KEY POINTS:
In what could turn out to be the greatest fraud in United States history, American authorities have started for the first time to investigate the alleged role of senior military officers in the misuse of US$125 billion ($240 billion) in an American-directed effort to reconstruct Iraq after the fall of Saddam Hussein.
The exact sum missing may never be clear but a report by the US Special Investigator for Iraq Reconstruction (SIGIR) suggests that it may exceed US$50 billion, making it an even bigger theft than the alleged Bernard Madoff Ponzi scheme.
"I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad," said a US businessman active in Iraq since 2003.
In one case, auditors working for SIGIR discovered that US$57.8 million was sent in "pallet upon pallet of hundred-dollar bills" to the US comptroller for south-central Iraq, Robert Stein, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.
Despite the vast sums expended on rebuilding by the US since 2003, there have been no cranes visible on the Baghdad skyline except those at work building a new US embassy and others rusting beside a half-built giant mosque which Saddam was constructing when he was overthrown.
One of the few visible signs of Government work on Baghdad's infrastructure is a tireless attention to planting palm trees and flowers in the centre strip between main roads. These are then dug up and replanted a few months later.
Iraqi leaders are convinced the theft or waste of huge sums of US and Iraqi Government money could have happened only if senior US officials were involved in the corruption.
In 2004-05, the entire Iraq military procurement budget of US$1.3 billion was siphoned off from the Iraqi Defence Ministry in return for 28-year-old Soviet helicopters too obsolete to fly and armoured cars easily penetrated by rifle bullets. Iraqi officials were blamed for the theft, but US military officials were largely in control of the Defence Ministry at the time and must have been either highly negligent or participants in the fraud.
American federal investigators are now starting an inquiry into the actions of senior US officers involved in the programme to rebuild Iraq, according to the New York Times.
Court records reveal that last month, investigators subpoenaed the bank records of Colonel Anthony B. Bell, now retired from the US Army, but previously responsible for contracting for the reconstruction effort in 2003 and 2004. Investigators are also said to be looking at the activities of Lieutenant-Colonel Ronald W. Hirtle of the US Air Force, senior contracting officer in Baghdad in 2004.
So far US officers who have been unmasked have mostly been involved in small-scale corruption.
The end of the Bush Administration which launched the war may give fresh impetus to inquiries into frauds in which tens of billions of dollars were spent on reconstruction with little being built that could be used.
As security deteriorated in Iraq from the summer of 2003 it was difficult to check if a contract had been completed. But the failure to provide electricity, water and sewage disposal during the US occupation was crucial in alienating Iraqis from the post-Saddam regime.
- INDEPENDENT
