A 'fraud' bigger than Madoff

[sky's the limit]

The real disaster in Iraq is just starting to show itself. The more I learn about the situation - couple very revealing books on the go - the more profound my disgust. The country has lost its control over its own resources through laws enacted by Paul Bremer and a constitution drawn up by American lawyers giving full access to Iraq state control industries, including oil. The "reconstruction," as I also saw in Afghanistan, is next to non-existent. Yes, the Bush years will go down in history for all the wrong reasons.

stl


A 'fraud' bigger than Madoff

Senior US soldiers investigated over missing Iraq reconstruction billions

By Patrick Cockburn in Sulaimaniyah, Northern Iraq

Monday, 16 February 2009


In what could turn out to be the greatest fraud in US history, American authorities have started to investigate the alleged role of senior military officers in the misuse of $125bn (£88bn) in a US -directed effort to reconstruct Iraq after the fall of Saddam Hussein. The exact sum missing may never be clear, but a report by the US Special Inspector General for Iraq Reconstruction (SIGIR) suggests it may exceed $50bn, making it an even bigger theft than Bernard Madoff's notorious Ponzi scheme.
Related articles

"I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad," said one US businessman active in Iraq since 2003.

In one case, auditors working for SIGIR discovered that $57.8m was sent in "pallet upon pallet of hundred-dollar bills" to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.

Despite the vast sums expended on rebuilding by the US since 2003, there have been no cranes visible on the Baghdad skyline except those at work building a new US embassy and others rusting beside a half-built giant mosque that Saddam was constructing when he was overthrown. One of the few visible signs of government work on Baghdad's infrastructure is a tireless attention to planting palm trees and flowers in the centre strip between main roads. Those are then dug up and replanted a few months later.

Iraqi leaders are convinced that the theft or waste of huge sums of US and Iraqi government money could have happened only if senior US officials were themselves involved in the corruption. In 2004-05, the entire Iraq military procurement budget of $1.3bn was siphoned off from the Iraqi Defence Ministry in return for 28-year-old Soviet helicopters too obsolete to fly and armoured cars easily penetrated by rifle bullets. Iraqi officials were blamed for the theft, but US military officials were largely in control of the Defence Ministry at the time and must have been either highly negligent or participants in the fraud.

American federal investigators are now starting an inquiry into the actions of senior US officers involved in the programme to rebuild Iraq, according to The New York Times, which cites interviews with senior government officials and court documents. Court records reveal that, in January, investigators subpoenaed the bank records of Colonel Anthony B Bell, now retired from the US Army, but who was previously responsible for contracting for the reconstruction effort in 2003 and 2004. Two federal officials are cited by the paper as saying that investigators are also looking at the activities of Lieutenant-Colonel Ronald W Hirtle of the US Air Force, who was senior contracting officer in Baghdad in 2004. It is not clear what specific evidence exists against the two men, who have both said they have nothing to hide.

The end of the Bush administration which launched the war may give fresh impetus to investigations into frauds in which tens of billions of dollars were spent on reconstruction with little being built that could be used. In the early days of the occupation, well-connected Republicans were awarded jobs in Iraq, regardless of experience. A 24-year-old from a Republican family was put in charge of the Baghdad stock exchange which had to close down because he allegedly forgot to renew the lease on its building.

In the expanded inquiry by federal agencies, the evidence of a small-time US businessman called Dale C Stoffel who was murdered after leaving the US base at Taiji north of Baghdad in 2004 is being re-examined. Before he was killed, Mr Stoffel, an arms dealer and contractor, was granted limited immunity from prosecution after he had provided information that a network of bribery – linking companies and US officials awarding contracts – existed within the US-run Green Zone in Baghdad. He said bribes of tens of thousands of dollars were regularly delivered in pizza boxes sent to US contracting officers.

So far, US officers who have been successfully prosecuted or unmasked have mostly been involved in small-scale corruption. Often sums paid out in cash were never recorded. In one case, an American soldier put in charge of reviving Iraqi boxing gambled away all the money but he could not be prosecuted because, although the money was certainly gone, nobody had recorded if it was $20,000 or $60,000.

Iraqi ministers admit the wholesale corruption of their government. Ali Allawi, the former finance minister, said Iraq was "becoming like Nigeria in the past when all the oil revenues were stolen". But there has also been a strong suspicion among senior Iraqis that US officials must have been complicit or using Iraqi appointees as front-men in corrupt deals. Several Iraqi officials given important jobs at the urging of the US administration in Baghdad were inexperienced. For instance, the arms procurement chief at the centre of the Defence Ministry scandal, was a Polish-Iraqi, 27 years out of Iraq, who had run a pizza restaurant on the outskirts of Bonn in the 1990s.

In many cases, contractors never started or finished facilities they were supposedly building. As security deteriorated in Iraq from the summer of 2003 it was difficult to check if a contract had been completed. But the failure to provide electricity, water and sewage disposal during the US occupation was crucial in alienating Iraqis from the post-Saddam regime.

[bmc]

Yes, but their free now, STL. They can vote. It's been worth it. They can now open Walmarts.

Ever wonder why they made sure they could never be challenged in front of a war crimes tribunal?

[sky's the limit]

Ever wonder why they made sure they could never be challenged in front of a war crimes tribunal?

Nope.... But it's just tragic to watch. Oh, but they just held "highly successful elections..." What a world.

stl

[bmc]

Iraq is becoming 'free fraud' zone


Corruption in Iraq under US-led CPA may dwarf UN oil-for-food scandal.

By Tom Regan | csmonitor.com, April 7, 2005.



A former senior advisor to the US-led Coalition Provisional Authority (CPA), which ran Iraq until the election of an interim Iraq government last January, says that the US government's refusal to prosecute US firms accused of corruption in Iraq is turning the country into a " free fraud zone."

Newsweek reported earlier this week that Frank Willis compared Iraq to the "wild west," and that with only $4.1 billion of the $18.7 billion that the US government set aside for the reconstruction of Iraq having been spent, the lack of action on the part of the government means "the corruption will only get worse."

More than US money is at stake. The administration has harshly criticized the United Nations over hundreds of millions stolen from the Oil-for-Food Program under Saddam [Hussein]. But the successor to Oil-for-Food created under the occupation, called the Development Fund for Iraq, could involve billions of potentially misused dollars.

In late March, the New Standard reported, the annual Global Corruption Report issued by the "corruption watchdog," Transparency International (TI), heavily criticized the US for "mismanaging" Iraq's oil revenues and "for using faulty procedures for awarding reconstruction contracts."


The report also criticizes efforts to rapidly privatize Iraqi assets and industries as a means of reducing the country's debt. TI warns that unless immediate corrective measures are taken, Iraq's reconstruction could become 'the biggest corruption scandal in history.'

The BBC reported that a UN report that came out in January also criticized the US as being a " poor role model" in "keeping corruption at bay."

The Christian Science Monitor reported on other allegations of corrpution in Iraq leveled against companies, including a "report by special inspector Stuart Bowen [which] found that $8.8 billion dollars had been disbursed from Iraqi oil revenue by US administrators to Iraqi ministries without proper accounting."

Meanwhile the Washington Post reported recently that both the Clinton and George W. Bush administrations had long known that monies used in the in the UN oil-for-food program were lining the pockets of Saddam Hussein, and did little to stop it.

CNN reported in February that "unclassified State Department documents sent to congressional committees with oversight of US foreign policy" show that the US actually condoned Jordan and Turkey breaking the UN sanctions against Iraq.

Rep. Robert Menendez, a New Jersey Democrat on the House International Relations Committee, one of five panels probing the oil-for-food program, told CNN the United States was 'complicit in undermining' the UN sanctions on Iraq.

'How is it that you stand on a moral footing to go after the UN when they're responsible for 15 percent maybe of the ill-gotten gains, and we were part and complicit of him getting 85 percent of the money?" Menendez asked.

One of the corruption cases that has drawn the most attention has been the attempts by two former employees of Custer Battles, a "private security company that was one of the highest-profile firms operating in Iraq" to sue the company on behalf of the US government. The whistler-blowers allege that the company and founders Mike Battles and Scott Custer, set up "shell companies in the Cayman Islands to falsely bill the government on two Iraq contracts."

The Washington Post reported last Friday that the Justice Department gave "strong support" to the men suing the company, "concluding that the company can be held liable for allegedly defrauding authorities in Iraq of tens of millions of dollars." Twice before the US governmment had declined to participate in the case when asked to do so by lawyers for the plaintiffs.

The judge, however, had asked the Justice Department "Does federal fraud law apply when the contract was administered by the Coalition Provisional Authority, which governed Iraq for a year after the US invasion?"

Newsweek reported that lawyers for Custer Battles, and until last week, the Bush administration, had argued the CPA was an "international authority" and thus US laws could not be used.

It [the US government] has argued privately that the occupation government, known as the Coalition Provisional Authority, was a multinational institution, not an arm of the US government. So the US government was not technically defrauded. Lawyers for the whistle-blowers point out, however, that President George W. Bush signed a 2003 law authorizing $18.7 billion to go to US authorities in Iraq, including the CPA, 'as an entity of the United States government.' And several contracts with Custer Battles refer to the other party as 'the United States of America.'

Max Boot, senior fellow at the Council on Foreign Relations, writes in the Los Angeles Times, the heavy use of contractors by the Bush administration not only lead to corruption problems, but is impeding the US military's progress in Iraq.

Peter W. Singer, a fellow at the Brookings Institution and author of 'Corporate Warriors,' estimates that there are 20,000 to 30,000 civilians in Iraq performing traditional military functions, from maintaining weapons systems to guarding supply convoys. If you add foreigners involved in reconstruction and oil work, the total soars to 50,000 to 75,000.

To put this into perspective: All of Washington's allies combined account for 23,000 troops in Iraq. In the latest issue of Foreign Affairs, Singer quips that "President George W. Bush's 'coalition of the willing' might thus be more aptly described as the 'coalition of the billing.' "

And the corruption problems go far beyond US contractors and other international firms. Reuters reported in March that one of the biggest problems facing the establishment of a legitimate government in Iraq is the corruption rampant in many Iraq government departments.

Radhi Hamza al-Radhi, head of the Commission on Public Integrity (CPI), an agency set up by the CPA to fight fraud committed by Iraqis, said that he faces many obstacles to fighting corruption in Iraq, including pressure from government officials to not work so hard.


Our work is new in Iraq and being an observer is not welcomed by many. We were asked many times by the government via official letters or phone calls not to speak to the media or not to speak to ministers. There were too many cases of 'Don't...'.

[bmc]

Or how about this article dating back to August 2007. I guess since it's an old story it doesn't matter any more. The bottom line is, it's not my money and I could care less. It just makes the righteous attitude a little hard to take.

Iraq Fraud Whistleblowers Vilified


Cases show fraud exposers have been vilified, fired, or detained for weeks


The Associated Press, Aug. 25, 2007

One after another, the men and women who have stepped forward to report corruption in the massive effort to rebuild Iraq have been vilified, fired and demoted.

Or worse.

For daring to report illegal arms sales, Navy veteran Donald Vance says he was imprisoned by the American military in a security compound outside Baghdad and subjected to harsh interrogation methods.

There were times, huddled on the floor in solitary confinement with that head-banging music blaring dawn to dusk and interrogators yelling the same questions over and over, that Vance began to wish he had just kept his mouth shut.

He had thought he was doing a good and noble thing when he started telling the FBI about the guns and the land mines and the rocket-launchers — all of them being sold for cash, no receipts necessary, he said. He told a federal agent the buyers were Iraqi insurgents, American soldiers, State Department workers, and Iraqi embassy and ministry employees.

The seller, he claimed, was the Iraqi-owned company he worked for, Shield Group Security Co.

“It was a Wal-Mart for guns,” he says. “It was all illegal and everyone knew it.”

So Vance says he blew the whistle, supplying photos and documents and other intelligence to an FBI agent in his hometown of Chicago because he didn’t know whom to trust in Iraq.

For his trouble, he says, he got 97 days in Camp Cropper, an American military prison outside Baghdad that once held Saddam Hussein, and he was classified a security detainee.

Also held was colleague Nathan Ertel, who helped Vance gather evidence documenting the sales, according to a federal lawsuit both have filed in Chicago, alleging they were illegally imprisoned and subjected to physical and mental interrogation tactics “reserved for terrorists and so-called enemy combatants.”

No noble outcomes

Corruption has long plagued Iraq reconstruction. Hundreds of projects may never be finished, including repairs to the country’s oil pipelines and electricity system. Congress gave more than $30 billion to rebuild Iraq, and at least $8.8 billion of it has disappeared, according to a government reconstruction audit.

Despite this staggering mess, there are no noble outcomes for those who have blown the whistle, according to a review of such cases by The Associated Press.

“If you do it, you will be destroyed,” said William Weaver, professor of political science at the University of Texas-El Paso and senior advisor to the National Security Whistleblowers Coalition.

“Reconstruction is so rife with corruption. Sometimes people ask me, ‘Should I do this?’ And my answer is no. If they’re married, they’ll lose their family. They will lose their jobs. They will lose everything,” Weaver said.

They have been fired or demoted, shunned by colleagues, and denied government support in whistleblower lawsuits filed against contracting firms.

“The only way we can find out what is going on is for someone to come forward and let us know,” said Beth Daley of the Project on Government Oversight, an independent, nonprofit group that investigates corruption. “But when they do, the weight of the government comes down on them. The message is, ’Don’t blow the whistle or we’ll make your life hell.’

“It’s heartbreaking,” Daley said. “There is an even greater need for whistleblowers now. But they are made into public martyrs. It’s a disgrace. Their lives get ruined.”

One whistleblower demoted

Bunnatine “Bunny” Greenhouse knows this only too well. As the highest-ranking civilian contracting officer in the U.S. Army Corps of Engineers, she testified before a congressional committee in 2005 that she found widespread fraud in multibillion-dollar rebuilding contracts awarded to former Halliburton subsidiary KBR.

Soon after, Greenhouse was demoted. She now sits in a tiny cubicle in a different department with very little to do and no decision-making authority, at the end of an otherwise exemplary 20-year career.

People she has known for years no longer speak to her.

“It’s just amazing how we say we want to remove fraud from our government, then we gag people who are just trying to stand up and do the right thing,” she says.


In her demotion, her supervisors said she was performing poorly. “They just wanted to get rid of me,” she says softly. The Army Corps of Engineers denies her claims.

“You just don’t have happy endings,” said Weaver. “She was a wonderful example of a federal employee. They just completely creamed her. In the end, no one followed up, no one cared.”


No regrets

But Greenhouse regrets nothing. “I have the courage to say what needs to be said. I paid the price,” she says.

Then there is Robert Isakson, who filed a whistleblower suit against contractor Custer Battles in 2004, alleging the company — with which he was briefly associated — bilked the U.S. government out of tens of millions of dollars by filing fake invoices and padding other bills for reconstruction work.

He and his co-plaintiff, William Baldwin, a former employee fired by the firm, doggedly pursued the suit for two years, gathering evidence on their own and flying overseas to obtain more information from witnesses. Eventually, a federal jury agreed with them and awarded a $10 million judgment against the now-defunct firm, which had denied all wrongdoing.


It was the first civil verdict for Iraq reconstruction fraud.

But in 2006, U.S. District Judge T.S. Ellis III overturned the jury award. He said Isakson and Baldwin failed to prove that the Coalition Provisional Authority, the U.S.-backed occupier of Iraq for 14 months, was part of the U.S. government.


Not a single Iraq whistleblower suit has gone to trial since.

“It’s a sad, heartbreaking comment on the system,” said Isakson, a former FBI agent who owns an international contracting company based in Alabama. “I tried to help the government, and the government didn’t seem to care.”

U.S. shows little support?

One way to blow the whistle is to file a “qui tam” lawsuit (taken from the Latin phrase “he who sues for the king, as well as for himself”) under the federal False Claims Act.

Signed by Abraham Lincoln in response to military contractors selling defective products to the Union Army, the act allows private citizens to sue on the government’s behalf.

The government has the option to sign on, with all plaintiffs receiving a percentage of monetary damages, which are tripled in these suits.

It can be a straightforward and effective way to recoup federal funds lost to fraud. In the past, the Justice Department has joined several such cases and won. They included instances of Medicare and Medicaid overbilling, and padded invoices from domestic contractors.

But the government has not joined a single quit tam suit alleging Iraq reconstruction abuse, estimated in the tens of millions. At least a dozen have been filed since 2004.

“It taints these cases,” said attorney Alan Grayson, who filed the Custer Battles suit and several others like it. “If the government won’t sign on, then it can’t be a very good case — that’s the effect it has on judges.”

The Justice Department declined comment.

Placed under guard, kept in seclusion

Most of the lawsuits are brought by former employees of giant firms. Some plaintiffs have testified before members of Congress, providing examples of fraud they say they witnessed and the retaliation they experienced after speaking up.

Julie McBride testified last year that as a “morale, welfare and recreation coordinator” at Camp Fallujah, she saw KBR exaggerate costs by double- and triple-counting the number of soldiers who used recreational facilities.

She also said the company took supplies destined for a Super Bowl party for U.S. troops and instead used them to stage a celebration for themselves.

“After I voiced my concerns about what I believed to be accounting fraud, Halliburton placed me under guard and kept me in seclusion,” she told the committee. “My property was searched, and I was specifically told that I was not allowed to speak to any member of the U.S. military. I remained under guard until I was flown out of the country.”

Halliburton and KBR denied her testimony.

She also has filed a whistleblower suit. The Justice Department has said it would not join the action. But last month, a federal judge refused a motion by KBR to dismiss the lawsuit.

'I thought I was among friends'

Donald Vance, the contractor and Navy veteran detained in Iraq after he blew the whistle on his company’s weapons sales, says he has stopped talking to the federal government.

Navy Capt. John Fleming, a spokesman for U.S. detention operations in Iraq, confirmed the detentions but said he could provide no further details because of the lawsuit.

According to their suit, Vance and Ertel gathered photographs and documents, which Vance fed to Chicago FBI agent Travis Carlisle for six months beginning in October 2005. Carlisle, reached by phone at Chicago’s FBI field office, declined comment. An agency spokesman also would not comment.

The Iraqi company has since disbanded, according the suit.

Vance said things went terribly wrong in April 2006, when he and Ertel were stripped of their security passes and confined to the company compound.

Panicking, Vance said, he called the U.S. Embassy in Baghdad, where hostage experts got on the phone and told him “you’re about to be kidnapped. Lock yourself in a room with all the weapons you can get your hands on.”’

The military sent a Special Forces team to rescue them, Vance said, and the two men showed the soldiers where the weapons caches were stored. At the embassy, the men were debriefed and allowed to sleep for a few hours. “I thought I was among friends,” Vance said.

An unspoken Baghdad rule

The men said they were cuffed and hooded and driven to Camp Cropper, where Vance was held for nearly three months and his colleague for a little more than a month. Eventually, their jailers said they were being held as security internees because their employer was suspected of selling weapons to terrorists and insurgents, the lawsuit said.

The prisoners said they repeatedly told interrogators to contact Carlisle in Chicago. “One set of interrogators told us that Travis Carlisle doesn’t exist. Then some others would say, ’He says he doesn’t know who you are,”’ Vance said.

Released first was Ertel, who has returned to work in Iraq for a different company. Vance said he has never learned why he was held longer. His own interrogations, he said, seemed focused on why he reported his information to someone outside Iraq.

And then one day, without explanation, he was released.

“They drove me to Baghdad International Airport and dumped me,” he said.

When he got home, he decided to never call the FBI again. He called a lawyer, instead.

“There’s an unspoken rule in Baghdad,” he said. “Don’t snitch on people and don’t burn bridges.”

For doing both, Vance said, he paid with 97 days of his life.

[Nark]

I saw it first hand, no argument for me on the wasted billions. Some might argue the same wasted billions sitting on Pres Obama's desk...

But I'm just a Jarhead, what do I know?




However, comma, pause for effect: there are a number legit contractors doing a lot of good over there. I saw that too.

[crazy_aviator]

Ancient Babylon is in Iraq , It was overthrown , Modern Babylon IS America and she is a Bastard ! Few understand that the corruption goes to the highest levels, right to the office of the President George Busch !! America is riddled with corruption and it SHALL get much worse !!! Pull up a seat and watch the show unfolding ,,,your going to see an incredible show in the next decade !!!

[Hedley]

At the end of it all, you either have your self-respect
and integrity, or you don't.

If you can't even comprehend the above, just disregard,
and hope no one ever catches you.

[bmc]

At the end of it all, you either have your self-respect and integrity, or you don't.

Well said.

[niss]

We three kings be stealing the gold.....

[Rowdy]

At the end of it all, you either have your self-respect
and integrity, or you don't.

If you can't even comprehend the above, just disregard,
and hope no one ever catches you.

Well put Hedley.

[Driving Rain]

Who's going to arrest the criminals?