Weekly Shredder 26:
The Report of the Iraqi CPA's Inspector General
by James Norton

Pity the poor bastards who are fighting to rebuild Iraq.

But pity them selectively.

Pity the blue collar American workers risking their lives to restore Iraq's constantly assaulted power and water grids.

Don't pity the executives staying in five-star hotels while racking up big sick bonuses.

Pity the National Guard members who have had their terms of service extended, and who are riding in poorly armored vehicles.

Don't pity the mercenaries who are paid often-exorbitant salaries to kill or be killed.

For archives, audio, and background about the column, click here.

Pity the Iraqi government accountants who are struggling to make sense of their new country's budget after decades of corruption under Saddam Hussein — and gross fiscal mismangement under the Coalition Provisional Authority (CPA).

Don't pity the Republican political hacks appointed to manage Iraq's economy in lieu of more qualified (but less "loyal") experts in money management and Iraqi history.

More than anything: Don't pity President Bush, or Vice President Cheney, or Secretary of Defense Donald Rumsfeld. They picked the wrong war, at a critical time.

So when mismangement, theft, and a colossally out-of-control conflict are revealed in a government audit like the one presented by the Inspector General of the Coalition Provisional Authority, dole out your anger and sympathy carefully.

And read patiently. In direct contrast to the recent report of the Defense Science Board, the October report of the Inspector General of the Coalition Provisional Authority is deadly dull.

It's not meant to be read by voters. But that doesn't make it any less jaw-dropping. Try this on for size:

The CPA-IG reviewed the accoutability and control of materiel assets of the CPA in Kuwait. The audit used a stratified, statistical sampling plan to test property records maintained by Kellogg Brown & Root for the CPA. Based on the results of the examination of property items randomly selected from an inventory of 3,032 items valued at $3.7 million, the CPA-IG projected that 1,297 items valued $1.1 million could not be accounted for or were missing.

There are three amazing things about this.

1) This review was looking at stuff in Kuwait, which is not actually a warzone. It's a desert with several military bases, dozens of oil wells and a disproportionate number of luxury hotels.

2) About one-third of the things examined were lost by KBR. It's as though you left the house with an umbrella, a wallet, keys, a cellphone, pants, a shirt, underwear, flipflops and a hat — and came home wearing absolutely nothing below the waist.

3) KBR is a subsidiary of Halliburton, and is the same company that (when not owned by Halliburton) strongly backed Lyndon Johnson's run for the presidency, thus joining the proud American military-industrial complex.

And KBR's hands have been anything but clean in Iraq.

To quote the excellent Iraq Revenue Watch (an element of the George Soros-funded left-wing conspiracy):

In December 2003, Pentagon auditors uncovered an overcharge of $61 million by KBR on a contract to supply fuel for the military in Iraq, and again, in January 2004, KBR repaid $6.3 million in overcharges and kickbacks for fuel contracts in Kuwait.

Of course, $61 million is peanuts compared to the scale of the war as whole.

To support the Global War on Terrorism (GWOT) since Sept. 11, 2001, the Congress has appropriated almost $200 billion in emergency supplemental appropriations to DoD. Spending is running about $6 billion per month, based on July data.

Global War on Terrorism; Sept. 11, 2001; Iraq. Which of these three things is not like the other?

A government report that purports to deal in facts is perpetuating one of the nastiest chestnuts in White House's entire rotten barrel: "The war in Iraq is part of the war against terrorism."

The war in Iraq was a fight against a despicable dictator with limited regional ties to terror groups. His deadliest attribute (a viable pile of WMD) and his nastiest connection (to Al Qaeda) turned out to be as fake and inflated as Tara Reid's breasts.

Instead of furthering the war on terror, Iraq has become an Al Qaeda recruiter's dream scenario, drawing a luminous parallel between Israeli brutality against the Palestinians to Abu Ghraib, and siege of Fallujah, and half-a-dozen other high profile US-vs-Arab clashes.

One other thing: $6 billion a month is an incredible pile of money. An incredible amount of good can be done with $6 billion. President Bush's five-year initiative against AIDS is $15 billion — or two-and-a-half months of fighting in Iraq.

Another interesting note struck by the report relates to the mercenaries "contractors" employed by the US government and its subsidiary corporations in Iraq.

The review found that the initial procurement action for about $26 million which was awarded to DynCorp International ... inaccurately described the services that subsequently were required. The contract's value, as stated in Modification 0012, is about $141 million. INL officials developed a statement of work ... to provide law enforcement personnel for service in Iraq. Instead, the contract provided facility support for CPA-funded advistors in Iraq. In Jordan, the contract was used to construct, operate, and maintain Iraqi policy training facilities.

Translation:

We hired mercenaries to train and act as Iraqi police.

We used them as guards, instead.

And we used them to train Iraqi police in Jordan at a cost far exceeding what it would have cost to train them in country.

We thought it would cost $26 million. The mercenaries charged us five times as much.

We paid it with American tax dollars.

The uncertain security environment in Iraq has led federal agencies and prime contractors responsible for rebuilding Iraq to employ private security companies to guard property and persons.

A deadly insurgency that we failed to account for — combined with our inability to recruit and equip enough new troops or bring in the support of allies — means that we've brought in hired guns. Lots of them.

More than 20,000 individuals are believed to be providing security services, and some reports indicate that nearly half of reconstruction contract dollars are being used to pay for security.

About 12 percent of our men with guns in Iraq are mercenaries, who are wildly more expensive than our armed forces, and far less accountable. Rather than spending reconstruction money to rebuild schools, sewers and power plants, we're spending it to pay hired guns up to $250,000 a year to protect us from the democratic people we liberated.

Based on [the October review by the State Department] the Commander of the Multi-National Force-Iraq recommended increased in three major forces:

Iraq Police (from 90,000 to 135,00)

But the Iraqi police are a paper tiger! To pretend that there are 90,000 effective Iraqi police — let alone a force building to the level of 135,000 — is like pretending that the war in Iraq has so terrified Osama Bin Laden that he and all his friends have been scared straight, and are now working entry-level jobs at bowling alleys and gas stations to pay their way through community college.

Also disturbing, and unheralded by the CPA report: A UN audit — as reported by the Boston Globe — revealed a giant pile of money that completely slipped away from the US authorities.

One chunk of the money — $1.4 billion — was deposited into a local bank by Kurdish leaders in northern Iraq but could be tracked no further: The auditors reported that they were shown a deposit slip but could find no additional records to explain how the money was used or to prove that it remains in the bank.

Here's a similar number:

In the fourth quarter of Fiscal Year 2004, the Iraqi Relief and Reconstruction Fund spent $1.484 billion on justice, public safety infrastructure, and civil society.

Granted that simply doubling this amount would not have made Iraq twice as just, clean, and civil. One of the CPA's signature problems has been an inability to spend the money in its pockets, something made much worse by disbursements having been entrusted to a couple of twentysomethings whose main qualifications were having their resumes on file with the conservative Heritage Foundation.

But just as challenging as trying to spend money when your officials have never managed anything more complicated than a Tilt-a-Whirl at a county fair is the job of paying off Iraq's enormous debt.

The US government estimates that Iraq owes $120-125 billion in foreign debt to other governments and market entities. The US government believes that this high level of debt (more than 500 percent of the GDP) is unsustainable and thata very high level of debt reduction is warranted.

Unless that debt is owed to Kuwait. And Kuwait is a client of James Baker, the "get tough" envoy sent by Bush and friends to reduce Iraq's debt. Naomi Klein has written a masterful piece about the nasty web surrounding Baker's seemingly altruistic mission to save Iraq from its own debt.

Containing few bangs but many whimpers, the CPA-IG report peters out as quietly as it begins, dropping a deadpan understatement that captures the whole situation in a nutshell:

The security situation has slowed the pace of the design-and-build teams in visiting job sites. This delay has resulted in unanticipated costs; the full effect on the estimated costs to complete projects is not yet known.

Unfortunately, the American people — and our money, and our troops — will have to stick around to find out what that final cost turns out to be.

E-mail James Norton at jrnorton@flakmag.com.

— graphic by Derek Evernden (derek@ocellus.net)