The Los Angeles Times reported that the U.S. Defense Department officials still can’t account for $6.6 billion in Iraq reconstruction funds – some of it distributed in shrink-wrapped pallets of $100 bills. Some or all of it may have been stolen, the Pentagon says.
It wasn’t American money. The $6.6 billion came out of Iraq oil sales, seized Iraqi assets and surplus funds from the United Nations oil-for-food program, and not from the $61 billion appropriated by Congress for Iraq reconstruction.
After the U.S.-led invasion of Iraq in March 2003, the George W. Bush administration flooded the conquered country with so much cash to pay for reconstruction and other projects in the first year that a new unit of measurement was born.
Pentagon officials determined that one giant C-130 Hercules cargo plane could carry $2.4 billion in shrink-wrapped bricks of $100 bills. They sent an initial full planeload of cash, followed by 20 other flights to Iraq by May 2004 in a $12-billion haul that U.S. officials believe to be the biggest international cash airlift of all time.
This month, the Pentagon and the Iraqi government are finally closing the books on the program that handled all those Benjamins. But despite years of audits and investigations, U.S. Defense officials still cannot say what happened to $6.6 billion in cash — enough to run the Los Angeles Unified School District or the Chicago Public Schools for a year, among many other things.
For the first time, federal auditors are suggesting that some or all of the cash may have been stolen, not just mislaid in an accounting error. Stuart Bowen, special inspector general for Iraq reconstruction, an office created by Congress, said the missing $6.6 billion may be “the largest theft of funds in national history.”
The excuse for the haste was the urgency of getting reconstruction started. The excuse might have some merit if reconstruction had actually taken place.
Rep. Henry A. Waxman of California, the senior Democrat on the House Government Reform Committee, deserves credit for his perseverance in investigating this scandal. But I think it is safe to predict that no individual is going to be held accountable, and nobody’s career will suffer.
The London Review of Books had a excellent series of articles on the mishandling of the Iraq reconstruction funds, starting as far back as 2005, and there were follow-up reports in The American Conservative, Foreign Policy and other U.S. publications.
On 12 April 2004, the Coalition Provisional Authority in Erbil in northern Iraq handed over $1.5 billion in cash to a local courier. The money, fresh $100 bills shrink-wrapped on pallets, which filled three Blackhawk helicopters, came from oil sales under the UN’s Oil for Food Program, and had been entrusted by the UN Security Council to the Americans to be spent on behalf of the Iraqi people. The CPA didn’t properly check out the courier before handing over the cash, and, as a result, according to an audit report by the CPA’s inspector general, ‘there was an increased risk of the loss or theft of the cash.’ Paul Bremer, the American pro-consul in Baghdad until June last year, kept a slush fund of nearly $600 million cash for which there is no paperwork: $200 million of this was kept in a room in one of Saddam’s former palaces, and the US soldier in charge used to keep the key to the room in his backpack, which he left on his desk when he popped out for lunch. Again, this is Iraqi money, not US funds.
But this reporting did not generate any general sense of outrage.
Click on Iraq: Missing money may have been stolen, auditors say for the complete Los Angeles Times article. (Hat tip to Don Montana for calling my attention to the link).
Click on The failed reconstruction of Iraq for an earlier post of mine on how the reconstruction money was wasted. It has links to all the investigative articles in London Review of Books.
The post has links to an Iraqi-eye view of reconstruction by a young Iraqi woman who called herself Riverbend and blogged as Baghdad Burning (when last heard from, she and her family were refugees). Riverbend described how companies such as Halliburton and Bechtel were given huge no-bid contracts, and then put out the work for bid to Iraqi companies. So the Iraqis might get, say, $1 million for doing work the U.S. company was paid $50 million to do. But this is not a scandal. All that money was spent as it was intended.
[Added 6/24/11]. Click on Baghdad Burning for the archive of Riverbend’s web log.