Bagging the carpetbaggers

The US Congress, not satisfied to let the US President do the job, has established SIGIR to audit the US money spent in reconstructing the Iraq that the coalition of the willing so willingly deconstructed. It seems like some of the contractors have gone over there to do good -- and have done very well, indeed.

The Council on Foreign Relations starts this post:

Three years after the fall of Baghdad, the reconstruction of Iraq is showing mixed results, says Stuart Bowen Jr., who heads the office of the Special Inspector General for Iraq Reconstruction (SIGIR). The latest quarterly SIGIR report [Guambat's efforts to effect that link came to nought -- "connection refused"; try this Google cache of the site] points to security concerns, poor oversight, and endemic corruption as some of the main obstacles hobbling reconstruction efforts.

Meanwhile, sabotage has left Iraq's oil and gas sector still performing at sub-prewar levels. A reconstruction gap continues to exist between U.S. expenditures and the delivery of essential services to Iraqis. And SIGIR continues to investigate more than seventy cases of fraud related to reconstruction contracts. Cfr.org spoke with Bowen about the pace and progress of reconstruction in Iraq.

Give me your assessment of U.S. reconstruction efforts in Iraq.

Well, it's a mixed picture, and it has been for a while. But it's also an improving picture on the reconstruction front, speaking in the larger perspective, since the reconstruction program started. And that improvement is tied to a clarified and more direct emphasis on providing reconstruction projects and programs that can be executed more rapidly and thus can provide benefits to the local Iraqi population.

If you're handing more power and decision-making capacity over to locals, how do you make sure there's proper oversight? Your report, after all, mentions the high amount of corruption at the local level.

One of the key issues identified in the report is the need to attack corruption in Iraq, to fight what I call the "second insurgency." The fact is there is significant corruption in the oil and defense ministries, and there has been some in the ministry of interior. That means that the Iraqis have a significant challenge in front of them. For their democracy to succeed, they must make progress in pushing back these corrupt practices, and holding government officials who commit corruption accountable. And that means prosecuting them and putting them in prison.

Does the corruption you mentioned go up to the actual ministers of oil, defense, and interior, or is it just their underlings?

I can't go into the details of who the specific wrongdoers are, and I don't want to. But I will say that I met with the commissioner on public integrity yesterday [April 26] for three hours discussing this issue. He's got 950 cases going—investigations. There are sixty cases in front of the central criminal court now. But I will say the commissioner, in my judgment, is committed to fighting corruption in Iraq, and the United States and the international community, the donor nations should support those institutions that are in Iraq designed to fight corruption. And they are the Commission on Public Integrity, the Board of Supreme Audit, and the inspectors general in the ministries.

Are these the same commissions investigating corruption of non-Iraqi contractors like Philip Bloom? And is Bloom's case just the tip of the iceberg, or are we looking at more guilty pleas in the months ahead?

I was talking about what Iraqis must do to prosecute Iraqis, as opposed to what we do, and that is prosecute the few Americans over there who have taken advantage of an occasionally chaotic situation to enrich themselves illegally. And Philip Bloom and Robert Stein [an American contractor and former Coalition Provisional Authority official who pleaded guilty earlier this year to charges of conspiracy, bribery and money laundering] are facing over thirty years respectively in prison for their wrongful conducts involving the criminal use and application of over $8 million. That's our biggest case, certainly to date, and there are other cases to follow. And I really can't go into the details of the other cases because of their sensitivity.

In addition to corruption, we often hear about security concerns and bureaucracy. Of those three, which is the biggest setback to reconstruction?

Security by far. It's incomparably more problematic than either corruption or bureaucratic red tape.

The New York Times had a recent front-page piece suggesting that a lot is blamed on sabotage and poor security, but, in fact, that poor decision-making and poor execution are bigger factors. Is that the case?

Well, there are two projects we have looked at that demonstrate what might be called poor management. That's the Al Fatah [oil] pipeline project in central Iraq, and then the Parsons Corporation [a U.S.-based engineering and construction company given roughly $2 billion in reconstruction contracts in Iraq] primary healthcare center contract — the clinics that we are looking at in this report. We have a detailed audit in this report that highlights the fact that over $180 million has been spent on that contract that was to construct 142 clinics, and only six are complete.

What explains this so-called reconstruction gap?

Well, there's blame allocable both to government oversight and contractor underperformance. The contractor clearly fell short of goals [to which] they perhaps should have been held more accountable along the way.

That convivial little chat differs in tone from the Sydney Morning Herald's report:

Iraq audit uncovers wasted millions, By Ewen MacAskill in Washington

A US congressional inspection team set up to monitor reconstruction in Iraq has published a scathing report of failures by contractors, mainly from the US, to carry out projects worth hundreds of millions of dollars.

The detailed and lengthy report on work projects in Iraq was drawn up by Stuart Bowen, the special inspector-general for Iraq reconstruction, and was published yesterday. Mr Bowen's office was set up after Congress expressed concern about the slow rate of reconstruction and the massive misuse of funds.

Mr Bowen's inspection team is investigating 72 cases of alleged fraud and corruption, and is pursuing leads not only in the US but in Europe and the Middle East.

In March, investigators conducted a successful sting operation which led to the arrest of a contractor who offered a bribe to an undercover agent.

The report says many completed projects "have delivered positive results, but there exists a gap between US project outputs and the delivery of essential services to Iraqis".

While progress has been made in the construction of schools and police stations, many Iraqis still have no access to clean water and electricity supplies in Baghdad are still below pre-invasion levels. The inspectors say economic recovery is being hampered by the failure to restore Iraq's oil production to pre-2003 levels.

The report says corruption in the oil and gas sector is a continuing problem that could have "devastating effects" on reconstruction in Iraq.

The report notes that a former contractor and former senior staffer in the now defunct US-led coalition government are facing jail sentences of up to 40 years on corruption charges.

Apart from mismanagement and corruption, the report identifies continuing attacks by Iraqi insurgents as one of the main reasons for the failures.

This danger was highlighted on Sunday when a roadside bomb south of Baghdad killed three private security firm staff and wounded two others.

Iraq's President, Jalal Talabani, said on Sunday that he and US officials had met insurgents and that a deal with some groups to end violence could be reached. Mr Talabani said: "I believe that a deal could be reached with seven armed groups that visited me."

His statement was one of the strongest signs yet that some groups involved in the three-year-old war may be ready to lay down their arms.

Iraq's parliament, elected in December, said it would meet for the third time tomorrow, but the Shiite Prime Minister-designate, Nuri al-Maliki, is not expected to unveil his cabinet line-up so soon, an aide said.

Also on Sunday, the US Secretary of State, Condoleezza Rice, defended the Bush Administration's Iraq war planning after her predecessor, Colin Powell, said he had made a case to send more troops to deal with the war's aftermath.

In an interview with the British television station ITV on Sunday, Mr Powell said there had been debates about the size of the force and how to deal with the aftermath.

The Guardian, Reuters, Hearst Newspapers
KEY FINDINGS

* Congress has approved $US21 billion ($A27.7 billion) for reconstruction since the invasion, of which 67 per cent has been allocated.

* Of $US186 million spent on health-care facilities, only six of 150 projects were complete; 77 per cent of the funds for these project have been spent.

* Lack of record keeping has "raised significant concerns about possible fraud, waste, and abuse … by US and Iraqi officials".

UPDATE 3 May 2006:
Reading a related post, Halliburton collected $100,000 a day for a pipeline it never built, I noticed an Austrlalian connection: "The new Al Fatah project is being carried out by a joint venture involving Parsons Corporation and the Australian company Worley, said Col. Richard B. Jenkins, commander of the Gulf Region Division-North for the Army Corps, in a telephone interview from Iraq." It turns out it is just an extension of Parsons, albeit as an associate rather than subsidiary, listed on the ASX (WOR) as WorleyParsons Limited. It should be noted that, as a service provider to the mining industry, its stock price has soared with the dot.commodity boom and its chart looks very much like Rio Tinto's.