Sitting atop shifting sands, the Mosul Dam in western Iraq is precariously vulnerable to cavities that regularly form beneath it. If the holes grow large enough, they can threaten the dam’s structure, so engineers pump grout to fill them. After the 2003 US invasion, the Americans spent $27 million hoping to improve the situation. But when inspectors visited the site in 2007, they found $19.4 million worth of equipment and materials sitting idle: the money had been wasted.
See also: Interactive guide to US reconstruction funds in Iraq
| Five ways to waste funds
1. Over-charging In September 2007, Anham, LLC was awarded a $300 million contract to operate and maintain two warehouse and distribution facilities. What SIGIR found Over 40 percent of costs were unreliable, with Anham subcontractor guilty of “egregious” overbilling, including a bill of $900 for a switch valued at $7.05.
2. Unwanted buildings In May 2004, American-led forces awarded an $80 million contract to build the Khan Bani Sa’ad Prison. What SIGIR found The Iraqi authorities had not wanted the prison and when visited in June 2008 parts of it were labeled for demolition.
3. Constructing mayhem Around $8.6 million in construction contracts was awarded to companies led by Philip Bloom by head of the coalition forces in Hilla district, Robert Stein. What SIGIR found There was considerable evidence of fraud and kickbacks and Stein and Bloom were both later jailed.
4. Ignoring advice After being bombed in 2003, Coalition forces aimed to rebuild the al-Fatah Bridge. What SIGIR found Despite geological surveys showing drilling in the sandy soil would not work, the recommendations were ignored. Over spent $75.7 million was spent without success. Eventually a new contract had to be drawn.
5. Dodgy soldiers Western military forces were directly involved in awarding contracts, often with the power to make decisions. What SIGIR found There was considerable evidence of fraud and corruption, with one of the most serious cases involving Army Major John Cockerham – who was later convicted of receiving more than $9 million in kickbacks. |
The dam was one of many projects where waste or corruption undermined development during the US occupation of Iraq. When you spend what adds to tens of billions of dollars unexpectedly and without a plan, there’s bound to be waste and corruption, according to Stuart Bowen.
Between the initial invasion in 2003 and September last year, the US alone spent at least $53.26 billion on reconstructing Iraq, on top of at least $19.8 billion of Iraqi money spent by the US. Bowen, head of the Office of the Special Inspector General for Iraq Reconstruction (SIGIR) since 2004, believes that much of that money was wasted due to a lack of planning. “The program was burdened by its ad hoc nature, that as a result of that ‘adhocracy’, the early years were wasteful and in a perpetual state of flux,” he tells Executive. SIGIR found that $11.7 billion in Iraqi funds spent by the US – more than half the total spent – were vulnerable to fraud, waste and abuse. Overall, the auditor estimates at least $8 billion in US and Iraqi funds were wasted.
SIGIR, set up by the US Congress in the wake of the invasion, had a broad remit: investigate fraud, waste and abuse for all US spending on rebuild Iraq. And after nearly a decade of work, the body released its final report this morning, providing a damning indictment of the US occupation.
Systematic failure
The report’s central conclusion is that the US had no system in place to effectively use the billions of dollars it was spending. A picture emerges of a chaotic revolving door of administrators, generals, ambassadors and other officials setting and changing policy rapidly, often not bothering to fully coordinate with each other or Iraqi officials.
Among the bodies making decisions were the Coalition Provisional Authority, the US Embassy, the US Agency for International Development, Multi-National Forces-Iraq, US Army Corps of Engineers and a litany of other smaller offices. The Departments of Justice, Homeland Security and Treasury, as well as other entities also figured into the flow of operations. The result, as US senator Claire McCaskill told SIGIR, was “a circular firing squad” which undermined reconstruction efforts.
From the Iraqi perspective, there was “an anger…that they weren’t properly consulted about what the rebuilding program should accomplish,” says Bowen. In an interview for the SIGIR report, Minister of Justice Hassan al-Shimari supports this point when he says “there was no real planning done, nor did they consult the Iraqis on what was really needed.”
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Bowen has led SIGIR since 2004
When Americans did coordinate, they lacked the capacity to reform a system built to address immediate needs instead of long-term interests. Bowen is careful not to blame administrators, but the lack of a pre-planned system: “The criticism is not of those who developed [the system]; the criticism is of a system that was not well-established beforehand to carry out such operations when they were assumed.”
Following two decades of wars and sanctions, the challenges to rebuilding were daunting. The Coalition Provisional Authority (CPA) that initially ruled Iraq aimed to create a free market democracy but made a series of devastating mistakes. In an act of blind overconfidence, the CPA exacerbated Iraq’s woes by ‘de-Baathifying’ state institutions – essentially gutting ministries and state-owned enterprises of experienced employees – and disbanding the army.
“When you fire the military without giving those in it a future, or fire the first four tiers of Baathist Party membership, they will have no interest in helping you reach your goals…. Such actions only give them incentives to oppose what we were trying to do,” David Petraeus, a former Commanding General of the multi-national force, told SIGIR.
The US spent the lion’s share of the reconstruction money between 2005 and 2009, peaking at more than $25 million per day on average in 2005. But as America gradually handed responsibility to Iraqi officials from 2009-2011, reconstruction firmly shifted to Iraqi hands, in terms of both funding and decision-making.
Universal truths
As the billions of American dollars fostered misuse and corruption, so apparently are the trillions of Iraqi dinars that today continue the reconstruction effort. Former Prime Minister Iyad Allawi told SIGIR that the failure to address corruption early on “was one of the United States’ biggest mistakes.” Prime Minister Nouri al-Maliki now calls it “a second insurgency.”
Bowen echoes these concerns. Corruption “is worse now,” he claims, stressing that all the Iraqi politicians he had spoken to agreed with this assessment. “Money laundering is draining the economy of its lifeblood.”
Last year a report by the Iraqi Board of Supreme Audit (BSA) claimed that the country’s central bank was complicit in laundering up to $800 million per week out of the country. Bowen notes that even if the sum is a fraction of that, it shows levels of endemic corruption.
Following the scandal the central bank governor was removed, with the head of the BSA, Abdul Basit Turki, named to replace him on an interim basis. Maliki’s critics see this ‘anti-corruption’ move as an excuse to centralize power in the prime minister’s office. Bowen, however, isn’t necessarily swayed by the political accusations. “I do have an opinion on [Basit’s] reliability, and it’s very high.”
Building transparency
SIGIR has investigated hundreds of cases, which had led to the conviction of 82 people thus far, and reclaimed nearly $200 million in American and Iraqi funds.
The issue of corruption, like the continuing work of reconstruction, is now in the hands of Iraqis. As SIGIR’s final report makes clear, the US reconstruction venture was plagued by poor planning and implementation. The record of American mistakes – and how to avoid them – may prove a useful but bittersweet consolation for Iraqi planners.
Bowen has some advice for the Iraqis as they seek to avoid repeating history. “Number one, enforce money laundering regulations, which have been largely unenforced for ten years. Number two, empower the inspectors general [or] develop a meaningful system of oversight that they’re willing to support and implement… Number three, reenergize the Commission of Integrity [which investigates corruption], which…has been eviscerated.“
