Deep Blade Journal

A few weeks ago, alarming stories appeared concerning corruption in the UN Oil-for-Food Program. (That link may not persist, so also check this story.) The Oil-for-Food program sought to alleviate the effects on the population of economic sanctions against the Saddam Hussein regime in Iraq.

The jist of the story is that Saddam Hussein’s government pilfered $10 billion in revenues from the Oil-for-Food program, $4 billion more than previously thought.

Yesterday, Joy Gordon, a scholar who has done extensive study of the 1991-2003 Iraq sanctions regime, had in USA Today an oped [UPDATED LINK, 5/13/04] defending UN operation of Oil-for-Food.

While Deep Blade has no reason to doubt that Saddam Hussein skimmed money on certain oil sales, there is reason to be suspicious of the great emphasis on recent media reports on Oil-for-Food diversions.

The Deep Blade suspicion is that Ahmed Chalabi, who has been given access to a treasure trove of Saddam’s secret files, is up to his old tricks. He seeks to keep the media eye on a dancing ball of Saddam/UN malfeasance, relevant or irrelevant, while parlaying this information to get himself in a position of political control after the US sovereignty handover on July 1. And as that Guardian story on sovereignty from a week ago clearly indicates, the United States will handpick a prime minister for Iraq.

Gordon compares the UN era with the current Iraq contracting story and expands on Chalabi’s role in today’s oped: “Though the U.N. is not yet involved in rebuilding Iraq, the U.S. is. But is its track record so much better? Have we forgotten that massive no-bid contracts were handed out to U.S. corporations such as Bechtel and Halliburton? Or that Ahmed Chalabi, the Iraqi Governing Council member leading the investigation into the oil-for-food charges, fled embezzlement charges in Jordan? The U.N. is the better choice for nation-building with integrity and competence”.

In other words, Gordon points out that Chalabi is a crook. How better for a crook to do his work than to keep everyone’s attention elsewhere? Is that what’s happening?

Current oil fund and contracting corruption
Talk of corruption in the Saddam-era Oil-for-Food program created a storm. So it’s interesting to note how reports of current corruption in the Development Fund for Iraq (DFI) (from Christian Aid and Iraq Revenue Watch) a few months ago produced only a small spurt of media interest.

The DFI is the successor of the Oil-for-Food program and is the conduit set up to hold oil revenue for the Iraqi people. The issues then were lack of oversight of how the US-controlled Coalitional Provisional Authority manages the DFI. Unaccountable expenditures totaling billions of dollars were involved.

More recently, the issues seem to be the same. On March 31, the Washington Post reported that, “The new inspector general of the U.S.-led interim authority in Iraq [told Congress] yesterday that though he is just beginning his own audits of reconstruction spending, he is concerned about the oversight of spending and control of cash….

“… Iraqi money, from cash seized from Saddam Hussein’s allies and the country’s oil revenue, has had little oversight until now. That, in part, is because the interim authority is not a federal agency and therefore not subject to the same controls as the Defense Department and U.S. Agency for International Development, which are awarding taxpayer-funded contracts”.

Security concerns seem to be a significant cost driver as private armies of guard personnel are needed to protect rapidly expanding US private interests in Iraq.

A story that appeared in the Financial Times on March 30 also describes the problem directly: “As Congress and Pentagon investigators delve into the often opaque contracting process, they are revealing a scarcity of auditors supervising the private companies retained to carry out vast projects such as restoring Iraq’s oil sector or rehabilitating its schools.

“The latest indication comes in a report last week from the Pentagon’s inspector-general, which found there was “little or no government surveillance” on 13 of 24 rebuilding contracts awarded at the outset of the war and that contacting officers failed to support price estimates on nearly all those assignments”.

Meanwhile, the Financial Times reports that, “From 1990 to 1999, for example, the defence department’s accounting and budget personnel fell from 17,504 to 6,432. During the same time, the ranks of the defence contract audit agency, the Pentagon’s auditing branch, fell from 7,030 to 3,958″.

The personnel needed to watch what is going on with these “cost-plus” contracts simply aren’t there.