The following is an archived copy of a message sent to the CASI Analysis List run by Cambridge Solidarity with Iraq.

Views expressed in this archived message are those of the author, not of Cambridge Solidarity with Iraq (CASI).

[Main archive index/search] [List information] [CASI Homepage]

[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

[casi-analysis] Corruption in Iraq under US-led CPA may dwarf UN oil-for-food scandal

[ This message has been sent to you via the CASI-analysis mailing list ]

Corruption in Iraq under US-led CPA may dwarf UN oil-for-food scandal
By: Tom Regan on: 08.04.2005
Iraq is becoming 'free fraud' zone

A former senior advisor to the US-led Coalition Provisional Authority
(CPA), which ran Iraq until the election of an interim Iraq
government last January, says that the US government's refusal to
prosecute US firms accused of corruption in Iraq is turning the
country into a "free fraud zone."

Newsweek reported earlier this week that Frank Willis compared Iraq
to the "wild west," and that with only $4.1 billion of the $18.7
billion that the US government set aside for the reconstruction of
Iraq having been spent, the lack of action on the part of the
government means "the corruption will only get worse."

More than US money is at stake. The administration has harshly
criticized the United Nations over hundreds of millions stolen from
the Oil-for-Food Program under Saddam Hussein. But the successor to
Oil-for-Food created under the occupation, called the Development
Fund for Iraq, could involve billions of potentially misused dollars.

In late March, the New Standard reported, the annual Global
Corruption Report issued by the "corruption watchdog," Transparency
International (TI), heavily criticized the US for "mismanaging"
Iraq's oil revenues and "for using faulty procedures for awarding
reconstruction contracts."

The report also criticizes efforts to rapidly privatize Iraqi assets
and industries as a means of reducing the country’s debt. TI warns
that unless immediate corrective measures are taken, Iraq’s
reconstruction could become 'the biggest corruption scandal in
The BBC reported that a UN report that came out in January also
criticized the US as being a "poor role model" in "keeping corruption
at bay."
The Christian Science Monitor reported on other allegations of
corrpution in Iraq leveled against companies, including a "report by
special inspector Stuart Bowen which found that $8.8 billion dollars
had been disbursed from Iraqi oil revenue by US administrators to
Iraqi ministries without proper accounting."

Meanwhile the Washington Post reported recently that both the Clinton
and George W. Bush administrations had long known that monies used in
the in the UN oil-for-food program were lining the pockets of Saddam
Hussein, and did little to stop it.

CNN reported in February that "unclassified State Department
documents sent to congressional committees with oversight of US
foreign policy" show that the US actually condoned Jordan and Turkey
breaking the UN sanctions against Iraq.

Rep. Robert Menendez, a New Jersey Democrat on the House
International Relations Committee, one of five panels probing the oil-
for-food program, told CNN the United States was 'complicit in
undermining' the UN sanctions on Iraq.
'How is it that you stand on a moral footing to go after the UN when
they're responsible for 15 percent maybe of the ill-gotten gains, and
we were part and complicit of him getting 85 percent of the money?"
Menendez asked.

One of the corruption cases that has drawn the most attention has
been the attempts by two former employees of Custer Battles, a
"private security company that was one of the highest-profile firms
operating in Iraq" to sue the company on behalf of the US government.
The whistler-blowers allege that the company and founders Mike
Battles and Scott Custer, set up "shell companies in the Cayman
Islands to falsely bill the government on two Iraq contracts."
The Washington Post reported last Friday that the Justice Department
gave "strong support" to the men suing the company, "concluding that
the company can be held liable for allegedly defrauding authorities
in Iraq of tens of millions of dollars." Twice before the US
governmment had declined to participate in the case when asked to do
so by lawyers for the plaintiffs.

The judge, however, had asked the Justice Department "Does federal
fraud law apply when the contract was administered by the Coalition
Provisional Authority, which governed Iraq for a year after the US

Newsweek reported that lawyers for Custer Battles, and until last
week, the Bush administration, had argued the CPA was an
"international authority" and thus US laws could not be used.

It the US government has argued privately that the occupation
government, known as the Coalition Provisional Authority, was a
multinational institution, not an arm of the US government. So the US
government was not technically defrauded. Lawyers for the whistle-
blowers point out, however, that President George W. Bush signed a
2003 law authorizing $18.7 billion to go to US authorities in Iraq,
including the CPA, 'as an entity of the United States government.'
And several contracts with Custer Battles refer to the other party as
'the United States of America.'
Max Boot, senior fellow at the Council on Foreign Relations, writes
in the Los Angeles Times, the heavy use of contractors by the Bush
administration not only lead to corruption problems, but is impeding
the US military's progress in Iraq.
Peter W. Singer, a fellow at the Brookings Institution and author of
'Corporate Warriors,' estimates that there are 20,000 to 30,000
civilians in Iraq performing traditional military functions, from
maintaining weapons systems to guarding supply convoys. If you add
foreigners involved in reconstruction and oil work, the total soars
to 50,000 to 75,000.
To put this into perspective: All of Washington's allies combined
account for 23,000 troops in Iraq. In the latest issue of Foreign
Affairs, Singer quips that "President George W. Bush's 'coalition of
the willing' might thus be more aptly described as the 'coalition of
the billing.' "

And the corruption problems go far beyond US contractors and other
international firms. Reuters reported in March that one of the
biggest problems facing the establishment of a legitimate government
in Iraq is the corruption rampant in many Iraq government
Radhi Hamza al-Radhi, head of the Commission on Public Integrity
(CPI), an agency set up by the CPA to fight fraud committed by
Iraqis, said that he faces many obstacles to fighting corruption in
Iraq, including pressure from government officials to not work so

Our work is new in Iraq and being an observer is not welcomed by
many. We were asked many times by the government via official letters
or phone calls not to speak to the media or not to speak to
ministers. There were too many cases of 'Don't...'.

Mark Parkinson

Sent via the CASI-analysis mailing list
To unsubscribe, visit
All postings are archived on CASI's website at

[Campaign Against Sanctions on Iraq Homepage]