April 18 US firms take Iraq for a ride

American companies have cheated post-war Iraq of more than $20 billion in unfufilled contracts and deals that existed on paper with help from the American government, according to details available in US official reports.
However, Iraq has no way of recovering the money because the companies involved have been given legal "immunity." The immunity was given by Paul Bremer, who ruled post-Saddam Hussein Iraq until June 28, 2004 when he handed over the charge to a temporary Iraqi government. The immunity says no American company could be taken to court by the Iraqi government for work done in Iraq under contracts given by Bremer's Coalition Provisional Authority (CPA).
According to reports and auditing findings by official agencies of the US government, Bremer, who was in control of $20.5 billion of Iraqi money in an account called the Development Fund for Iraq, signed away hundreds of contracts in the months before he left Iraq in June 2004.
The Development Fund for Iraq held money that came from Iraq's oil exports.
The contracts signed by Bremer covered rebuilding roads, bridges, schools, hospitals, power and communication stations, and even garbage collection. However, American auditors found that less than 10 per cent of the contracts were actually carried out and the rest of the contracts existed only on paper, with Bremer's CPA having already paid the entire contract money in advance.
The auditing was conducted by the Special Inspector General for Iraq Reconstruction, a temporary office set up by Congress to oversee the use of reconstruction funds. The inspector-general found that out of 198 separate contracts, 154 contracts contained no evidence that goods or services promised by contractors were ever received.
The auditing also found that in some cases, contractors were paid twice for the same job. In others cases, they were paid for work that was never done.
Halliburton, in which US Vice-President Dick Cheney holds stakes, was given a no-tender, direct contract to restore Iraq's oil infrastructure worth $2.4 billion. No work was ever done.
Some of these companies were also involved in direct contracts given by the US military and here also they were found to have cheated the US military. Cases related to such cases are being tried in US courts, but there is no case involving actual Iraqi money.
Indeed, there is law in the US called the False Claims Act, However, it only protects the US government from fraud. It holds that the United States suffered no direct economic loss from fraud involving Iraqi money and therefore the False Claims Act could not be applied in cases involving Iraqi money. That saves Bremer, his associates and all others, including the contractors, from prosecution for misapproprating Iraqi money.
Here are some examples of the fraud uncovered by the US special inspector general.
Only $498 million of the approximately $1.5 billion in cash given to Iraqi banks for government operating expenses can be accounted for.
Halliburton overcharged $218 million on a contract to import fuel and repair oil fields, for which the US company was paid $1.6 billion in Iraqi oil proceeds.
One US official was given a week to spend $6.75 million in cash before Bremer handed over the country to the interim Iraqi government on June 28 2004, when the money would revert to Iraqi control.
Bremer gave more than $8 billion in cash to Iraqi ministries that had no internal controls to handle such an influx, and significant amounts appeared to be paid to ''ghost employees."