special Inspector General for Iraq Reconstruction.
The $8.8 billion was reported to have been spent on salaries, operating and capital expenditures, and reconstruction projects between October 2003 and June 2004, Bowen's report concluded. The money came from revenues from the United Nations' former oil-for-food program, oil sales and seized assets -- all Iraqi money. The audit did not examine the use of U.S. funds appropriated for reconstruction. Auditors were unable to verify that the Iraqi money was spent for its intended purpose. In one case, they raised the possibility that thousands of "ghost employees" were on an unnamed ministry's payroll.
"CPA staff identified at one ministry that although 8,206 guards were on the payroll, only 602 guards could be validated," the audit report states. "Consequently, there was no assurance funds were not provided for ghost employees." The Defense Department, which was in charge of the reconstruction effort, and former Iraq civil administrator Paul Bremer have disputed the findings. Pentagon spokesman Bryan Whitman told CNN that the provisional authority was operating under "extraordinary conditions" and relied on Iraqi ministries to manage development money that was transferred to them. "We simply disagree with the audit's conclusion that the CPA provided less-than-adequate controls over Iraqi funds that were provided to Iraqi ministries through the national budget process for hundreds of projects, essential services, Iraqi salaries and security forces," Whitman said.
The occupation government established "major reforms" in Iraq's budgeting system, setting up a transparent mechanism for decision-making and beginning efforts to fight corruption, Whitman said. Under a U.N. Security Council resolution, the Development Fund for Iraq was to be used for humanitarian needs, economic reconstruction and repair of infrastructure, continued disarmament, costs of civilian administration and other programs benefiting Iraqis. Bremer, in a written response included in the report, said Bowen's report failed to recognize the difficulties of operating in wartime. "The IG auditors presume that the coalition could achieve a standard of budgetary transparency and execution that even peaceful Western nations would have trouble meeting within a year, especially in the midst of a war," Bremer wrote.
Bremer, who received a Presidential Medal of Freedom in December for his work in Iraq, stated that auditors did not interview him, any of his budget directors or deputies in preparing their draft report. "On the whole, the office has done excellent work," he wrote. "But I do believe my colleagues at the CPA have a right to expect a level of professional judgment and awareness, which seems to be missing in the current draft report." Bowen's report, which was prepared for Congress, acknowledged that the insurgency in Iraq poses "the most difficult challenge" to reconstruction.
"Even under the most favorable of conditions, rebuilding Iraq would be a job of daunting proportions," he wrote. But the provisional authority did not clearly assign managerial responsibility, and its rules lacked clear guidance on procedures and controls for dispersing funds, he concluded. Staffing shortages and turnover also resulted in inadequate oversight of budget execution by Iraqi ministries, he found -- and allegations of corruption in the oil-for-food program should have raised concerns about the Iraqi government's ability to manage the reconstruction funds.
U.S. officials in charge of the Development Fund for Iraq drained all but $900 million from the $20 billion fund by late last month in what a watchdog group has called an "11th-hour splurge." An international monitoring board is planning an audit of money from the fund that was spent on contracts for Iraq's reconstruction that were approved without competitive bidding. The fund, made up largely of Iraqi oil revenue, is intended to pay for the rebuilding of Iraq. Critics have charged that U.S. officials have failed to account properly for money spent so far.
In a report this week, the General Accounting Office said that "contracts worth billions of dollars in Iraqi funds have not been independently reviewed." It also questioned what control over U.S.-approved contracts would now exist with the handover of formal sovereignty to Iraqis. Beth Marple, a U.S. spokeswoman in Baghdad, said the rapid spending was agreed on between the now-dissolved Coalition Provisional Authority and Iraqi officials. She said that "the unfunded needs of the Iraqi people demanded that these dollars be put to work."
U.S. authorities have not identified all the contractors hired. But they have told international monitors that some of the contracts were awarded without competitive bidding to Halliburton, the Texas-based company formerly led by Vice President Dick Cheney. Halliburton has been at the center of Pentagon and congressional inquiries. Some critics have suggested that American authorities tapped the Iraqi money to avoid the stricter controls Congress demanded on the spending of U.S. tax dollars, after reports last year of overcharges by Pentagon contractors.
"Perhaps they prefer to have the flexibility to give away contracts to whichever companies they want on whatever terms they want," said Svetlana Tsalik, director of the George Soros-funded Revenue Watch, part of the Open Society Institute. Soros, a billionaire financier, is a harsh critic of the administration and has contributed heavily to groups seeking to defeat President Bush.
In recent reports, Revenue Watch and the British-based group Christian Aid faulted the Coalition Provisional Authority for making commitments on spending of Iraqi oil revenue that will outlast the occupation. Revenue Watch referred to the spending as "the CPA's 11th-hour splurge." Christian Aid faulted U.S. occupation authorities for failing to disclose full details of the spending. The group said the authorities may also have understated by up to $3 billion the amount of Iraqi oil revenue that went into the development fund. "This lack of accountability creates an environment ripe for corruption and theft at every level," Christian Aid said in a report titled Fueling Suspicion: the Coalition and Iraq's Oil Billions.
The Development Fund for Iraq was set up by the United Nations Security Council last year after Bush declared major combat over in Iraq. Besides the new Iraqi oil revenue, it includes leftover oil revenue that was put into the U.N.-run Oil for Food program before the United States invaded Iraq.
The development fund has been spent in several ways. As of May, more than half the money had gone to operate Iraqi ministries. The rest went to relief and reconstruction projects; out of that money, about $350 million was put at the discretion of U.S. military commanders for projects intended to improve relations with Iraqis. Until the handover, the provisional authority had the ultimate say over how the money was used. Decisions were made in meetings with Iraqi officials appointed by the provisional authority and the U.S.-picked Iraqi Governing Council.
Noting the latest reports by the provisional authority, Joseph Christoff, who directs the GAO's international affairs section, said that of the $20 billion in the fund, all but $900 million had been committed as of late June. The GAO is an investigative arm of Congress. "They clearly spent [development fund money] at a much faster pace than the appropriated dollars," Christoff said in a telephone interview. The GAO report said that as of April, the provisional authority had spent nearly $13 billion from the fund on reconstruction activities. By that time, the authority had spent only $8.2 billion out of U.S. tax dollars - money that would likely invite greater congressional scrutiny.
The Security Council created an International Advisory and Monitory Board for Iraq to watch how the development fund was spent. The board is made up of representatives of the United Nations, World Bank, International Monetary Fund and the Arab Fund for Economic and Social Development. In February, the board began to question the awarding of no-bid contracts awarded by the provisional authority with money from the development fund, according to minutes of the board's meetings. The next month, the board was told that Halliburton won some of the contracts without competitive bidding. The provisional authority "indicated that as a general rule, effective January 2004 contracts were no longer awarded without competitive bidding," according to the board's minutes.
The board demanded that the provisional authority turn over audits of the uncompetitive contracts. None had been provided by its June meeting. The board then delivered a public rebuke of the U.S. authorities. In a statement issued June 22, the board said it "regrets, despite its repeated requests, the delay in receiving reports on audits undertaken by various agencies on sole-sourced contracts" paid for by the development fund. The board chose to launch an audit "to determine the extent of sole-sourced contracts." In a telephone interview from Baghdad, Marple said she could not immediately explain why the provisional authority used development fund money for no-bid contracts or why it had been slow to provide information to the monitors.
The new Iraqi government is now in control of deciding how Iraqi oil revenue is spent, though the international monitoring board will continue an oversight role. Rend al-Rahim, Iraq's chief representative in Washington, argued in a speech this week that too much money had been spent on costly infrastructure and high-tech projects that did not employ large numbers of Iraqis. Noting that the new government "will now have a lot of authority in awarding contracts from the Development Fund for Iraq," she said it must focus on projects "that can employ tens and hundreds of thousands of Iraqis and get money into the pockets of Iraqis and again give them a stake in the new Iraq."
quote: So you have no source that the UN has spent money on Iraq reconstruction. You just resort to insults. Thank you.
Clearly, you DO need more:
UN-HABITAT Iraq Programme as of January 2005
In line with its Urban and Housing Rehabilitation Programme for Iraq (UHRP), UN-HABITAT continues to actively participate in the reconstruction of Iraq through physical rehabilitation activities as well as policy and institutional reform, and training and capacity building. This programme is being implemented as part of the overall UN Strategic Plan for Iraq by UN-HABITAT working out of offices in Amman , Jordan and Kuwait. In late 2003, UN-HABITAT established the High-Level Advisory Panel for the Reconstruction of Iraq with a multi-disciplinary membership of distinguished Iraqi professionals, academics, and government officials, including the Ministers for Municipal and Public Works, Housing and Construction, and Planning and International Cooperation. The Panel guided UN-HABITAT in the formulation of the Urban and Housing Rehabilitation Programme (UHRP) for Iraq. It has ensured that this programme enjoys full Iraqi ownership and support. The UHRP focuses on capacity building and reform in housing and housing finance, slum upgrading and strengthening the construction sector, as well as municipal management, and urban information systems. Implementation of the UHRP started in mid-2004 through two projects financed by the UNDG Iraq Trust Fund. The High-Level Advisory Panel assists UN-HABITAT with continued advice and monitoring of the projects. UN-HABITAT is the only UN agency with current activities in Iraq that has established such an advisory panel.
The Government of Japan is presently the largest partner of UN-HABITAT in Iraq, with total approved funding mainly through the Iraq Trust Fund of US$ 42.4 million for the projects Rehabilitation of Schools , Community Rehabilitation , Educational Facilities Rehabilitation, and the Living Infrastructure and Community Rehabilitation project. These projects, as well as the Rehabilitation of School Buildings in the Lower South supported by US$5.2 million from the Iraq Trust Fund, are being implemented in the central and southern region of Iraq in close cooperation with Iraqi authorities and communities, primarily in and around Samawa and Basra .
quote: So I already countered your post before you posted it.
No, you merely thought you did. Let me show you:
quote: BAGHDAD, Iraq — Stories of homicide bombers or kidnappers get most of the news headlines out of Iraq (search) but U.S. officials working in the country want Americans to think about other things when they mull the millions of tax dollars spent there.
Sure, that is what US officials WANT the public to think. Undeniably. That doesn't mean its TRUE, does it?
quote: According to its Web site, the Project and Contracting Office aims to ...
Such sterling journalism: "we know whats going on becuase we looked at their webiste".... ahahahaha. Of course, a mission statement, even if 100% honest, does not mean that that is actually happening on the ground.
The rest of this extract is just happy-happy nice-nice stuff about Working Together (tm). In no way, shape, or form does this extract answer or contradict any of the charges laid at the US's door. All it says is that the US Gov would rather people thought happy thoughts.
OIf course they do. Thats becuase the facts are acutely embarrasing.
This message has been edited by contracycle, 05-05-2005 09:43 AM
Nearly $9 billion of money spent on Iraqi reconstruction is unaccounted for because of inefficiencies and bad management, according to a watchdog report published Sunday. An inspector general's report said the U.S.-led administration that ran Iraq until June 2004
No mention of UN spending money on reconstruction.
This message has been edited by Tal, 05-05-2005 01:28 PM
This message has been edited by Tal, 05-05-2005 01:28 PM
Then I heard the voice of the Lord saying, "Whom shall I send? And who will go for us?" And I said, "Here am I. Send me!" Isaiah 6:8 www.1st-vets.us