The Great Iraq Swindle

Robbery, Nor Reconstruction, in Iraq -- by Derrick Z. Jackson

The great liberator of Iraq was actually the hyena that cleaned out the nation.

Piece by piece, Halliburton over here, a corrupt company over there, we have heard various individual cases of overcharging and fraud by American firms in the reconstruction of Iraq. Last weekend, a Globe story connected some of the dots of corruption. Of $20.7 billion in Iraqi bank accounts and oil revenues seized by the Coalition Provisional Authority in the US-led invasion of Iraq, $14 billion was given out for reconstruction but tens of millions of dollars were unaccounted for. A year ago, an audit by the inspector general found no evidence of work done or goods delivered on 154 of 198 contracts. Sixty cases of potential swindles are under investigation.

Halliburton and its hundreds of millions of dollars of overcharges or baseless costs are well known. But millions more were taken by companies that promised to build or restore libraries or police facilities, or deliver trucks and construction equipment. Money was given to the puppet government with no follow-up. US government investigators can account for only a third of the $1.5 billion given by the CPA to the interim government and it appears that a substantial portion of the $8 billion given to Iraqi ministries went to ''ghost employees.''

Because of the way the United States set things up after the invasion, contractors are immune from prosecution by Iraqis. And even when firms are prosecuted, the millions of dollars in fines go to the US Treasury, not the Iraqi people. It amounts to two invasions. First the bombs. Then the banks.

This is robbery, not reconstruction.

It also amounts to yet another slow-motion lie by the Bush administration. The magnitude of the corruption brings into sharper relief the claims made by then-Deputy Defense Secretary Paul Wolfowitz a month before the war.

The claims came from the same infamous testimony before the House Budget Committee where Wolfowitz said Army chief of staff Eric Shinseki was ''wildly off the mark'' for saying several hundred thousand troops would be needed to stabilize Iraq. Wolfowitz told the committee that the administration was ''doing everything possible in our planning now to make post-war recovery smoother and less expensive.''

Besides pooh-poohing Shinseki's estimates, Wolfowitz said a Washington Post story that quoted administration officials as saying the initial invasion would cost $60 billion to $95 billion was also way off the mark. Speaking about such administration officials, Wolfowitz said, ''I don't think he knows what he's talking - he or she knows what they're talking about. I mean, I think the idea that it's going to be eclipsed by these monstrous future costs ignores the nature of the country we're dealing with.''

''It's got already, I believe, on the order of $15 billion to $20 billion a year in oil exports, which can finally - might finally be turned to a good use instead of building Saddam's palaces. It has one of the most valuable undeveloped sources of natural resources in the world. And let me emphasize, if we liberate Iraq, those resources will belong to the Iraqi people, that they will be able to develop them and borrow against them.''

''It is a country that has somewhere between, I believe, over $10 billion -- let me not put a number on it - in an escrow account run by the United Nations. It's a country that has $10 billion to $20 billion in frozen assets from the Gulf War, and I don't know how many billions that are closeted away by Saddam and his henchmen. But there's a lot of money there and to assume that we're going to pay for it is just wrong.''

Wolfowitz was wrong on nearly every point, except for the idea that there was about $20 billion floating around Iraq to seize. It has been three years and all Iraq has become is a ''free-fraud zone,'' according to one of the attorneys for whistleblowers in Iraqi swindles. Recently, the Army found that Halliburton had $263 million of exaggerated or unexplainable costs on a $2.4 billion no-bid contract, yet still paid Halliburton $253 million of the $263 million.

Halliburton is in 103rd place in the Fortune 500 with $21 billion in revenues and just under $2.4 billion in profits. Halliburton gets its $2.4 billion no-bid contract nearly paid in full while the Iraqi people are out of much of their $21 billion. We liberated Iraq. The resources belong to American contractors.

(Email to: jackson@globe.com)