THE BURNED OVER DISTRICT

The American Conservative magazine has an article detailing the corruption in the Coalition Provisional Authority.

The 15-month proconsulship of the CPA disbursed nearly $20 billion, two-thirds of it in cash, most of which came from the Development Fund for Iraq that had replaced the UN Oil for Food Program and from frozen and seized Iraqi assets. Most of the money was flown into Iraq on C-130s in huge plastic shrink-wrapped pallets holding 40 “cashpaks,” each cashpak having $1.6 million in $100 bills. Twelve billion dollars moved that way between May 2003 and June 2004, drawn from accounts administered by the New York Federal Reserve Bank. The $100 bills weighed an estimated 363 tons.

Once in Iraq, there was virtually no accountability over how the money was spent. There was also considerable money “off the books,” including as much as $4 billion from illegal oil exports. The CPA and the Iraqi State Oil Marketing Board, which it controlled, made a deliberate decision not to record or “meter” oil exports, an invitation to wholesale fraud and black marketeering.

When you start like that, is any of this a surprise?

The contracts were especially attractive because no work or results were necessarily expected in return. It became popular to cancel contracts without penalty, claiming that security costs were making it too difficult to do the work. A $500 million power-plant contract was reportedly awarded to a bidder based on a proposal one page long. After a joint commission rejected the proposal, its members were replaced by the minister, and approval was duly obtained. But no plant has been built.

Where contracts are actually performed, their nominal cost is inflated sufficiently to provide handsome bribes for everyone involved in the process. Bribes paid to government ministers reportedly exceed $10 million.

Money also disappeared in truckloads and by helicopter. The CPA reportedly distributed funds to contractors in bags off the back of a truck. In one notorious incident in April 2004, $1.5 billion in cash that had just been delivered by three Blackhawk helicopters was handed over to a courier in Erbil, in the Kurdish region, never to be seen again. Afterwards, no one was able to recall the courier’s name or provide a good description of him.

Paul Bremer, meanwhile, had a slush fund in cash of more than $600 million in his office for which there was no paperwork. One U.S. contractor received $2 million in a duffel bag. Three-quarters of a million dollars was stolen from an office safe, and a U.S. official was given $7 million in cash in the waning days of the CPA and told to spend it “before the Iraqis take over.” Nearly $5 billion was shipped from New York in the last month of the CPA. Sources suggest that a deliberate attempt was being made to run down the balance and spend the money while the CPA still had authority and before an Iraqi government could be formed.

And the sad part is that we probably could have bought each and every Iraqi, except the Chalabi family, for 10% of that.