$50 Billion Stolen in Iraq?

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$50 Billion Stolen in Iraq?

Postby American Dream » Mon Feb 16, 2009 10:49 am

http://www.independent.co.uk/news/world ... 22987.html

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.

"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.

***

http://www.nytimes.com/2009/02/15/world ... 5iraq.html

Inquiry on Graft in Iraq Focuses on U.S. Officers

By JAMES GLANZ, C.J. CHIVERS and WILLIAM K. RASHBAUM



Federal authorities examining the early, chaotic days of the $125 billion American-led effort to rebuild Iraq have significantly broadened their inquiry to include senior American military officers who oversaw the program, according to interviews with senior government officials and court documents.

Court records show that last month investigators subpoenaed the personal bank records of Col. Anthony B. Bell, who is now retired from the Army but who was in charge of reconstruction contracting in Iraq in 2003 and 2004 when the small operation grew into a frenzied attempt to remake the country’s broken infrastructure. In addition, investigators are examining the activities of Lt. Col. Ronald W. Hirtle of the Air Force, who was a senior contracting officer in Baghdad in 2004, according to two federal officials involved in the inquiry.

It is not clear what specific evidence exists against the two men, and both said they had nothing to hide from investigators. Yet officials say that several criminal cases over the past few years point to widespread corruption in the operation the men helped to run. As part of the inquiry, the authorities are taking a fresh look at information given to them by Dale C. Stoffel, an American arms dealer and contractor who was killed in Iraq in late 2004.

Before he was shot on a road north of Baghdad, Mr. Stoffel drew a portrait worthy of a pulp crime novel: tens of thousands of dollars stuffed into pizza boxes and delivered surreptitiously to the American contracting offices in Baghdad, and payoffs made in paper sacks that were scattered in “dead drops” around the Green Zone, the nerve center of the United States government’s presence in Iraq, two senior federal officials said.

Mr. Stoffel, who gave investigators information about the office where Colonel Bell and Colonel Hirtle worked, was deemed credible enough that he was granted limited immunity from prosecution in exchange for his information, according to government documents obtained by The New York Times and interviews with officials and Mr. Stoffel’s lawyer, John H. Quinn Jr. There is no evidence that his death was related to his allegations of corruption.

Prosecutors have won 35 convictions on cases related to reconstruction in Iraq, yet most of them involved private contractors or midlevel officials. The current inquiry is aiming at higher-level officials, according to investigators involved in the case, and is also trying to determine if there are connections between those officials and figures in the other cases. Although Colonel Bell and Colonel Hirtle were military officers, they worked in a civilian contracting office.

“These long-running investigations continue to mature and expand, embracing a wider array of potential suspects,” a federal investigator said.

The reconstruction effort, intended to improve services and convince Iraqis of American good will, largely managed to do neither. The wider investigation raises the question of whether American corruption was a primary factor in damaging an effort whose failures have been ascribed to poor planning and unforeseen violence.

The investigations, which are being conducted by the Special Inspector General for Iraq Reconstruction, the Justice Department, the Army’s Criminal Investigation Command and other federal agencies, cover a period when millions of dollars in cash, often in stacks of shrink-wrapped bricks of $100 bills, were dispensed from a loosely guarded safe in the basement of one of Saddam Hussein’s former palaces.

Former American officials describe payments to local contractors from huge sums of cash dumped onto tables and stuffed into sacks as if it were Halloween candy.

“You had no oversight, chaos and breathtaking sums of money,” said Senator Claire McCaskill, a Missouri Democrat who helped create the Wartime Contracting Commission, an oversight board. “And over all of that was the notion that failure was O.K. It doesn’t get any better for criminals than that set of circumstances.”

In one case of graft from that period, Maj. John L. Cockerham of the Army pleaded guilty to accepting nearly $10 million in bribes as a contracting officer for the Iraq war and other military efforts from 2004 to 2007, when he was arrested. Major Cockerham’s wife has also pleaded guilty, as have several other contracting officers.

In Major Cockerham’s private notebooks, Colonel Bell is identified as a possible recipient of an enormous bribe as recently as 2006, the two senior federal officials said. It is unclear whether the bribe was actually offered or paid.

When asked if Major Cockerham had ever offered him a bribe, Colonel Bell said in a telephone interview, “I think we’ll end the discussion,” but stayed on the line. Colonel Bell’s response was equally terse when asked if he thought that Colonel Hirtle had carried out his duties properly: “No discussion on that at this time.”

The current focus on Colonel Bell is revealed in federal court papers filed in Georgia, where he has a residence and is trying to quash a subpoena of his bank records by the Special Inspector General. The papers, dated Jan. 27, indicate that Colonel Bell’s records were sought in connection with an investigation of bribery, kickbacks and fraud.

Colonel Bell said that he sought to quash the subpoena not because he had anything to hide, but because the document contained inaccuracies. “If they clean it up, I won’t have a problem,” he said, suggesting that he would cooperate. He declined to detail the inaccuracies, although his handwritten notations on the court papers indicated that the home address and the bank account number on the subpoena were incorrect.

Asked whether he knew why the records had been subpoenaed, he said, “That is not for me to direct what they’re going to do.”

Another case that has raised investigators’ suspicions about top contracting officials involves a company, variously known as American Logistics Services and Lee Dynamics International, that repeatedly won construction contracts for millions of dollars despite a dismal track record.

One contracting official committed suicide in 2006 a day after admitting to investigators that she had taken $225,000 in bribes to rig bids in favor of the company. At least two other former contracting officials in Iraq have admitted to taking bribes in the case and are cooperating with investigators. It is unknown what information they may have provided on Colonel Hirtle, a high-ranking contracting official in Baghdad. But Colonel Hirtle signed the company’s first major contract in Iraq in May 2004, a roughly $10 million deal to build arms warehouses for the fledgling Iraqi security forces, according to a copy of the contract and federal officials. The warehouses went largely unbuilt. Investigators said the inquiry into the Lee case was continuing.

“I can’t talk to any media right now, because I don’t know anything about this and I’ve got to do some research on it,” Colonel Hirtle said when reached by phone in California, before abruptly hanging up.

The next day, Colonel Hirtle said he had been “taken aback” by questions about an investigation involving himself. “I try to keep things as transparent and aboveboard as I can,” he said, referring questions to an Air Force public affairs office.

The Air Force referred questions to the United States Army Criminal Investigation Command, where a spokesman, Christopher Grey, said the command “does not discuss or confirm the names of persons who may or may not be under investigation.”

An extraordinary element of the current investigation is a voice from beyond the grave: that of Mr. Stoffel, who died with a British associate, Joseph J. Wemple, in a burst of automatic gunfire on a dangerous highway north of Baghdad in December 2004 as he returned from a business meeting at a nearby military base.

A previously unknown Iraqi group claimed responsibility for the killings, which remain unsolved. The men may simply have been unlucky enough to be engulfed in the violence that was then just beginning to grip the country.

On May 20, 2004, a little more than a week after Colonel Hirtle signed the Lee company’s warehouse contract, Mr. Stoffel was granted limited immunity by the Special Inspector General for what amounted to a whistle-blower’s complaint. Copies of the immunity document were obtained from two former business associates of Mr. Stoffel.

The picture of corruption Mr. Stoffel painted, including the clandestine delivery of bribes, was “like a classic New York scenario,” said a former business associate.

“Fifty thousand dollars delivered in pizza boxes to secure contracts,” said the former associate, a consultant in the arms business with whom Mr. Stoffel sometimes worked in the former Eastern bloc. “Of course, it just looked like a pizza delivery.”

It was Mr. Stoffel’s experience with Eastern bloc weaponry that helped him win a contract to refurbish Iraq’s Soviet-era tanks as part of a program to rebuild Iraq’s armed forces. Mr. Stoffel’s company remains locked in a dispute over payments it says are owed by the Iraqi government.

His problems with American officials were what led him to make the accusations of corruption. Mr. Stoffel, the associate said, “was trying to do this as quietly as possible, to blow the whistle.”

“He knew enough about what was going on, and he was getting pretty frustrated.”
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