Iraq Funds Are Focus of 27 Criminal Inquiries
By T. Christian Miller
Times Staff Writer

July 30, 2004
WASHINGTON — A comprehensive examination of the U.S.-led agency that oversaw the rebuilding of Iraq has triggered at least 27 criminal investigations and produced evidence of millions of dollars' worth of fraud, waste and abuse, according to a report by the Coalition Provisional Authority's inspector general.

The report is the most sweeping indication yet that some U.S. officials and private contractors repeatedly violated the law in the free-wheeling atmosphere that pervaded the multibillion-dollar effort to rebuild the war-torn country.

More than $600 million in cash from Iraqi oil money was spent with insufficient controls. Senior U.S. officials manipulated or misspent contract money. Millions of dollars' worth of equipment could not be located, the report said.

\"We found problems in the CPA's financial management, procurement practices and operational controls,\" Stuart W. Bowen Jr., the inspector general, wrote in the report. \"These results are not surprising: The CPA faced a variety of daunting challenges, including extremely hazardous working conditions.\"

The report raises anew questions surrounding the occupation government under Ambassador L. Paul Bremer III, who turned over control in June to an interim Iraqi government.

The coalition's failures continue to haunt the country today as Iraqis struggle with security issues and infrastructure problems with electricity, transportation and water.

The Times has reported on several cases in which a small circle of former Republican administration officials had drawn scrutiny for their actions in Iraq, including a deputy undersecretary of Defense under investigation by the FBI in connection with a telecommunications contract. In another case, officials have said, a former senior U.S. advisor conducted negotiations with a family connected to Saddam Hussein to form a new Iraqi airline.

Conference Postponed Amid Fraud Allegations

The gathering to choose an interim national assembly is delayed for two weeks. Three sons of a provincial governor are kidnapped.
By Alissa J. Rubin and Raheem Salman
Special to The Times

July 30, 2004
RAMADI, Iraq — The conference of top civic and tribal leaders to pick a national assembly was postponed Thursday amid allegations of fraud and corruption.
The announcement of the delay came as violence and kidnappings by insurgents seeking to undermine the U.S. presence and the new Iraqi government continued, especially in Ramadi, where three sons of the governor of Al Anbar province were seized. On Wednesday, at least 68 Iraqis died in the deadliest car bombing since Iraq gained sovereignty last month.
\"These are forces of evil who are acting against us,\" interim Iraqi Prime Minister Iyad Allawi said on a visit to Saudi Arabia, where he called for a force from other Muslim countries to help bring security to Iraq. \"We are going to suffer casualties — we are suffering casualties. We are going to — and we have to — end their terrorism route,\" he said at a news conference with U.S. Secretary of State Colin L. Powell. The response from the Islamic world to the request for troops has been lukewarm.

Early today, Powell made an unannounced trip to Baghdad where he was expected to hold talks with senior Iraqi officials, Associated Press reported. Powell is the highest ranking U.S. official to visit Iraq since the interim government took power June 28.
Under pressure from the United Nations, organizers of the conference to select Iraq's interim national assembly said they were reluctantly postponing the event, set to begin Saturday, for two weeks. There have been allegations of fraud and violence at regional caucuses to select the 1,000 delegates.

The national conference is a key element of a plan devised by the U.S.-led Coalition Provisional Authority to move Iraq toward free elections and a permanent constitution by next year. The interim assembly will have the power to approve the 2005 budget and overturn laws.

fantomas
The interim assembly will have the power to approve the 2005 budget and overturn laws.

twin58:
I'll be darned. That's exactly what the party in the majority does here.

Halliburton Co. and other U.S. contractors are being paid at least $1.9 billion from Iraqi funds under an arrangement set by the U.S.-led occupation authority, according to a review of documents and interviews with government agencies, companies and auditors.

Most of the money is for two controversial deals that originally had been financed with money approved by the U.S. Congress, but later shifted to Iraqi funds that were governed by fewer restrictions and less rigorous oversight.

For the first 14 months of the occupation, officials of the Coalition Provisional Authority provided little detailed information about the Iraqi money, from oil sales and other sources, that it spent on reconstruction contracts. They have said that it was used for the benefit of the Iraqi people and that most of the contracts paid from Iraqi money went to Iraqi companies. But the CPA never released information about specific contracts and the identities of companies that won them, citing security concerns, so it has been impossible to know whether these promises were kept.

The CPA has said it has awarded about 2,000 contracts with Iraqi money. Its inspector general compiled records for the major contracts, which it defined as those worth $5 million or more each. Analysis of those and other records shows that 19 of 37 major contracts funded by Iraqi money went to U.S. companies and at least 85 percent of the total $2.26 billion was obligated to U.S. companies. The contracts that went to U.S. firms may be worth several hundred million more once the work is completed.

That analysis and several audit reports released in recent weeks shed new light on how the occupation authority handled the Iraqi money it controlled. They show that the CPA at times violated its own rules, authorizing Iraqi money when it didn't have a quorum or proper Iraqi representation at meetings, and kept such sloppy records that the paperwork for several major contracts could not be found. During the first half of the occupation, the CPA depended heavily on no-bid contracts that were questioned by auditors. And the occupation's shifting of projects that were publicly announced to be financed by U.S. money to Iraqi money prompted the Iraqi finance minister to complain that the \"ad hoc\" process put the CPA in danger of losing the trust of the people.

Kellogg Brown & Root Inc., a subsidiary of Halliburton, was paid $1.66 billion from the Iraqi money, primarily to cover the cost of importing fuel from Kuwait. The job was tacked on to a no-bid contract that was the subject of several investigations after allegations surfaced that a subcontractor for Houston-based KBR overcharged by as much as $61 million for the fuel.