October 2, 2007

Dead Souls

Filed under: Politics — Tags: — duncan @ 7:37 pm

The strange ideological alignments of right and left. That so many small-government free-marketeers foresaw no problem establishing a democratic state from scratch, by force. That the so-called ‘paternalists’ demanded non-engagement; then withdrawal. I want to understand what’s going on here. But it’s hard to focus, when the hypocrisy is so blatant, and appalling.

It’s fun when Paul Wolfowitz, at the World Bank, imposes, by controversial personal fiat, a drive for democratic accountability. It’s fun when his campaign against corruption is derailed by the eye-watering pay-rise he gives his girlfriend. But Iraq has never been fun – even as the occupation moves ever closer to the perfect synthesis of tragedy and farce.

Roger Gathman, at Limited Inc, has started blogging on Iraq again, in the wake of the Blackwater shootings. It’s made me pay a little more attention. Even though I read the papers, read some books… even though I expect the worst… every new fact appals me. Here are some quotes from the recent Vanity Fair article by Donald Barlett and James Steele. We know the basic story; but the details shock afresh.

“Between April 2003 and June 2004, $12 billion in U.S. currency – much of it belonging to the Iraqi people – was shipped from the Federal Reserve to Baghdad, where it was dispensed by the Coalition Provisional Authority. Some of the cash went to pay for projects and keep ministries afloat, but, incredibly, at least $9 billion has gone missing, unaccounted for, in a frenzy of mismanagement and greed.”

“By all accounts, the New York Fed and the Treasury Department exercised strict surveillance and control over all of this money while it was on American soil. But… [w]hen the U.S. military delivered the cash to Baghdad, the money passed into the hands of an entirely new set of players – the staff of the American-led Coalition Provisional Authority.”

“The C.P.A. itself was a creature of the Pentagon, and it would be Pentagon personnel who did the C.P.A.’s hiring… Lawmakers had never discussed the establishment of the C.P.A., much less authorized it … Accountable really to no one, its finances ‘off the books’ for U.S. government purposes, the C.P.A. provided an unprecedented opportunity for fraud, waste, and corruption involving American contractors, renegade Iraqis, and many others. In its short life more than $23 billion would pass through its hands. And that didn’t include potentially billions more in oil shipments that C.P.A neglected to meter.”

“During the C.P.A.’s little more than a year of life, the New York Federal Reserve Bank made 21 shipments of currency to Iraq totalling $11,981,531,000. All told, the Fed would ship 281 million individual banknotes, in bricks weighing a total of 363 tons. After arriving in Baghdad, some of the cash was shipped to outlying regions, but most of it stayed in the capital, where it was delivered to Iraqi banks, to installations such as Camp Victory, the mammoth U.S. Army facility adjacent to Baghdad airport, and to Saddam’s former presidential palace, in the Green Zone, which had become the home of Bremer’s C.P.A. and the makeshift Iraqi government. At the palace the cash disappeared into a vault in the basement.”

“Even those who picked up large sums usually did not actually see the vault. Once a disbursement had been made, the cash was brought to an adjoining room for pickup… The table would be piled high with cash. An authorized officer would sign papers for the money, then begin carting it upstairs… Upon turning over the cash, the officer would be required to obtain a receipt – nothing more.”

“’Fraud’ was simply another word for ‘business as usual’. Of 8,206 ‘guards’ drawing paychecks courtesy of the C.P.A., only 602 warm bodies could in fact be found; the other 7,604 were ghost employees. Halliburton, the government contractor once headed by Vice President Dick Cheney, charged the C.P.A. for 42,000 daily meals for soldiers while in fact serving only 14,000 of them. Cash was handed out from the backs of pickup trucks.”

“The pervasiveness of this Why-should-I-care? attitude was driven home in an exchange with retired admiral David Oliver, the C.P.A.’s director of management and budget. Oliver was asked by a BBC reporter what had happened to all the cash airlifted into Baghdad:

Oliver: ‘I have no idea – I can’t tell you whether or not the money went to the right things or didn’t – nor do I actually think it’s important.’
Q: ‘Not important?’
Oliver: ‘No…’
Q: ‘… but the fact is that billions of dollars have disappeared without a trace.’
Oliver: ‘… yeah, I understand. I’m saying what difference does it make?”

That’s the budget director of the Coalition Provisional Authority speaking.

Meanwhile, Alan Greenspan has been in the news a lot these last few weeks; he’s been doing his book tour; his cabaret act; reprising his years as a jazz musician, touring the provinces, playing to the crowd. The big story: his book’s apparent claim that the war was really – all along! – about oil. In this three-way interview with Amy Goodman and Naomi Klein he clarifies his views. It wasn’t that we invaded Iraq to get its oil; it’s that we invaded Iraq to stop Saddam stopping us getting its oil. “Had he decided to shut down, say, seven million barrels a day, which he could have done if he controlled, he could have essentially also shut down a significant part of economic activity throughout the world.”

Klein: “I’m just wondering if it troubles Mr. Greenspan at all that wars over resources in other countries are actually illegal.”

Greenspan’s answer to that is pretty long. Check it out, at your leisure. For me, though, the most interesting section of the interview involves that same Barlett and Steele Vanity Fair article. Goodman briefly summarises the article’s contents – and asks Greenspan “when you were head of the Federal Reserve, how much knowledge did you have of this? Were you aware of this at the time?

Alan Greenspan: “Well, let me say that what we were involved in was essentially endeavouring to create a viable currency for the central bank of Iraq. And what we did do was – I think very successfully – create what is a viable financial system, even under the circumstances that currently exist. … The issue which you are referring to had nothing to do with the Federal Reserve in any of our relationships with the central bank.

Amy Goodman: Well, they are talking about, in one day, for example, the East Rutherford operation centre of the Federal Reserve Bank of New York… the vault had never before processed a single order of this magnitude: $2.4 billion in $100 bills… $9 billion of $12 billion gone missing in Iraq.

Alan Greenspan: I am not familiar with any such evidence… I, frankly, find it very unlikely that those orders of magnitude were involved… You have to make certain that – there’s been a lot of confusion about losses, and people have used the dinar, the basic currency unit of Iraq, and assumed they were American dollars. And, of course, that gives you a highly distorted view. There’s been, I’ve seen, several reports in which that sort of mistake was being made…

Amy Goodman: This is based on that award-winning article in Vanity Fair, or the team who have won –

Alan Greenspan: Let me put it this way, award winning doesn’t necessarily –

Amy Goodman: Well, no, no. I mean Don Barlett and Jim Steele, Pulitzer Prize-winning journalists. I’m sure you know their work…

Naomi Klein: … Paul Bremer had to testify before Congress and was asked directly about those missing billions. It’s been the subject of very high-level investigations. There is a huge paper trail around it. So this is hardly a secret, and it’s hardly just a matter that’s confined to Vanity Fair…

Alan Greenspan: Oh, I’m not saying that the losses are not real. I think they are, because, obviously, we can’t account for all the oil revenues. I’m just merely saying it’s not something which was directly related to any of the actions which the Federal Reserve Bank of New York, to which we were referring, was involved, as far as I know.”

Except, of course, that the missing $9 billion came from the Federal Reserve Bank of New York.

In August The Economist – remorseless its defence of the war – published a short article about fraudulent Pentagon contracts. “Everyone knows about the $400 hammer and the $600 lavatory seat, but these days defrauding the Pentagon is a seriously big business. Twin sisters from the town of Lexington, South Carolina, a few miles from the state capitol in Columbia, managed to swindle American’s Defence Department out of no less that $20.5m over the past nine years by using an automated payment system intended to cut red tape and speed up shipments to troops.” It turns out that “[i]f your scam is brazen enough you can still hoodwink the Pentagon – for a while.”

What so great about this piece is the way it brings fraudulent Pentagon contracts centre stage – while presenting the Pentagon as a victim. The possibility of systemic, pervasive fraud in the operation of American defence policy? Don’t be silly. As The Economist says, its easy to get away with a scam, provided its blatant enough.

Barlett and Steele again: “In one of his last official acts before leaving Baghdad, Bremer issued an order – prepared by the Pentagon, he says – declaring that all coalition-force members ‘shall be immune from any form of arrest or detention other than by persons acting on behalf of their Sending States.’” Similarly, “‘contractors shall be immune from Iraqi legal process with respect to acts performed by them pursuant to the terms and conditions of a Contract or any sub-contract thereto.’” These are the laws currently protecting Blackwater contractors. But let’s end by returning to the financial. One of the most extraordinary aspects of that Barlett and Steele article is their investigation into the agency charged with monitoring the distribution of the money transported to Iraq.

“Under the terms of C.P.A. Regulation No. 2, signed by Bremer on June 15, 2003, money coming into Iraq was supposed to be tracked by an ‘independent certified public accounting firm.’” The firm the C.P.A. appointed, in a $1.4m contract, was called NorthStar Consultants. NorthStar is run from a two-story house in La Jolla California; its owners, Thomas A. and Konsuelo Howell, are not certified public accountants; nor are any of their employees. The company was incorporated in the Bahamas, and operates as an ‘International Business Company’, without public financial statements. Its legal home is a P.O. Box in Nassau, which it shares with the notorious mutual fund Evergreen. “When a request was made to the U.S. government for a copy of [NorthStar’s] contract, officials at the Pentagon, which has oversight, dragged their feet for weeks. The document they eventually supplied had been strategically redacted. Nearly all the information about the contractor had been blacked out, including the name and title of the company officer who had executed the contract, the name of the person to call for information about the company, the last four digits of the company’s phone number, and the name of the U.S.-government official who had awarded the contract in the first place.”

A double theft: the looting of Iraq; and the looting of the American public. As Iraq is razed to the ground, and the U.S. spirals ever further into debt, a group of lucky businessmen, politicians and mercenaries grow rich beyond their wildest dreams. These years will live in infamy forever.

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