A couple of billion here and a couple of billion there …
by digby
From the “we can’t afford to pay for schools and firefighters file”
A leaked Pentagon memo has revealed the cost of the U.S. military involvement in Libya is soaring and is set to soon exceed the Pentagon’s initial estimate of $750 million. In other Libya news, the U.S. Securities and Exchange Commission is examining whether Goldman Sachs and some other financial companies violated bribery laws in dealings with Libya’s sovereign-wealth fund.
But hey, that’s nothing! We spent trillions on Iraq and Afghanistan. This is a bargain. In fact, we spent so much that we can’t even account for many billions of dollars.
You all remember the missing billions in Iraq, right? I wrote about it a lot at the time it was revealed. This post from 2005 discussed it in detail and talked about why it happened:
Too bad we can’t lay our hands on the 8 Billion Dollars of the Iraqis own money that went missing under Paul Bremer’s Coalition provisional Government.
When Paul Bremer, the American pro consul in Baghdad until June last year, arrived in Iraq soon after the official end of hostilities, there was $6bn left over from the UN Oil for Food Programme, as well as sequestered and frozen assets, and at least $10bn from resumed Iraqi oil exports. Under Security Council Resolution 1483, passed on May 22 2003, all these funds were transferred into a new account held at the Federal Reserve Bank in New York, called the Development Fund for Iraq (DFI), and intended to be spent by the Coalition Provisional Authority (CPA) “in a transparent manner … for the benefit of the Iraqi people”.
The US Congress also voted to spend $18.4bn of US taxpayers’ money on the redevelopment of Iraq. By June 28 last year, however, when Bremer left Baghdad two days early to avoid possible attack on the way to the airport, his CPA had spent up to $20bn of Iraqi money, compared with $300m of US funds. The “reconstruction” of Iraq is the largest American-led occupation programme since the Marshall Plan – but the US government funded the Marshall Plan. Defence secretary Donald Rumsfeld and Paul Bremer have made sure that the reconstruction of Iraq is paid for by the “liberated” country, by the Iraqis themselves.
The CPA maintained one fund of nearly $600m cash for which there is no paperwork: $200m of it was kept in a room in one of Saddam’s former palaces. 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…
The auditors have so far referred more than a hundred contracts, involving billions of dollars paid to American personnel and corporations, for investigation and possible criminal prosecution. They have also discovered that $8.8bn that passed through the new Iraqi government ministries in Baghdad while Bremer was in charge is unaccounted for, with little prospect of finding out where it has gone. A further $3.4bn appropriated by Congress for Iraqi development has since been siphoned off to finance “security”.
[…]
Lack of accountability does not stop with the Americans. In January this year, the Sigir issued a report detailing evidence of fraud, corruption and waste by the Iraqi Interim Government when Bremer was in charge. They found that $8.8bn – the entire Iraqi Interim Government spending from October 2003 through June 2004 – was not properly accounted for. The Iraqi Office of Budget and Management at one point had only six staff, all of them inexperienced, and most of the ministries had no budget departments. Iraq’s newly appointed ministers and their senior officials were free to hand out hundreds of millions of dollars in cash as they pleased, while American “advisers” looked on.
“CPA personnel did not review and compare financial, budgetary and operational performance to planned or expected results,” the auditors explained. One ministry gave out $430m in contracts without its CPA advisers seeing any of the paperwork. Another claimed to be paying 8,206 guards, but only 602 could be found. There is simply no way of knowing how much of the $8.8bn has gone to pay for private militias and into private pockets.
“It’s remarkable that the inspector general’s office could have produced even a draft report with so many misconceptions and inaccuracies,” Bremer said in his reply to the Sigir report. “At liberation, the Iraqi economy was dead in the water. So CPA’s top priority was to get the economy going.”
The Sigir has responded by releasing another audit this April, an investigation into the way Bremer’s CPA managed cash payments from Iraqi funds in just one part of Iraq, the region around Hillah: “During the course of the audit, we identified deficiencies in the control of cash … of such magnitude as to require prompt attention. Those deficiencies were so significant that we were precluded from accomplishing our stated objectives.” They found that CPA headquarters in Baghdad “did not maintain full control and accountability for approximately $119.9m”, and that agents in the field “cannot properly account for or support over $96.6m in cash and receipts”. The agents were mostly Americans in Iraq on short-term contracts. One agent’s account balance was “overstated by $2,825,755, and the error went undetected”. Another agent was given $25m cash for which Bremer’s office “acknowledged not having any supporting documentation”. Of more than $23m given to another agent, there are only records for $6,306,836 paid to contractors.
Many of the American agents submitted their paperwork only hours before they headed to the airport. Two left Iraq without accounting for $750,000 each, which has never been found. CPA head office cleared several agents’ balances of between $250,000 and $12m without any receipts. One agent who did submit receipts, on being told that he still owed $1,878,870, turned up three days later with exactly that amount. The auditors thought that “this suggests that the agent had a reserve of cash”, pointing out that if his original figures had been correct, he would have accounted to the CPA for approximately $3.8m more than he had been given in the first place, which “suggests that the receipt documents provided to the DFI account manager were unreliable”.
The CPA was a very special boondoggle, if you’ll recall. It was an experiment in Republican Party governance. They refused to allow anyone on “the team” who didn’t pass the GOP litmus test. They would not hire experts nor would they allow foreign or domestic political actors who were not deemed sufficiently loyal to Bush to help with planning and implementation. So much so that they were finally reduced to hiring kids who had posted resumes on the Heritage Foundation web-site in order to ensure ideological purity. If I recall correctly, Ari Fleischer’s brother was put in charge of setting up the new Iraqi stock market despite the fact that he knew absolutely zero about stock markets. But he had the right contacts, that’s for sure.
And, let’s not forget that all this happened because we were in such a hurry to “disarm” Iraq that we couldn’t take even a minute to think through how we might re-start their economy and rebuild their infrastructure in a planned and rational way. We just invaded come hell or high water and then sent in a bunch of college Republicans with planeloads of cash. This is one of the aspects of the DSM’s that hasn’t yet been properly discussed. The minutes make clear that it wasn’t that our plans just didn’t forsee the particular problems we encountered. We didn’t plan for the post war period at all.
This is a huge story for someone to truly unravel although I think it will probably take a novelist or a filmmaker to do it justice. The grand Neocon experiment turns out to be a corrupt boondoggle of unprecedented, epic proportions. Perhaps that plot is just too predictable to sell… I can tell you one thing, though: I don’t want to hear one more goddamned self-righteous word from any Republican about the “Oil For Food” scandal. Not one.
The story was told in a great book called Imperial Life in the Emerald City
The LA Times reports today on the results of the latest audit. Guess what?
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 mystery is a growing embarrassment to the Pentagon, and an irritant to Washington’s relations with Baghdad. Iraqi officials are threatening to go to court to reclaim the money, which came from Iraqi oil sales, seized Iraqi assets and surplus funds from the United Nations’ oil-for-food program…
Pentagon officials have contended for the last six years that they could account for the money if given enough time to track down the records. But repeated attempts to find the documentation, or better yet the cash, were fruitless.
I suspect the Iraqis will be told to take a hike on their request for compensation. In fact, last week Congressman Dana Rohrabacher went even further than that:
Rep. Dana Rohrabacher spoke during a one-day visit by a group of six U.S. congressman. The California Republican said he raised the suggestion during a meeting with Prime Minister Nouri al-Maliki that some day when Iraq is a “prosperous” nation it pay back the U.S. for everything that it has done here.
“We would hope that some consideration be given to repaying the United States some of the megadollars we have spent here in the last eight years,” Rohrabacher told reporters at the U.S. Embassy after the meeting.
You can’t say he doesn’t have chutzpah.
By the way, he also expects the Libyans to ante up so that’s good.
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