Analysis: Iraqis claim graft probe slowed
Shaun Waterman
WASHINGTON, April 22 (UPI) -- The U.S. administrator in Iraq, L. Paul Bremer, deliberately put the brakes on an investigation by the Iraqi Governing Council into allegations of $10 billion in bribes, kickbacks and smuggling at the U.N. oil-for-food program, lawmakers were told.
The 2-month delay caused by needlessly putting the audit contract out for tender may have allowed the loss of vital evidence, Claude Hankes-Drielsma, an adviser to the U.S.-appointed council told the House National Security Subcommittee, led by Rep. Christopher Shays, R-Conn.
Bremer told the Iraqis "he would not release funds ... to meet the cost of the investigation unless the work was put out to tender," Hankes-Drielsma said Wednesday, despite the fact that KPMG -- the firm selected by the council's finance committee -- was acknowledged world leaders in forensic auditing and had sent a team to Baghdad.
"The lack of respect we are giving this council is troubling to me," said Shays, pressing U.S. diplomats and State Department officials to ensure that "there'll be no more procedural delays" imposed by Bremer.
At the United Nations Wednesday, a separate three-member panel headed by former Federal Reserve Chairman Paul Volcker opened its own investigation following a unanimous U.N. Security Council vote to authorize the probe.
But unlike their counterparts in New York, the KPMG investigators in Baghdad have access to financial and other records from the files of deposed dictator Saddam Hussein. They hope to trace more than $10 billion believed misappropriated from the program, which had been established to allow Iraq to sell oil for humanitarian supplies such as food and medicine for its people.
According to congressional investigators, the program did succeed in mitigating a humanitarian crisis provoked by international sanctions on Iraq, but it also provided a huge honey pot for Saddam and his cronies, who smuggled more than $5.7 billion worth of oil out of the country through Jordan, Turkey and Syria between 1997 and 2003. Congress' investigative arm, the General Accounting Office, found last month that the regime also demanded and was paid more than $4 billion in kickbacks from companies selling humanitarian goods.
The effort to recover the missing cash is a race against the clock, lawmakers were told.
"Time is of the essence," said Hankes-Drielsma. "Evidence can and may be lost," he added, describing how one vital document had been rescued from destruction by fire or water by a conscientious civil servant. Many documents were destroyed when government buildings were looted in the turbulent weeks that followed the U.S. capture of Baghdad, but more sinister forces were also at work: Hankes-Drielsma said, "I expect shredders are working round-the-clock at this very moment."
He would not speculate as to Bremer's motives in delaying the probe, beyond saying that it was an example of Bremer's "high-handedness," but a source close to the investigation told United Press International, "There can be no legitimate cause for delay, given the importance of this issue to Iraq and the whole world. The only reason must be that they did not want the report out before the handover (of power to an interim Iraqi authority, on June 30th)."
A U.S. administration official who spoke on condition of anonymity, confirmed that the report would not be finished for at least three months. But the official dismissed any claim of an ulterior motive on Bremer's part in tendering the $5 million contract to open bidding.
"What Bremer is trying to do is to make sure that there are appropriate standards, professionalism and accountability in any investigation ... If you're going to spend a lot of money to engage a forensic auditing firm, the goal of the (Coalition Provisional Authority) is to put that out to bid."
"You have to practice what you preach," concluded the official.
The official said Bremer had also placed the investigation under the control of the Iraqi Board of Supreme Audit, an independent financial watchdog set up by his CPA, wresting control of it from the finance committee of the governing council.
The finance committee, which hired Hankes-Drielsma, is led by the controversial former exile Ahmed Chalabi, a fact which caused some Democrats to raise questions about the timing and origin of the recent round of charges.
"I understand that the allegations ... come from one source which may have an interest in preventing the United Nations' involvement in Iraq," said Rep. Carolyn Maloney, D-N.Y. The U.N. special envoy to Iraq, Lakhdar Brahimi, recently recommended that the Iraqi Governing Council, on which Chalabi sits, should be dissolved after the June 30 handover.
Allegations that Saddam was earning illicit cash by smuggling oil out of the country, or that the regime was profiting from kickbacks paid by companies keen to get the lucrative business are nothing new. A special committee of the United Nations monitored the sanctions regime. "This was like a chess game," Ambassador Patrick F. Kennedy, from the U.S. mission to the United Nations, told the panel. "We knew Saddam was up to no good. He would try and make a move, we would move to try and block it."
But, in January this year, an Iraqi newspaper published the names of 270 people and companies outside Iraq it said had received trading vouchers for Iraqi oil. These vouchers were used when oil sales under the program were made to middlemen or traders, but some of those on the list -- like the U.N. official who ran the oil-for-food program, Bevon Savan -- have no legitimate connection to the oil business, and the paper accused them of accepting the vouchers as bribes.
"They are unsubstantiated allegations provided without any evidence," Kennedy acknowledged, after being pressed on the issue by Rep. C.A. "Dutch" Ruppersberger, D-Md.
"I'm not sure of the credibility of Iraqi newspapers," Ruppersberger said, adding later that he had information that Chalabi owned the paper in question. "We have to do whatever we can to substantiate these allegations," he said in an apparent reference to charges that U.N. Security Council members had opposed U.S. action against because of the money to be made from the oil-for-food program, "especially at a time when we need the world to come help us fight terrorism."
Republican panel members were much less skeptical about the corruption claims. "I can't help but believe that where there's smoke there's fire," said Rep. Doug Ose, R-Calif., "I am sufficiently cynical where these numbers of dollars are concerned."
Rep. Timothy Murphy, R-Pa, asked whether the fact that there were companies from U.N. Security Council member nations on the list of alleged bribe recipients might explain the reluctance of some members to act against the corruption. "Is that perhaps why the Security Council had its feet in concrete ... because some of them were making a lot of money?" he asked Kennedy.
Kennedy acknowledged that this might have been a factor. "To a certain extent it might have been driven by commercial considerations of various companies that were nationals of the (member) country involved," he said.
But Ruppersberger remained unconvinced, pressing Hankes-Drielsma about the "very strong statements" in his testimony to the effect that U.N. votes were for sale.
"I am a former chairman of the management committee of Price Waterhouse," said Hankes-Drielsma, referring to his role at one of the world's most established accounting firms, "and I don't make such statements lightly." He said he had seen the list, prepared "by conscientious, competent civil servants who'd been there a long time," and some of the underlying documentation.
"What I've seen disturbs me greatly," he concluded.
Hankes-Drielsma said KPMG would cooperate fully with the U.N. inquiry, and told the panel he was meeting with Volcker Thursday.
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