- Money is intended for rebuilding use; international board
plans to do audit.
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- Washington - U.S. officials in charge of the Development
Fund for Iraq drained all but $900 million from the $20 billion fund by
late last month in what a watchdog group has called an "11th-hour
splurge."
-
- An international monitoring board is planning an audit
of money from the fund that was spent on contracts for Iraq's reconstruction
that were approved without competitive bidding.
-
- The fund, made up largely of Iraqi oil revenue, is intended
to pay for the rebuilding of Iraq. Critics have charged that U.S. officials
have failed to account properly for money spent so far.
-
- In a report this week, the General Accounting Office
said that "contracts worth billions of dollars in Iraqi funds have
not been independently reviewed." It also questioned what control
over U.S.-approved contracts would now exist with the handover of formal
sovereignty to Iraqis.
-
- Beth Marple, a U.S. spokeswoman in Baghdad, said the
rapid spending was agreed on between the now-dissolved Coalition Provisional
Authority and Iraqi officials. She said that "the unfunded needs of
the Iraqi people demanded that these dollars be put to work."
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- U.S. authorities have not identified all the contractors
hired. But they have told international monitors that some of the contracts
were awarded without competitive bidding to Halliburton, the Texas-based
company formerly led by Vice President Dick Cheney. Halliburton has been
at the center of Pentagon and congressional inquiries.
-
- Some critics have suggested that American authorities
tapped the Iraqi money to avoid the stricter controls Congress demanded
on the spending of U.S. tax dollars, after reports last year of overcharges
by Pentagon contractors.
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- "Perhaps they prefer to have the flexibility to
give away contracts to whichever companies they want on whatever terms
they want," said Svetlana Tsalik, director of the George Soros-funded
Revenue Watch, part of the Open Society Institute. Soros, a billionaire
financier, is a harsh critic of the administration and has contributed
heavily to groups seeking to defeat President Bush.
-
- In recent reports, Revenue Watch and the British-based
group Christian Aid faulted the Coalition Provisional Authority for making
commitments on spending of Iraqi oil revenue that will outlast the occupation.
Revenue Watch referred to the spending as "the CPA's 11th-hour splurge."
-
- Christian Aid faulted U.S. occupation authorities for
failing to disclose full details of the spending. The group said the authorities
may also have understated by up to $3 billion the amount of Iraqi oil revenue
that went into the development fund.
-
- "This lack of accountability creates an environment
ripe for corruption and theft at every level," Christian Aid said
in a report titled Fueling Suspicion: the Coalition and Iraq's Oil Billions.
-
- The Development Fund for Iraq was set up by the United
Nations Security Council last year after Bush declared major combat over
in Iraq. Besides the new Iraqi oil revenue, it includes leftover oil revenue
that was put into the U.N.-run Oil for Food program before the United States
invaded Iraq.
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- Diverse Spending The development fund has been spent
in several ways. As of May, more than half the money had gone to operate
Iraqi ministries. The rest went to relief and reconstruction projects;
out of that money, about $350 million was put at the discretion of U.S.
military commanders for projects intended to improve relations with Iraqis.
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- Until the handover, the provisional authority had the
ultimate say over how the money was used. Decisions were made in meetings
with Iraqi officials appointed by the provisional authority and the U.S.-picked
Iraqi Governing Council.
-
- Noting the latest reports by the provisional authority,
Joseph Christoff, who directs the GAO's international affairs section,
said that of the $20 billion in the fund, all but $900 million had been
committed as of late June. The GAO is an investigative arm of Congress.
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- "They clearly spent [development fund money] at
a much faster pace than the appropriated dollars," Christoff said
in a telephone interview. The GAO report said that as of April, the provisional
authority had spent nearly $13 billion from the fund on reconstruction
activities.
-
- By that time, the authority had spent only $8.2 billion
out of U.S. tax dollars - money that would likely invite greater congressional
scrutiny.
-
- The Security Council created an International Advisory
and Monitory Board for Iraq to watch how the development fund was spent.
The board is made up of representatives of the United Nations, World Bank,
International Monetary Fund and the Arab Fund for Economic and Social Development.
-
- In February, the board began to question the awarding
of no-bid contracts awarded by the provisional authority with money from
the development fund, according to minutes of the board's meetings.
-
- The next month, the board was told that Halliburton won
some of the contracts without competitive bidding. The provisional authority
"indicated that as a general rule, effective January 2004 contracts
were no longer awarded without competitive bidding," according to
the board's minutes.
-
- The board demanded that the provisional authority turn
over audits of the uncompetitive contracts. None had been provided by its
June meeting. The board then delivered a public rebuke of the U.S. authorities.
-
- In a statement issued June 22, the board said it "regrets,
despite its repeated requests, the delay in receiving reports on audits
undertaken by various agencies on sole-sourced contracts" paid for
by the development fund. The board chose to launch an audit "to determine
the extent of sole-sourced contracts."
-
- In a telephone interview from Baghdad, Marple said she
could not immediately explain why the provisional authority used development
fund money for no-bid contracts or why it had been slow to provide information
to the monitors.
-
- New-Government Role The new Iraqi government is now in
control of deciding how Iraqi oil revenue is spent, though the international
monitoring board will continue an oversight role.
-
- Rend al-Rahim, Iraq's chief representative in Washington,
argued in a speech this week that too much money had been spent on costly
infrastructure and high-tech projects that did not employ large numbers
of Iraqis.
-
- Noting that the new government "will now have a
lot of authority in awarding contracts from the Development Fund for Iraq,"
she said it must focus on projects "that can employ tens and hundreds
of thousands of Iraqis and get money into the pockets of Iraqis and again
give them a stake in the new Iraq."
-
-
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- U.S. Funds for Iraq Are Largely Unspent
By Rajiv Chandrasekaran
Washington Post
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- Sunday 04 July 2004
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- Baghdad - The U.S. government has spent 2 percent of
an $18.4 billion aid package that Congress approved in October last year
after the Bush administration called for a quick infusion of cash into
Iraq to finance reconstruction, according to figures released Friday by
the White House.
-
- The U.S.-led occupation authorities were much quicker
to channel Iraq's own money, expending or earmarking nearly all of $20
billion in a special development fund fed by the country's oil sales, a
congressional investigator said.
-
- Only $366 million of the $18.4 billion U.S. aid package
had been spent as of June 22, the White House budget office told Congress
in a report that offers the first detailed accounting of the massive reconstruction
package.
-
- Thus far, according to the report, nothing from the package
has been spent on construction, health care, sanitation and water projects.
More money has been spent on administration than all projects related to
education, human rights, democracy and governance.
-
- Of $3.2 billion earmarked for security and law enforcement,
a key U.S. goal in Iraq, only $194 million has been spent. Another central
objective of the aid program was to reduce the 30 percent unemployment
rate, but money has been spent to hire only about 15,000 Iraqis, despite
U.S. promises that 250,000 jobs would be created by now, U.S. officials
familiar with the aid program said.
-
- U.S. officials involved in the reconstruction blame security
concerns and bureaucratic infighting between the Pentagon, the State Department
and the White House for delays in the allocation of funds. By the time
the Pentagon's contracting office in Baghdad began awarding contracts,
the risk of kidnapping and other attacks aimed at foreign workers was so
dire that many projects never began. Several Western firms that won contracts
have summarily withdrawn their employees from Iraq.
-
- Fewer than 140 of the 2,300 reconstruction projects that
were to be funded with the U.S. aid package are underway, the officials
said.
-
- Officials with the contracting office contend the amount
of money actually spent does not reflect the full scope of work being performed.
A more accurate figure, they said, is the amount of money allocated for
reconstruction work. Just over $5.2 billion had been allocated as of June
22, according to the White House budget report.
-
- "The money that is disbursed is typically not disbursed
until the work is completed, so it doesn't give the best picture of what's
going on," said John Proctor, a spokesman for the contracting office.
"Some of our projects take months, or even years, to complete."
-
- Proctor said actual spending had increased to $400 million
since the figures were provided to the White House on June 22.
-
- Spending patterns have been different with the Iraqi
money. The Coalition Provisional Authority, the now-dissolved U.S.-led
occupation administration, spent or locked in for future programs more
than $19 billion from the $20 billion Development Fund for Iraq, which
was established by the U.N. Security Council to manage Iraq's oil revenue,
said Joseph A. Christoff, director of international affairs and trade at
the General Accounting Office, the watchdog arm of Congress.
-
- Christoff said in a telephone interview on Saturday that
all but $900 million of the fund had been spent or allocated by the time
the United States transferred political authority to an interim Iraqi government
last Monday.
-
- Some Iraqi officials have criticized the contrasting
spending practices. The occupation authorities "came here and spent
a lot of our money but very little of theirs," said a senior Iraqi
official, who spoke on condition of anonymity on the ground that criticism
could affect his relationship with the new U.S. Embassy here.
-
- The official did not contest the CPA's decision to use
the development fund money to pay the expenses of running Iraq's government
during the occupation, but he condemned spending on what he called "less
essential projects that should have been left up to the Iraqis to decide."
-
- "They wanted to do things their way before they
left," the official said.
-
- The CPA appears to have earmarked more than $6 billion
of the Iraqi funds over the past two months alone, as it prepared to hand
over political authority - and control over the development fund - to the
interim Iraqi government. As of May 6, the CPA had earmarked only $13 billion
from the fund, according to a GAO report released this week.
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- Allocations and disbursements from the development fund
were made by the 12-member Program Review Board, a committee composed of
Americans representing the CPA, Iraqis from the U.S.-appointed government
and officials from the governments of Britain and Australia. Most of the
voting members were non-Iraqis.
-
- "It was a CPA-run thing," the senior Iraqi
official said. "There was lots of talk about taking input from the
Iraqis, but in the end, they made all the decisions."
-
- At a meeting on May 15, the board allocated $2 billion,
according to minutes of the session posted on the CPA's Web site. Among
the commitments were $500 million for Iraqi security forces, $315 million
for electricity repairs, $460 million to rehabilitate the oil industry
and $180 million to fund a property-claims commission.
-
- It was not clear what specific projects would be funded
in the security, electricity and oil sectors. The CPA had already earmarked
$3.2 billion for security, $5.5 billion for electricity and $1.7 billion
for the oil industry from the $18.4 billion aid package, although little
of that money has been spent.
-
- The development fund, at least until May 6, was used
largely to bankroll day-to-day Iraqi government operations. More than $7.5
billion was withdrawn to pay for operational expenses - principally employee
salaries - at ministries and government agencies.
-
- From July 2003 to May 2004, the CPA allocated about $4.8
billion from the development fund for relief and reconstruction projects
and services. But as with the U.S.-funded aid package, the CPA had trouble
actually spending money to address those needs, disbursing only about $1.8
billion of the $4.8 billion.
-
- Of the $972 million allocated for repairs to electric-power
infrastructure before May 6, only $157 million was disbursed, according
to the GAO report. Of the $842 million allocated to address increased security
needs, only $2 million was spent, the GAO said.
-
- One of the principal beneficiaries of the development
fund money was Halliburton Co., which was paid hundreds of millions of
dollars to truck gasoline and other fuels into Iraq - a country with the
world's second-largest oil reserves - because of problems with Iraq's refineries.
-
- According to the GAO report, $1.1 billion of the $1.9
billion allocated for fuel imports was disbursed. Although it is not clear
how much went to Halliburton, a firm formerly chaired by Vice President
Cheney, U.S. officials familiar with spending patterns said a majority
of those funds went to Halliburton and other non-Iraqi firms.
-
- The Defense Department has been investigating a Halliburton
subsidiary for allegedly overcharging for imported fuels.
-
- Two former CPA officials involved in contracting issues
said the CPA spent money from the development fund faster because it was
not governed by the same rules requiring competitive bidding as the money
from Congress was. The CPA has not identified how many noncompetitive contracts
were awarded.
-
- U.S. officials have said that Halliburton was among the
firms to receive no-bid contracts from the Program Review Board.
-
- Although the Security Council created a monitoring board
composed of representatives from the United Nations, the World Bank, the
International Monetary Fund and the Arab Fund for Economic and Social Development
to oversee the CPA's spending, its efforts to audit the process were stymied
by the CPA, according to other officials, who spoke on condition of anonymity.
-
- The monitoring board has not received many documents
it has sought from the CPA pertaining to uncompetitive contracts. "Transactions
worth billions of dollars in Iraqi funds have not been independently reviewed,"
the GAO wrote in its report.
-
- The slow rate of spending of the U.S. aid package has
dismayed several members of Congress who worked to speed passage of the
White House's supplemental budget request last year.
-
- "It's unacceptable for this to have taken so long,"
said Sen. Joseph R. Biden Jr. (Del.) , the ranking Democrat on the Foreign
Relations Committee.
-
- Biden, who recently returned from Iraq, said he had "learned
from our military commanders that these projects have a direct bearing
on their ability to defeat the insurgency."
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- http://www.truthout.org/docs_04/070504B.shtml
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