When President Bush announced �Mission Accomplished,� and the end of
the war in May 2003, he also said we would help the citizens of Iraq rebuild
their country. �Now that the dictator�s gone,� he stated, �we and our coalition
partners are helping Iraqis to lay the foundations of a free economy.�
Apparently he was referring to the Coalition Provisional Authority
(CPA) that took up residence in Saddam�s luxurious palace in May 2003, with the
newly appointed king, Paul Bremer. The CPA was granted the authority to award
reconstruction contracts in Iraq and it used that authority to implement what
will go down in the history books as the most blatant war profiteering scheme
of all time.
In large part, the masterminds of the reconstruction disaster that
would occur after the CPA took over Iraq were Secretary of Defense Donald
Rumsfeld and Undersecretary of Defense Douglas Feith.
But to ensure control of the contracting process on the ground in Iraq,
Bush filled the top slots of the CPA with administration cronies. For instance,
a friend of Dick Cheney�s, Peter McPherson, took a leave of absence as
president of Michigan State University to serve as Bremer�s economic deputy.
The leader of the CPA�s private development sector was Thomas Foley, an
old college classmate of Bush, who served as finance chairman for his
presidential campaign in Connecticut and also raised more than $100,000 for
Relatives of administration officials were also given jobs, such as Ari
Fleischer�s brother Michael, and Simone Ledeen, the daughter of Michael Ledeen.
Cheney�s daughter Liz, also did a short stint. However, it should be noted that
none of them lounged around for too long in what soon became a hellhole in
On May 16, 2003, the CPA issued its first regulation and described its
authority in no uncertain terms stating, �The CPA is vested with all executive,
legislative, and judicial authority necessary to achieve its objectives, to be
exercised under relevant U.N. Security Council resolutions, including
resolution 1483 (2003), and the laws and usages of war. This authority
shall be exercised by the CPA Administrator.�
With one swipe of the pen, Bremer granted himself the authority to run
the government ministries, appoint Iraqi officials and award contracts for
reconstruction. Next he fired 500,000 Iraqis, most of them soldiers, but
pink slips also went out to many doctors, nurses, teachers and other public
employees as well.
For the most part, the CPA financed its activities with billions of
dollars that belonged to the Iraqis. On May 22, 2003, a UN Security Council
resolution directed the proceeds from Iraqi oil to be placed in a development
fund, and the CPA was granted authority to control the fund and decide which
profiteers would get contracts.
During the year that Bremer controlled the purse strings, the Iraqi
Development Fund received $20.2 billion, including $8.1 billion from the UN�s
oil-for-food program, $10.8 billion from Iraqi oil, and the rest from
repatriated funds, vested assets and donations.
The CPA accounting system was cash and carry and a steady stream of
cash was flown into Bagdad from the US. Inspector General, Stuart Bowen later said
that he knew of one $2 billion flight.
A report released by the House Government Reform Committee in February
2007 shows that in the 13 months that Bremer ruled, from May 2003 to June 2004,
the Federal Reserve Bank in New York shipped nearly $12 billion in cash to
One can only imagine the bank service charges associated with these
shipments because to accomplish this feat, according to the Democratic chairman
of the Reform Committee, Henry Waxman, the cash weighed 363 tons and the bank
had to count and pack 281 million individual bills, including more than 107
million $100 bills, and then load them onto wooden pallets to be shipped to
Bagdad on C-130 cargo planes.
Inspector Bowen later said that he
determined that some of this cash went to pay salaries for thousands of �ghost
employees� and Iraqi civil servants who did not exist.
Within a few months of the CPA�s arrival in Iraq, reports of corruption
in the contracting process began appearing in the media. A British
adviser to the Iraqi Governing Council told the BBC that officials in the CPA
were demanding bribes of up to $300,000 in return for contracts.
Reports of flat out-fraud remained steady throughout Bremer�s reign in
Iraq. One audit showed that the CPA Ministry of Finance could not provide
documentation for about $17 million spent on employee salaries in February
2004, and a CPA advisor to the Ministry of the Interior said the ministry was
paid for 8,602 guards but only 602 could be verified.
A CPA advisor to the Ministry of Finance was so concerned about payroll
corruption that he submitted a formal complaint that stated in part: �Of the
1.6 million government employees currently on payroll, credible estimates put
the number of ghost workers at somewhere between 250,000-300,000 employees.�
An October 2004 audit performed for the International Advisory and
Monitoring Board, created by the UN to monitor the spending of Iraqi money,
found one case where a payment of $2.6 million was authorized by a CPA senior
adviser to the Ministry of Oil, and auditors were unable to obtain an
underlying contract or any evidence that the services had been rendered.
The auditors in this group found 37 cases where files could not be
located for contracts worth $185 million. In another 52 cases, a total of $87.9
million had been paid, but there were no records that goods had been received.
People on the ground in Iraq said that doing business with the CPA was
reminiscent of the Wild West. Former CPA employees told a congressional
committee that sacksful of cash were tossed around like footballs. Franklin
Willis, showed pictures of himself and others holding up bundles of $100 notes
totaling $2 million, which he said was used to pay the contractor, Custer
Battles. �We told them to come in and bring a bag,� Willis said.
He also testified that millions of dollars in $100 bills were stored in
the basement of the CPA offices and distributed to favored contractors with
little accounting discipline. For instance, in the year that the CPA ruled,
Custer was awarded contracts worth more than $100 million.
Two former Custer employees ended up filing a lawsuit under the Federal
False Claims Act, saying Custer had swindled $50 million from the CPA with
scams like double-billing for salaries and repainting the forklifts found at
the Baghdad airport and then leasing them back to the US government.
The employees said the CPA paid Custer $15 million to provide security
for Iraq�s civilian airline, when no services were needed because the airline
was grounded during the time covered by the contract.
These employees said they kept informing the CPA about Custer�s
fraudulent conduct for more than a year and when they asked why the firm
continued to get contracts, they were told: �Battles is very active in the
Republican party, and speaks to individuals he knows in the White House almost
In June 2004, the Government Accounting Office estimated that more than
$1 billion had been wasted due to illegal overcharges by contractors since the
war began. A later audit by the Iraqi government found that as much as $1.27
billion was lost to accounting irregularities between June 2004 and February
In a November 3, 2005, interview on National Public Radio, Inspector
Bowen cited two examples of poor oversight where $28 million was paid to build
five power plants and $1.8 million was paid to rebuild a library, but the work
was never performed and the money �simply disappeared,� he said.
A recent report by Bowen says DynCorp was paid $43.8 million for a
residential camp for police training personnel, but it has been empty for
months and the company may also have billed $18 million in other unjustified
About $4.2 million, he says, was improperly spent on 20 VIP trailers
and an Olympic-size pool and an additional $36.4 million in spending for
weapons such as armored vehicles, body armor and communications equipment that
cannot be accounted for.
Not surprisingly, Cheney�s Halliburton remained
the top profiteer under Bremer�s rule. A July 23, 2004, audit conducted by
Bowen, showed the company had received 60 percent of all contracts paid for
with Iraq money, including five no-bid contracts worth $222 million, $325
million, $180 million, and $194 million for the last two. In
comparison, the audit showed that the CPA awarded only 2 percent of the
reconstruction contracts to Iraqi companies.
In one example of blatant fraud, an audit found that Halliburton was
charging for more than 41,000 meals a day for soldiers when only about 14,000
By the fall of 2003, the country was realizing that the rationale for
war was based on lies and that the only ones drawing any benefits were the
profiteers. So when Bush asked Congress for another $20 billion for the CPA,
Bremer was summoned to Washington to explain where all the money was going and
of course he testified in full stonewall mode.
Before the Senate Appropriations Committee on September 22, 2003,
Bremer said the CPA had detailed records that could be audited by
Congress. But when he testified before the House Armed Services Committee
three days later he said the Office of Management and Budget was responsible
for maintaining the CPA records and that Congress would have to go to the White
House to access the records.
That arrogant assertion went over like a lead balloon with many members
of Congress. Senator Robert Byrd said he was outraged over the inability to
monitor CPA spending. �There is no reason why any arm of the executive branch
charged with making such significant spending decisions,� he said, �should not
be working directly with Congress.�
�When we�re talking about handing over another $20 billion to the CPA,�
he said, �there is a real need for Congress to confirm that the CPA has its
finances in order and that it is managing the taxpayer�s money responsibly.�
�We don�t even know how much of the $20 billion,� Byrd said, �will flow
to government contractors in Iraq.�
�Whatever the amount is,� he noted, �we know that the size and scope of
the profits being made will be enormous.�
�Former Bush Administration officials,� he warned fellow senators, �are
even setting up consulting firms to act as middlemen for contractors hoping to
take part in the bonanza.�
�Are we turning the U.S. Treasury into a grab bag for favorite campaign
contributors to be financed at taxpayer expense?� he asked.
The answer was yes, and what a grab bag it was. Media reports revealed
that Bush�s ex-campaign manager and Feith�s former law partner had set up
consulting firms to profit from the war by lining up contracts for clients
through their partners in crime within the CPA.
Other reports revealed that contracts worth $407 million were awarded
to a firm called Nour that was formed less than two months after the war began.
The names linked to the profits from Nour, among many others, included former
Secretary of Defense William Cohen, Ahmad Chalabi, via a $2 million kickback;
his nephew Salam Chalabi as the attorney handling the deal, and the money trail
even led to the First Brothers, Marvin and Jeb Bush.
But Doug Feith the ringleader on the ground in Washington, had awarded
a batch of no-bid contracts to a favored company the month before the war
began, for the purpose of controlling the media in post-war Iraq.
In October 2003, the Center for Public Integrity obtained copies of
seven contracts awarded to the San Diego-based Science Applications. The total
value of the contracts was redacted but the Center was able to determine that
they were all awarded in February 2003, and called for the work to be directed
However, the center�s most stunning discovery was that when the
contracts were awarded, Feith�s top deputy at the time, Christopher �Ryan�
Henry, had been a senior vice president at SAIC until October 2002.
In addition, one of SAIC�s board members was Army General, Wayne Downing,
who ran counterterrorism in the Bush administration for almost a year after
9/11, and had even gone to the CIA with Cheney to discuss intelligence on Iraq.
Downing had also served as an advisor to Ahmed Chalabi and the Iraqi National
Congress, and was a well-known advocate for a war against Saddam.
Some of the SAIC
contracts required that specific persons referred to as �executive management
consultants� be hired and the pay range listed went as high as $209 and $273
per hour. The center said congressional sources estimated the value of the
media contract as $38 million for the first year and as high $90 million in
SAIC had no special expertise to justify receiving these contracts. One
company executive, quoted in the media, said the firm�s only credential for
setting up an independent media, supposedly modeled after the BBC, was military
work in �informational warfare�-signal jamming, �perception management,� and
Under these contracts, the Iraq Media Network (IMN) was established and
journalist Mark North, who covered the Iraq invasion for National Public Radio,
was hired to train Iraqi journalists to report for the IMN.
In one of the many congressional hearings, North testified about the
control of the IMN by the CPA and said CPA officials regularly directed and
censored the activities of the news station and provided �a laundry list of CPA
activities� to cover instead of stories about security or the lack of
electricity and jobs
While testifying, he also described the CPA�s shabby treatment of Iraqi
employees and its refusal to pay their wages. �For the first two months,� North
said, �the local staff of about 200 journalists and technicians were not paid
When the staffers went on strike in attempt to get paid, he said, the
CPA told the Iraqis to get back to work or the US Army would remove them from
The CPA had control of Iraqi money for one year
between June 2003 and June 2004, but unfortunately no auditors arrived to take
a look at the agency�s spending until April 2004, two months before the CPA�s
rule was scheduled to end.
And as so often happens when it comes to giving
solid advice or warnings, the senior senator from Virginia was absolutely
right. It was far too late for audits, because the CPA and its gang of
profiteers had already robbed the Iraqis blind.
The favored companies enjoyed a free-for-all. For instance, Halliburton
said it had lost over $60 million worth of government property including
trucks, office furniture and computers. Inspector Bowen reported that 6,975
items valued at $61.1 million were lost, and, in June 2005, the Defense
Contract Audit Agency reported that the Halliburton had overcharged or
presented questionable bills for close to $1.5 billion.
In the end, Bowen�s audit concluded that �the CPA�s internal controls
for approximately $8.8 billion in DFI funds disbursed to Iraqi ministries
through the national budget process failed to provide sufficient accountability
for the use of those funds.�
As of February 2007, according to Bowen, audits of the CPA have
resulted in 300 criminal and civil investigations, five arrests and
convictions, and another 23 cases are currently under prosecution at the DOJ,
and he is working on 76 on-going investigations.
One of the convictions involved Robert Stein, a former CPA comptroller
and funding officer, who recently pleaded guilty to five felony counts,
including conspiracy, money laundering, and bribery for stealing more than $2
million of reconstruction funds and taking more than $1 million in kickbacks to
rig the bids on contracts that exceeded $8 million.
The whistleblower case against Custer Battle went to trial and a jury
found that Custer had committed 37 acts of fraud and filed $3 million in false
claims. It rendered a verdict with a $10 million penalty. However, the verdict
was overturned by Republican appointed US District Court Judge TS Ellis III,
who ruled that the CPA was not a US entity and therefore the false claims act
does not apply to it.
In the ruling, the judge said Custer�s accusers �failed to prove that
the U.S. government was ever defrauded. Any fraud that occurred was perpetrated
instead against the Coalition Provisional Authority, formed to run Iraq until a
government was established.�
Legal experts say this ruling is great news for the CPA and contractors
because from now on anyone charged with any act of fraud related to the Iraqi
money doled out by the CPA in Bagdad will use it in attempt to avoid civil or
Evelyn Pringle is a columnist for OpEd
News and an investigative journalist focusing on exposing corruption in
government and corporate America.. She can be reached at: firstname.lastname@example.org.