Corruption In Iraq & World

Head of Iraq's Anti-Corruption agency apparently replaced

This is an early report from AP in France, but it could be resolved later. The CPI Commisioner, by law, can't be replaced for 5 years, but the central government (al-Maliki's) is apparently trying to do so in violation of the law that created CPI.

More to follow as we find it...

Also, below this article is another with a quote from the head of SIGIR (Special Inspector General for Iraq Reconstruction) stating that corruption is a major factor in funding Iraqi terrorism.
vj
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From
http://www.iht.com/articles/ap/2007/09/06/africa/ME-GEN-Iraq-Corruption.php

This is from the Associated Press in France, which publishes middle east daily news earlier than the US.

Government replaces head of anti-corruption commission

The Associated Press
Thursday, September 6, 2007

BAGHDAD: The Iraqi government has named the deputy head of the country's anti-corruption body to temporarily replace his boss, who is accused by a parliamentary committee of corruption himself, officials said Thursday.

Moussa Faraj, walked into the Public Integrity Commission on Wednesday carrying a government document saying he has been named as acting head of the commission to replace Radhi al-Radhi, who is currently in the United States, said a commission official on condition of anonymity because of the sensitivity of the issue.
Sabah al-Saidi, the head of the parliament's anti-corruption committee — the body that charged al-Radhi with corruption — confirmed that Faraj had taken over the post.

A government official, also speaking on condition of anonymity for the same reason, said al-Radhi had requested retirement and that Prime Minister Nouri al-Maliki had accepted. The official said Faraj will replace al-Radhi on a temporary basis until he is approved by parliament permanently to the new post.

Parliament Speaker Mahmoud al-Mashhadani has protested al-Radhi's removal, saying a letter to al-Maliki on Wednesday that the move was "illegal and unconstitutional" because the commission is an independent body and not a government organization, the commission official said.

But al-Saidi said al-Maliki has the right to name a replacement for al-Radhi as long as he is approved by parliament later.

Al-Maliki told reporters Monday that al-Radhi fled the country after being charged with corruption — a claim al-Radhi strongly denied, saying he was at a training course at the U.S. Department of Justice in Washington.

The accusations come as officials at U.S. Embassy in Baghdad are reviewing a draft report by the Office of Accountability and Transparency. It includes allegations that the al-Maliki government is riddled with corruption and has, in some cases, sought to derail or prevent investigations into alleged graft by Shiite-controlled agencies or allied officials, according to two U.S. officials familiar with the findings.

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More on the general Iraqi climate from SIGIR from
http://news.bbc.co.uk/1/hi/business/6977728.stm

Little progress on halting Iraq's decay
Analysis
By Robert Plummer
Business reporter, BBC News
The US troop surge in Iraq has been accompanied by a similar surge in the amount of US funds devoted to Iraqi reconstruction - but with just as debatable an effect.

By the end of 2006, Washington had provided $37.45bn to help rebuild Iraq's shattered infrastructure.
Figures issued just six months later showed that the total has since swollen to $44.54bn - an increase of nearly one-fifth.

But ordinary Iraqis have seen no benefit from this extra cash.

Baghdad's electricity ministry recently warned that the national power grid was close to collapse, while water supplies in the Iraqi capital have been cut off for days at a time.

Conditions are arguably worse than at any time since the US-led invasion overthrew Saddam Hussein in 2003.

The office of the US Special Inspector General for Iraq Reconstruction (Sigir), a kind of super-auditor for rebuilding efforts, has singled out widespread corruption and economic mismanagement as the source of the continuing decay.

The inspector general himself, Stuart Bowen, told the BBC in July that endemic corruption amounted to a "second insurgency" in Iraq, while what he calls "the volatile security environment" has also hindered progress.

But a close look at the accounts covered by Sigir's regular quarterly reports points to another reason for the faltering relief effort.

Iraq's shortfall

US government money, as appropriated by Congress in various spending bills, is only one component of the reconstruction fund. The rest comes from international donors and from Iraq itself.
Between December 2006 and June 2007, international aid went up slightly, from $15.21bn to $18.22bn - although most of the total ($13.59bn) was actually pledged at the Madrid donors' conference in October 2003.

IRAQ RECONSTRUCTION FUNDS
US government: $44.54bn
International donors: $18.22bn
Iraqi funds: $36.88bn
Total: $99.64bn
Source: Sigir, 30 June 2007

However, during the same period, there was a huge decline in Iraqi funds, from $50.58bn to $36.88bn.
The shortfall is contained in the Development Fund for Iraq (DFI), which represents Iraqi oil export revenues and repatriated assets. It shrank from $23.04bn to $9.34bn.

Sigir gives no explanation for the reduction in the DFI, which is now administered by the Iraqi government and therefore outside the auditor's remit.

But that decline, which completely negates the increase in US financial support, is probably due to the serious problems that continue to plague the Iraqi oil industry.

Confusion
The disarray in the oil sector was fully outlined two months ago in a damning report by another US agency, the Government Accountability Office (GAO), which highlighted "serious challenges" involving corruption, theft and sabotage.

As the GAO acknowledges, rebuilding the Iraqi oil industry is crucial to the country's economy.

Its reserves, at an estimated 115 billion barrels, are the third-largest in the world, while oil export revenues account for more than half Iraq's GDP and more than 90% of government revenues.

However, no-one seems to know exactly how much oil Iraq is currently producing, although the level has certainly fallen drastically since the invasion.

Different parts of the US administration report different figures, while the US and Iraq have different production targets. In any case, production levels may be overstated, because no-one is measuring them properly.

"The deteriorating security environment has led to project delays and increased costs," says the GAO.
"Insurgents have destroyed key oil infrastructure, threatened workers, compromised the transport of materials, and threatened project completion and repairs by preventing access to work sites."

Investor fears

As well as continuing violence, there are also political obstacles to the regeneration of Iraq's oil sector.
As the GAO says, Iraq has still to pass legislation that defines how to share the country's oil wealth and what rights foreign investors would have.

IRAQ'S ENERGY PRODUCTION
Electricity: 3,800 megawatts (pre-war: 4,000)
Oil: 2.12m barrels per day (pre-war: 2.5m bpd)
Source: Sigir, April 2007

"Until this legislation is enacted and implemented, it will be difficult for Iraq to attract the billions of dollars in foreign investment it needs to modernise the sector," the report says.

It's all a far cry from the optimism shown by key members of the Bush administration in the run-up to the Iraq war.

Paul Wolfowitz, who was deputy defence secretary at the time, maintained that Iraqi oil revenues alone would pay for rebuilding the country.

"We are dealing with a country that can really finance its own reconstruction," he assured the House of Representatives' budget committee - falsely, as it turned out.

Now the US wants Iraq to pass an oil law as a means of promoting reconciliation among different religious and ethnic groups.

Distribution of oil revenues is a big issue for Sunni Arabs, who mostly live outside oil-producing areas.
But fears are growing that far from uniting Iraqis, the prospect of economic growth may prove to be just another factor dividing them.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/6977728.stm

Published: 2007/09/06 22:34:56 GMT

Anti-Corruption in Iraq Colloquium Sept. 12, 2007 in Arlington, VA

The speaker at the colloquium is Paul Tyson, who I worked with at the Iraqi Commission on Public Integrity in 2005. He started at CPI in mid-2004 when I did, and he replaced the outgoing CPI founder, Chuck Grinnell in early 2005 and Paul left in mid-2005 before I did.
vj

Peace Operations Policy Program
School of Public Policy
Peace and Stability Operations Colloquium The Peace Operations Policy Program of the School of Public Policy, George Mason University is proud to present the following in its "Peace and Stability Operations Colloquium Series" of events:

Anti-Corruption in Iraq: The Bridge Too
Far?

Date:
Wednesday, 12 September 2007

Time:
1:00 PM-3:30 PM

Location:
George Mason University
3401 North Fairfax
Drive, Room 317
Arlington, Virginia
22201
(Virginia Sq/GMU Metro
station)
http://coyote.gmu.edu/map/arling.html

Speaker:
Paul H. Tyson

Paul H. Tyson has spent the last three years engaged in Iraq issues on behalf of the U.S.
Department of State. He will join us to discuss his time working as the senior U.S. Embassy official for the newly established Iraqi Commission on Public Integrity. Tyson is currently the Senior Director for International Business at PRO-telligent LLC. Prior to his Iraq work, he had been assigned to State's Office of the Inspector General (1999-2003) where he evaluated and suggested improvements for the Front Offices, Economic, Political and Public Diplomacy sections of U.S. missions overseas and in Washington, D.C. Other past positions include work in the Bureau of Political Military Affairs Executive Office (1998) to draft an agreement on Department of Defense-State personnel exchanges; in U.S.
Embassy Kuwait (1993-96) where he tracked the
$2 billion dollar foreign military sales program; in U.S. Embassy London (1989-93) where he served as an expert on electricity privatization; and in the U.S. Mission to the United Nations (1988-89) where he negotiated Third World debt resolution. Tyson also served as a civilian observer with the Multinational Force and Observers in the Sinai Peninsula (1985-86). He has a B.A. in Government-Urban Studies from Dartmouth College, a J.D. from George Washington University, and an M.S. in National Security Strategy from the National War College.

Host:
Robert W. "Bill" Farrand, Amb.
(Ret.)
Peace Operations Policy Program, GMU

RSVP: Please contact Dr. Allison
Frendak at 703.993.4983 or afrendak@gmu.edu

APEC Issues Reports saying, well, maybe corruption hurts foreign trade

This Australian article describes reports from APEC ( Asia-Pacific Economic Cooperation ) which talk about the need for member nations to combat corruption to improve trade between nations. Of course, one problem was when Australia's Board of Trade was found to have paid bribes to get wheat contracts with Saddam Hussein's Iraq via the Oil for Food program.

The quote I like is: "The report says "there is now an emerging body of evidence to support the view that corruption matters for trade"." Well... Duhhhh... Maybe the State Dept. and diplomats won't act on fixing corruption in countries receiving foreign aid, but if it harms economic trade, maybe the trading partners will force change?

See APEC info at : http://www.apec.org/

We could not find the new "Transparency or Anti-Corruption" reports on the website yet, however a search on "Transparency" yields entries going back to 2003 on the subject.

The notes from APEC's 2006 Anti-Corruption & Transparency task force are at:
http://www.apec.org/content/apec/documents_reports/anti_corruption_experts/2006.html

Here is a link to a June, 2007 entry on APEC's website about the Anti-Corruption & Transparency Experts Task Force...
http://www.apec.org/apec/apec_groups/som_special_task_groups/anti-corruption.html

vj

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from:
http://www.news.com.au/story/0,23599,22357218-2,00.html

APEC nations to tackle corruption

By Ean Higgins

September 04, 2007 01:00am
Article from: The Australian

APEC leaders will this week sign up to codes of conduct for business and government in a crackdown on the rampant corruption undermining trade and investment across the region.

Officials yesterday told The Australian that the anti-corruption initiative, to be announced later in the week, was one of the key economic results John Howard hoped to achieve from the summit.

It is understood that there will be two codes of conduct, one for government and one for the private sector.

The move comes as two official APEC reports released yesterday pointed to cronyism and corruption as major barriers to economic expansion.

Details of the code of conduct will be worked out during the APEC meeting.

But it is understood the codes will focus on the problems identified in the two reports, which say corruption and favouritism act as deterrents to traders and investors.

The reports say more transparent and efficient government regulation and better application of the rule of law can help reduce corruption by diminishing the scope and incentive for businessmen and traders to engage in illegal practices.

One report, "Transparency and Trade Facilitation in the Asia Pacific", says the APEC economies could increase trade by $US148 billion ($181 billion) if they adopted better practices, particularly eliminating "unofficial payments".

The authors of the report say Australia - whose trading reputation was damaged by wheat exporter AWB's $300 million corruption of the UN oil-for-food program in Iraq - could gain 3.7 per cent in improved trade through greater transparency.

The report says "there is now an emerging body of evidence to support the view that corruption matters for trade".

While not specifying corruption, the authors say some countries could increase their trade enormously if they "improved transparency".

The Philippines could raise its trade by 25 per cent by introducing more transparent procedures, while Vietnam could grow its trade by 50 per cent.

Better enforcement was one way to deal with corruption, making trade regulations and procedures less onerous, but more transparent and more predictable would reduce the incentive to go around them.

"Restrictive and non-transparent trade policy can constitute one important source of corruption incentives," the reports says. "By imposing unnecessarily high costs on 'legitimate' traders, such policies can make it worthwhile for exporters and importers to look for ways around legal requirements - and to be prepared to exchange bribes for 'services' in order to do so."

One of the authors of the report, World Bank economist John Wilson, said yesterday that "unofficial payments" were "off the books, and may be provided in order to get goods across the border".

"The trader might expect to pay, say, a $10 duty tax, a $10 charge for transport, a $10 administration fee to handle documents, and information would be published and available on these official payments," he told The Australian. "But then a trader might be demanded to go beyond it and make a payment to a customs official or other authority, which is not a legal official payment - it can't be found in any published regulation."

Mr Wilson cited another example of traders trying to get goods from the interior of a country to the sea for export, who encountered a series of roadblocks where police would ask for an "unofficial payment" to let the trucks through.

The codes of conduct would be expected to deal with this problem by making clear exactly what payments were official, cracking down on unofficial payments and generally improving and fast-tracking regulation and administration.

The theme was taken up by the executive director of the Centre for International Economics, Andrew Stoeckel, who wrote the other report, "Enhancing Investment Liberalisation and Facilitation in the Asia-Pacific Region".

Dr Stoeckel's study concentrates on "behind the border" barriers to investment.

He said inefficient practices and uncertain legal procedures discouraged investment but also encouraged corruption.

He cited as an example how in Canada an investor could deal with the paperwork to set up a business in two days, while in other countries of the region it could take up to a year.

"If it takes a year to legally set up a business, you might not bother with the legalities and just start doing the business," Dr Stoeckel said. "If an official later comes along and says, 'you don't legally exist', it's setting up the scene for corruption. If you streamline regulation, you're going to encourage investment, improve efficiency and get rid of corruption as well."