[casi] Iraq Funding process has little openness

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Funding process has little openness, despite regulations
By Jackie Spinner and Ariana Eunjung Cha

Washington Post    http://msnbc.msn.com/id/3814159/
Updated: 8:34 a.m. ET Dec. 27, 2003
Iraqis spooked by rumors of a fuel shortage were hoarding the precious commodity, inadvertently 
causing exactly what they feared. Officials in charge of oil for the U.S.-led occupation government 
in Baghdad were worried that there would be riots if they didn't do something to improve the 
situation fast. And so on Nov. 29, they went to Saddam Hussein's former presidential palace and 
sought help.


By nightfall, they had received an emergency allotment of $425 million to import fuel from 
neighboring countries. Although it didn't solve what appears to be a chronic fuel shortage, it did 
help avert a crisis.

The spending was approved by the 11-member Program Review Board, a mini-Congress of sorts for the 
occupation government in its power to allocate money. The board -- comprising mostly Americans, 
Britons and Australians -- was appointed by L. Paul Bremer, the top administrator of the Coalition 
Provisional Authority. It uses Iraqi money that includes oil revenue and seized assets from the 
Hussein era to pay for projects not anticipated by the country's budget. So far the board has 
approved more than $4 billion in such spending.

During its twice-weekly afternoon meetings, the board has approved more than 500 projects, 
including $120 million for printing and distributing currency, $36 million for renovating police 
stations, $15 million for a national microcredit program and $4 million for creating a radio system 
for the railroad network. It also has signed off on scores of smaller projects, including $3,500 to 
start a Baghdad theater festival, $50,000 to pay two zookeepers and $79,245 to reestablish the 
Baghdad stock exchange.

As the skeleton of an Iraqi government has been formed, the board has begun to hand off more of the 
responsibility for handling specific projects to the ministries. But the board still handles the 
overall allocations

Of the billions of dollars appropriated or promised for the largest nation-building project since 
World War II, the Iraqi money doled out by Bremer and the Program Review Board is the least 
visible. Spending of the $18.6 billion the U.S. Congress approved this fall for Iraqi 
reconstruction will be overseen by an office run by a retired U.S. admiral. The $13 billion pledged 
from other countries will be monitored by an Iraqi-run oversight board.

Little information


Despite detailed regulations and pronouncements about "transparency," the Coalition Provisional 
Authority's process for spending Iraq's money has little of the openness, debate and paper trails 
that define such groups in democratic nations. Though the interim government has extensive 
information on its Web site, it doesn't include, for example, when contracts have been awarded. 
Citing security concerns, it also doesn't say what companies won them.

An international monitoring board, set up when the United Nations transferred money from the 
oil-for-food program to the occupation authority, is supposed to audit the Program Review Board's 
work. But its formation was delayed for months and it is still being organized. It held its second 
meeting Monday. U.S. Defense Secretary Donald H. Rumsfeld has yet to appoint an inspector general 
for the Coalition Provisional Authority, as Congress mandated.



The occupation authority's legal standing has led to some confusion. For example, the General 
Accounting Office, which reviews federal contract disputes, said that because the CPA isn't a 
federal agency it wasn't sure it had the authority to review a protest lodged by a company that 
lost a bid for a reconstruction contract. The Pentagon inspector general, looking at the same 
issue, dropped it for the same reason.

"Our allies clearly expect there to be transparency in the process," said Christopher R. Yukins, a 
contracting expert and associate professor of government contract law at George Washington 
University Law School.

Meetings of the review board aren't public and there are no transcripts. Abbreviated minutes of 
meetings since August have been posted on the Internet, but they do not include information on more 
than 200 projects approved from May to mid-August.

There's no description of the discussions leading to a decision. There's no explanation, for 
example, why the board decided to spend $35,000 to remove the four busts of Hussein's head at the 
presidential palace headquarters of the interim government or why it approved $194,370 for the 
Resalla High School but nothing for the Tigris Primary School next door or why it felt a $1.4 
million allocation to support women's centers would be beneficial to the Iraqi people.

Names kept secret


Some contracts, mostly small ones, aren't publicized and the only way to know one has been approved 
is through personal relationships with people who work in the occupation authority's offices. The 
names of winning contractors are kept secret. And the limited amount of information available, how 
much money was allocated and for what general purpose, is available only in English, though the CPA 
says it is translating the minutes into Arabic.

Frederick D. Barton, a former official of the U.S. Agency for International Development and the 
United Nations, said it was essential for the occupation authority to start spending money as 
quickly as possible. "That money did not have the usual slow-me-down quality of U.S. government 
money," he said. "A lot of things got done. Obviously, there's always an opportunity to question 
how that money got out. But if you spend time doing all your normal procedures, you'll get people 
killed."

Officials also defend the review board's procedures, noting that an independent auditor is being 
hired to review all transactions.

A Pentagon spokesman said the coalition can track the Iraqi money. "We've got accountability for 
it," said Maj. Joseph M. Yoswa. "It's not like we're letting it disappear."

CPA officials declined numerous requests for an on-the-record interview with someone who could talk 
about the process. In written answers to questions, the CPA said it "goes a long way beyond its 
legal requirements and is far more conscientious than many democratic governments in ensuring real 
transparency in its contracting and spending decisions."

The statement noted that in October, the board issued 52 contracts for a total of $57.4 million to 
Iraqi companies, 41 contracts for a total of $66.4 million to U.S. firms, and $86.2 million worth 
of contracts to companies in 19 other countries.

"Government" money is a complicated thing in the new Iraq. The Program Review Board is supposed to 
coordinate payments from all three major sources of money for reconstruction -- that appropriated 
by the U.S. Congress, the Iraqi money and foreign government pledges -- to make sure priorities are 
correct and that efforts aren't duplicated. But it really controls only the Iraqi money.

Plagued by controversy


The spending of U.S. money has been plagued by controversy. The Pentagon this month said a draft 
audit had found that a subsidiary of Halliburton Inc. that is importing fuel may have overcharged 
the U.S. government by $61 million. But the use of money appropriated by Congress is restricted by 
regulations for competitive bidding and disclosure.

There are fewer controls over how the Iraqi money is spent.

For some "micro-purchases," contracts may be awarded without competition. For contracts from 
$5,000.01 to $25,000, bids can be taken orally.

The Program Review Board is chaired by Rodney G. Bent, a deputy from the Office of Management and 
Budget, but its membership has changed over time.

It has included Walter B. Slocombe, a former undersecretary of defense; Olin L. Wethington, a 
former assistant secretary of Treasury; and Sherri Kraham, an assistant to Undersecretary of State 
John R. Bolton and a former Iraq desk officer in the Clinton administration.

There is only one Iraqi member, Finance Minister Kamil Mubdir Gailani. According to minutes from 20 
meetings from Aug. 12 to Nov. 8, he attended just one session. The CPA said it is working "to 
better accommodate everyone's schedule."

Attendance at the meetings varies widely. On Nov. 29, when the board approved more than $440 
million in contracts, eight of the 11 members were present. The next week, when the board allocated 
$1.2 million for oil field security, only five members were present and another two voted 
electronically. Only two people showed up for both meetings.

The CPA said "we endeavor to have a quorum" of voting members at each meeting.

Getting an audience before the Program Review Board often requires a confluence of good luck and 
good connections. There are thousands of proposals floating around, but only a few of them are seen 
by the board.

Some ideas come from local advisory councils. Others originate with the coalition military forces, 
the CPA staff or the various Iraqi ministries.

Program Review Board staff members vet the proposals presented during meetings, which last from 
five minutes to several hours. Sometimes there are one or two proposals to review, on other 
occasions there are eight or more.

Bremer has veto power over the allocations. On Nov. 15, for example, the board approved the use of 
$5.8 million to buy equipment and uniforms and to pay salaries for the Iraqi Civil Defense Corps, 
but Bremer knocked it down to $1.7 million. More often than not, however, Bremer approves the 
board's decisions.

Cha reported from Baghdad.

 © 2003 The Washington Post Company


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