Corruption In Iraq & World

American Consultant fails to produce expected work in Iraq Contract

What is interesting about this article below is that it talks about a consulting firm that was founded by Robert Raggio in Baghdad and got a contract to develop a data base that tracked what happened to $7.3 billion in "Iraqi money" spent by the coalition.  I worked with Robert Raggio in my first year in Baghdad.  He was one of the other consultants helping set up the Iraqi anti-corruption agency CPI , and was a real character.  The 7.3 billion dollars talked about was Iraqi money seized by the coalition after the initial invasion in 2003, then spent by the coalition on Iraqi reconstruction activities without decent accounting.   Raggio founded his firm after working at CPI, the Iraqi anti-corruption agency, for perhaps 15 months.  He had hired perhaps 40 Iraqi locals to do a lot of the work, and I knew some of them because they were hired from CPI.   The records he had to deal with were a MESS because as other audits have indicated, no one really spent much time trying to account for the usage of the Iraqi funds.  I can say clearly that there were hordes of attorneys,  health specialists, etc. but NO ONE form the federal government sent enough accountants or auditors in 2003 to ensure the captured funds were clearly controlled.  I had earlier spent time to find why no one from GAO, OMB or even military accounting groups did not come to Iraq, and it is because they DO NOT have any unit dedicated to working overseas.  Any overseas work done by US agencies is through the State Dept., and the State Dept. does not have people at that level, or experienced in disbursement controls or project management.   Consider that several large contracting firms were hired to do engineering and construction, telecommunications, etc. but none of the big 4 accounting firms were hired to ensure captured funds were controlled (since the GAO, etc did not assign people to Iraq). 

I had a friend who worked with the Iraqi Ministry of Interior (the state police) and they had $5-million in cash of the captured funds sitting in a vault, and were using it to pay the gardener $100,000 or more per month for the fancy building complex used by that Ministry in the Green Zone.   The state dept. took over responsibility for the Interior Ministry in 2004 or early 2005 and appointed an ex ambassador to run it who had NO skills and was too old too be taken seriously.  He ordered the funds be "returned" and they disappeared for maybe a year  until  another friend was trying to resolve a problem with all the unpaid bills to the gardener and finally found the funds which had been moved to another room in storage.  That is the kind of thing that happened in 2003-2005.

As for Raggio, he probably was the only bidder, he was already in Iraq, and knew everyone in the relevant departments, and had good contacts to get Iraqi workers to do the work, since some of the records were in Arabic.  It does not surprise me it took as long as it did to get the final requirement.  I remember his main contact was a Navy officer who was a Comptroller and I met them occasionally in the dining room, and he was very good.  Then he left and maybe the new program manager added the new requirement.  Raggio was quite catankerous, but honest, so I doubt he did anything wrong.
vj
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Iraq accounting is still a muddle

Contract fails to produce system to detect fraud

By Matt Kelley
USA TODAY

WASHINGTON — A newly formed consulting firm hired to account for more than $7.3 billion in Iraqi reconstruction money did not deliver a database that could help investigators track waste and fraud, a recent report found.

The result: Two years after uncovering one major fraud case, auditors still haven't determined whether there was more graft in the spending of Iraqi oil proceeds.

In April 2005, Stuart Bowen, the special inspector general for Iraq reconstruction, recommended creating a database to help review U.S. spending throughout Iraq. The recommendation followed the discovery of an $8.6 million bid-rigging scheme in south-central Iraq. Five months later, a U.S. contracting office in Baghdad hired Reviewer Management International (RMI) of New York to create a database that could link contracts with the officials who authorized them.

RMI, however, wasn't given adequate instructions until near the end of its $1.5 million contract and, as a result, didn't deliver a usable database, the inspector general's office found in a follow-up report released Jan. 29.

Employees in the Baghdad contracting office took on the project, completed the work and turned over the results to the Iraqi government in December. Bowen promised Congress that his office will investigate further.

Air Force Lt. Col. Joe Mazur of the Joint Contracting Command-Iraq said Bowen's report was accurate. He said RMI got a "sole-source contract." Such contracts are awarded without competitive bidding because only one company is considered qualified to do the work quickly enough. Mazur could not comment on the firm's qualifications because he was unable to find a copy of its proposal.

Robert Raggio, RMI's chairman and sole officer, did not respond to repeated telephone and e-mail messages seeking comment.

The United Nations gave the U.S.-led provisional Iraqi government control over the country's oil proceeds — an account called the Development Fund for Iraq (DFI) — shortly after the 2003 invasion. U.S. agencies oversaw reconstruction projects using more than $7.3 billion of DFI money through the middle of 2006, U.N. auditors say.

In addition, Bowen's office has found U.S. officials transferred $8.8 billion in oil proceeds to interim Iraqi ministries without keeping track of the money.

Mismanagement of Iraqi money has angered some Democrats in Congress, who say it may have increased costs for the United States, which has spent $38 billion of taxpayer money on reconstruction.

"If this administration could not accomplish these (reconstruction) goals with Iraqi money, how can they be trusted to be good stewards over American taxpayer dollars?" asked Rep. William Lacy Clay, D-Mo., at a House oversight committee hearing in February.

Much of the Iraqi oil money spent by the United States was given in bundles of $100 bills to military officials and civilians to quickly pay for small-scale projects, Bowen's office has reported.

In 2004, the inspector general began investigating $120 million in cash provided to American officials at a regional reconstruction office in south-central Iraq. That probe led to the largest criminal fraud case in Iraq so far, which resulted in three guilty pleas and charges against five others.

The military hired RMI in September 2005 to compile records of all similar cash transactions made throughout Iraq. Raggio incorporated the firm in Delaware less than seven weeks before getting the contract. State records show he listed the firm's office as a residence in Babylon, N.Y., and its principal place of business as Iraq.

Army contracting officials didn't tell RMI until granting a one-month extension to its eight-month contract that it should try "as time permits" to link payment records to the U.S. officials who authorized the spending, the report said.

Although the RMI database includes more than 300,000 entries, an unidentified military contracting official is quoted in the report as saying it is "only a collection of records that were not audited or effectively connected to one another."

Baghdad Mosquito Cites Iraqi Newspaper Reports on Corruption Issues

A coalition email newsletter called the "Baghdad Mosquito" issued in Iraq prints translations of  local newspaper articles about different subjects.  They also rank most popular publications and list their political bias, such as this info from the Apr. 13, 2007 Mosquito:

New Baghdad Mosquito Top 10 Newspaper List

To come up with our new list, we discussed with our participants in the weekly forum, “What’s The Word On The Streets Of Baghdad?” on which papers are the most in demand on Baghdad’s streets, both in which ones are bought and which ones have the most influence. Here is our new list as of

13 June 2005

:

1. Azzaman No Bias
2. Asharq Al Awsat No      Bias
3. Al Mada No      Bias
4. Al Fourat Anti-Coalition
5. Al Sabah No      Bias
6. Addustour Anti-Coalition
7. Al Sabah Al Jadeed No      Bias

8. Baghdad

   No Bias
9. Al Mashriq Anti-Coalition
10. Al Adala No      Bias

Here are two articles regarding corruption in Iraq:

Integrity Board Has Investigated 2,600 cases (Crime) [¨Al Bayaan Newspaper] (3 APR)

Summary: Judge Radhi Hamza, Integrity Board Chief, said that the Integrity Board has investigated 2,600 cases since 2004. In a meeting with the Los Angeles Times, he spoke about the obstacles which block the way of the Integrity Board. He spoke about Article 136B which states the government has no right to dismiss any employee without the authorization of the employee’s ministry.

He also spoke about sectarian attempts to violate the Integrity Board. Radhi al Radhi said that the corruption investigation cases need time to collect documents and evidence. The Integrity Board receives reports form citizens from phone line tips. 

Author: Not Given

-------------------------------------------------

 14,000 MOI Employees Dismissed Because Of Corruption (Crime) [¨Al Bayaan Newspaper] (3 APR)

Summary: MOI officials said that the MOI has dismissed 14,000 employees because of corruption. COL. Abd Al Karim Khalaf, an official of the

National

Command

Center

said, “These employees were dismissed because of corruption, using their positions illegally, violating human rights, and committing crimes.”

Author: Not Given

PS:  MOI is the Ministry of Interior, which is the national police department.

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Here is another version of the first article above - from:

http://www.fin24.co.za/articles/companies/display_article.aspx?Nav=ns&lvl2=comp&ArticleID=1518-1783_2093535

Iraq losing corruption battle

03/04/2007 17:41

Baghdad - Iraq has lost some $8bn to administrative and financial corruption since the 2003 US-led invasion which toppled the Saddam Hussein regime, an anti-corruption panel said on Tuesday. "The estimated value of the wasted sum because of administrative and financial corruption is $8bn," Radi al-Radhi, head of the anti-corruption committee, said in a statement emailed to news organisations. Radhi blamed the constitution for some of the funds lost, saying one of the clauses in the Iraqi law blocked the launching of legal action against government employees. "Article 136 B stipulates that no civil servant should be sent for trial before the consent of his minister," the statement quoted Radhi as saying. The article was obstructing investigations into the "lost money". The official said that efforts were being made to abolish the clause from the constitution and clear the way for action against employees accused of fraud and corruption. Radhi also revealed his panel was investigating around 180 employees of the oil ministry in the southern port city of Basra following reports of corruption, but it was not known whether they will face trial. The committee was set up in 2004 to monitor spending at state offices.

US Congress Committee on Oversight & Government Reform - Iraq Reconstruction Page

The US Congress has a Committee on Oversight & Reconstruction, which is now chaired by Democrat Henry Waxman.   Within that committee's website, they have a page on hearings held on the subject of Iraq Reconstruction, including fraud, mismanagement, etc. 

Now that a Democrat is in charge, they are charging ahead with investigations of Iraq Reconstruction contracts, waste, fraud & abuse, etc.   It is always interesting to get the video or audio recordings  if available, and listen to them  online.

It is at:
http://oversight.house.gov/investigations.asp?Issue=Iraq+Reconstruction   

vj

Five British companies probed in drive against corruption

This article doesn't really provide a good background on why this new UK anti-corruption police group was formed.  As mentioned later in the article, the OECD (Organisation for Economic Co-operation and Development) was involved, but they didn't explain that the OECD has been working on a cooperative agreement for a number of years among larger countries to adopt a "Convention on Bribery".  Basically, the Convention signers agree to support other countries where residents of one country, i.e. the UK, commit fraud, bribery or corruption in another country, like Iraq, then escape back to the UK.  In many cases, the country of residence didn't provide good legal support for the "losing" country to arrest and prosecute the wrongdoers.   Maybe 1-2 years ago, there was an outcry about the UK being a signer of the convention, but not actually doing anything to extradite wrongdoers to the country where bribery occurred.  The article below mentions a case  regarding a UK company BAE. 

So, it appears now that the UK has established a crack police group to track down UK residents and citizens and assist the "loser" country in extraditing or prosecuting them for bribery cases.   There is progress in international anti-corruption prosecution, but it happens in one country at a time.  For instance, there are quite a few known Iraqi government officials who took bribes or siphoned government funds from Iraq, and escaped to London.  Hopefully they will be tracked down and prosecuted or extradited to Iraq.
vj

from FT.com
Five British companies probed in drive against corruption

By Jimmy Burnsand Michael Peel

Published: March 24 2007 02:00 | Last updated: March 24 2007 02:00

British companies in at least five foreign countries are being investigated for alleged bribes in an initiative that the new anti-corruption police unit hopes will result in the first overseas corruption trial getting under way next year.

The unprecedented anti-corruption drive is being led by a 10-person investigation unit within the City of London's economic crime department, the elite anti-fraud squad. It is focused on cases that have been referred by the Serious Fraud Office.

Cases being probed by the unit include allegations that a number of UK-based companies paid bribes to Saddam Hussein's regime in Iraq as part of the United Nations' discredited oil-for-food programme.

Steve Wilmott, head of the new unit, said in an interview that its existence was evidence the government was serious about its international anti-corruption obligations, although heaccepted it would be judgedon results rather than intentions.

"I would like to be judged in a year's time to see what we have done," he said. "Have we got people before the court? I am convinced we will within the year."

Speaking from the City police's new headquarters, Mr Wilmott, who is the head of the force's economic crime department, said the anti-corruption unit already had five cases "on the go" and could probably go up to a maximum of seven at any one time. In January, the unit made its first arrests over a case relating to an alleged $1.6m (£815,000) slush fund in Costa Rica. London-based PWS Holdings, the reinsurance company at the centre of the inquiry, says it is co-operating fully with the authorities.

Mr Wilmott said that the new unit, which is due to receive about £3m of Department for International Development funding over the next three years, was "a major step forward in terms of credibility" and was pioneering internationally. "We think we are the only country in the world tohave a dedicated policeunit deploying on this,"he said.

Leading industrialised nations last week attacked Britain's record on tackling bribery, announcing that they would investigate whether flaws in the law and its enforcement were preventing successful prosecutions.

The decision by the 36-member anti-bribery group of the Organisation for Economic Co-operation and Development came after Britain used national security grounds controversially to drop an investigation into alleged bribery of Saudi Arabian officials by BAE Systems, the arms maker. BAE has consistently denied wrongdoing.

Mr Wilmott said that considerations of national security, diplomacy and commerce had not been part of the vetting process for the cases that his unit had taken on.

He said that his unit would not "cherry-pick" easy investigations, al-though he acknowledged it was "far easier" to investigate cases in which foreign governments were co-operative because the alleged wrongdoing involved members of a previous administration.

Earlier this week, Ian McCartney, the trade minister, told MPs that the government would co-operate fully with the OECD's continuing investigation into Britain's efforts to tackle international corruption.

The co-operation would include a "constructive approach" to a future visit to the UK by experts in anti-corruption issues from two other OECD countries over the coming year, and a further "progress" report due to be compiled by them on Britain's policing record and legislation.

"We fully anticipate further recognition of the high level of transparency that characterises the UK's activities in this field," said Mr McCartney in a written statement.

Copyright The Financial Times Limited 2007