Corruption In Iraq & World

Overview of Prior Corruption Charges against Assassinated Benazir Bhutto

After the tragedy of Benazir Bhutto's assassination yesterday, I was reading that she was re-admitted to Pakistan by President Pervez Musharraf after he approved a waiver of outstanding corruption charges filed against her in earlier years. Her husband was also involved in corruption charges and did spend time in prison.

I am not using this to make any political statement other than our interest in reviewing corruption activities anywhere in the world.

Below is an extract from Wikipedia, which has a detailed description of the earlier corruption charges. And, Wikipedia also contained statements where Bhutto claimed that the charges were trumped up by an earlier Pakistani government to push her out of a Ministerial position she held in the past.

Thus, as we have seen in Iraq, an existing government can trump up charges of corruption to get rid of the opposition. In Iraq's case, as discussed in prior postings, the Commissioner of Public Integrity was accused of corruption by the existing government, and replaced.

(Note: Just today, news notices appeared saying that Kenya, one of the most corrupt countries, put their anti-corruption chief on leave for a year - details to follow.)

Here is my favorite quote about France from the article below. When I was in Iraq, the machinery we saw in Saddam's palaces were made by German or French companies.

At the time (1998), French corruption laws forbade bribery of French officials but permitted payoffs to foreign officials, and even made the payoffs tax-deductible in France. However, France changed this law in 2000.[31]

vj

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The extract below is from the Dec. 27, 2007 Wikipedia entries on Benazir Bhutto, and only contains the info on corruption charges - see the link for all the details. Remember, Wikipedia is written by volunteers, and any of the info below can be biased. Also, the Wikipedia site contains links to citations (the footnote numbers in brackets) for some of the details.
http://en.wikipedia.org/wiki/Benazir_Bhutto

Charges of corruption

French, Polish, Spanish, and Swiss documents have fueled the charges of corruption against Bhutto and her husband. Bhutto and her husband faced a number of legal proceedings, including a charge of laundering money through Swiss banks. Her husband, Asif Ali Zardari, spent eight years in prison on similar corruption charges. Zardari, released from jail in 2004, has suggested that his time in prison involved torture; human rights groups have supported his claim that his rights were violated.[11]

A 1998 New York Times investigative report[12] indicates that Pakistani investigators have documents that uncover a network of bank accounts, all linked to the family's lawyer in Switzerland, with Asif Zardari as the principal shareholder. According to the article, documents released by the French authorities indicated that Zardari offered exclusive rights to Dassault, a French aircraft manufacturer, to replace the air force's fighter jets in exchange for a 5% commission to be paid to a Swiss corporation controlled by Zardari. The article also said a Dubai company received an exclusive license to import gold into Pakistan for which Asif Zardari received payments of more than $10M into his Dubai-based Citibank accounts. The owner of the company denied that he had made payments to Zardari and claims the documents were forged.

Bhutto maintained that the charges leveled against her and her husband were purely political.[13][14] "Most of those documents are fabricated," she said, "and the stories that have been spun around them are absolutely wrong." An Auditor General of Pakistan (AGP) report supports Bhutto's claim. It presents information suggesting that Benazir Bhutto was ousted from power in 1990 as a result of a witch hunt approved by then-president Ghulam Ishaq Khan. The AGP report says Khan illegally paid legal advisers 28 million Rupees to file 19 corruption cases against Bhutto and her husband in 1990-92.[15]

The assets held by Bhutto and her husband have been scrutinized. The prosecutors have alleged that their Swiss bank accounts contain £740 million.[16] Zardari also bought a neo-Tudor mansion and estate worth over £4 million in Surrey, England, UK.[17][18] The Pakistani investigations have tied other overseas properties to Zardari's family. These include a $2.5 million manor in Normandy owned by Zardari's parents, who had modest assets at the time of his marriage.[12] Bhutto denied holding substantive overseas assets.

Bhutto and her husband until recently continued to face wide-ranging charges of official corruption in connection with hundreds of millions of dollars of "commissions" on government contracts and tenders. But because of a power-sharing deal brokered in October 2007 between Bhutto and Musharraf, she and her husband had been granted amnesty.[16] If it stood, this development could have triggered a number of Swiss banks to "unlock" accounts that were frozen in the late 1990s.[12][16] The executive order could in principle have been challenged by the judiciary, although the judiciary's future was uncertain due to the same developments. However, the death of Bhutto has now prevented any such accounts from being unlocked, and it is now up to the discretion of the Swiss banks as to where the funds ought to be placed.

Switzerland

On 23 July 1998, the Swiss Government handed over documents to the government of Pakistan which relate to corruption allegations against Benazir Bhutto and her husband.[19] The documents included a formal charge of money laundering by Swiss authorities against Zardari. The Pakistani government had been conducting a wide-ranging inquiry to account for more than $13.7 million frozen by Swiss authorities in 1997 that was allegedly stashed in banks by Bhutto and her husband. The Pakistani government recently filed criminal charges against Bhutto in an effort to track down an estimated $1.5 billion she and her husband are alleged to have received in a variety of criminal enterprises.[20] The documents suggest that the money Zardari was alleged to have laundered was accessible to Benazir Bhutto and had been used to buy a diamond necklace for over $175,000.[21]

The PPP has responded by flatly denying the charges, suggesting that Swiss authorities have been misled by false evidence provided by Islamabad.

On 6 August 2003, Swiss magistrates found Bhutto and her husband guilty of money laundering.[22] They were given six-month suspended jail terms, fined $50,000 each and were ordered to pay $11 million to the Pakistani government. The six-year trial concluded that Bhutto and Zardari deposited in Swiss accounts $10 million given to them by a Swiss company in exchange for a contract in Pakistan. The couple said they would appeal. The Pakistani investigators say Zardari opened a Citibank account in Geneva in 1995 through which they say he passed some $40 million of the $100 million he received in payoffs from foreign companies doing business in Pakistan.[23]

In October 2007, Daniel Zappelli, chief prosecutor of the canton of Geneva, said he received the conclusions of a money laundering investigation against former Pakistani Prime Minister Benazir Bhutto on Monday, October 29, but it was unclear whether there would be any further legal action against her in Switzerland.[24]

Poland

The Polish Government has given Pakistan 500 pages of documentation relating to corruption allegations against Benazir Bhutto and her husband. These charges are in regard to the purchase of 8,000 tractors in a 1997 deal.[25][26] According to Pakistani officials, the Polish papers contain details of illegal commissions paid by the tractor company in return for agreeing to their contract.[27] It was alleged that the arrangement "skimmed" Rs 103 mn rupees ($2 million) in kickbacks.[28] "The documentary evidence received from Poland confirms the scheme of kickbacks laid out by Asif Zardari and Benazir Bhutto in the name of (the) launching of Awami tractor scheme," APP said. Bhutto and Asif Ali Zardari allegedly received a 7.15% commission on the purchase through their front men, Jens Schlegelmilch and Didier Plantin of Dargal S.A., who received about $1.969 million for supplying 5,900 Ursus tractors.[29]

France

Potentially the most lucrative deal alleged in the documents involved the effort by Dassault Aviation, a French military contractor. French authorities indicated in 1998 that Bhutto's husband, Zardari, offered exclusive rights to Dassault to replace the air force’s fighter jets in exchange for a five percent commission to be paid to a corporation in Switzerland controlled by Zardari.[30]

At the time, French corruption laws forbade bribery of French officials but permitted payoffs to foreign officials, and even made the payoffs tax-deductible in France. However, France changed this law in 2000.[31]

Western Asia

In the largest single payment investigators have discovered, a gold bullion dealer in the Western Asia was alleged to have deposited at least $10 million into one of Zardari's accounts after the Bhutto government gave him a monopoly on gold imports that sustained Pakistan's jewellery industry. The money was allegedly deposited into Zardari's Citibank account in Dubai.

Pakistan's Arabian Sea coast, stretching from Karachi to the border with Iran, has long been a gold smugglers' haven. Until the beginning of Bhutto's second term, the trade, running into hundreds of millions of dollars a year, was unregulated, with slivers of gold called biscuits, and larger weights in bullion, carried on planes and boats that travel between the Persian Gulf and the largely unguarded Pakistani coast.

Shortly after Bhutto returned as prime minister in 1993, a Pakistani bullion trader in Dubai, Abdul Razzak Yaqub, proposed a deal: in return for the exclusive right to import gold, Razzak would help the government regularize the trade. In November 1994, Pakistan's Commerce Ministry wrote to Razzak informing him that he had been granted a license that made him, for at least the next two years, Pakistan's sole authorized gold importer. In an interview in his office in Dubai, Razzak acknowledged that he had used the license to import more than $500 million in gold into Pakistan, and that he had travelled to Islamabad several times to meet with Bhutto and Zardari. But he denied that there had been any corruption or secret deals. "I have not paid a single cent to Zardari," he said.

Razzak claims that someone in Pakistan who wished to destroy his reputation had contrived to have his company wrongly identified as the depositor. "Somebody in the bank has cooperated with my enemies to make false documents," he said.

Iraqi Cabinet Approves Amnesty Bill Draft, but NOT for the Corrupt

Iraq's Cabinet has approved an Amnesty draft bill, but Associated Press quoted an official saying it would not apply to those convicted of corruption... GOOD! The main intent is to provide amnesty to Baath party members and Sunni party members so they can work in the military, run for political office, etc. (not explained in the article below).

But, it won't be brought to their Parliament for discussion and voting until March.

So, the law might not be passed, or it might, but we won't know until March, 2008 or later. It is good, however, that they started out specifically excluding convicted corrupt officials from any amnesty.
vj

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from
http://ap.google.com/article/ALeqM5gkx-3oYeFwuWKCusr2jrojs98w8wD8TPCQ082

Iraqi Cabinet Approves Amnesty Draft

By BRADLEY BROOKS – 1 day ago
Associated Press

BAGHDAD (AP) — Iraq's Cabinet on Wednesday approved the draft of a general amnesty bill for detainees being held in Iraqi prisons, a measure which could go a long way toward reconciling Iraq's warring sects and factions.

But the measure will not be brought to parliament for debate until March at the earliest, said Sami al-Askari a key adviser to Prime Minister Nouri al-Maliki. Many key draft laws — including measures to share oil revenue and to allow some members of Saddam Hussein's Baath party to hold government jobs — have remained mired for months in Iraq's gridlocked parliament.

There was no immediate reaction from Sunni lawmakers who have in the past called for such a bill.

Al-Askari, who is a parliament member, said the amnesty would not cover those convicted of terrorism, corruption, crimes against humanity and kidnapping.

The draft will also not involve prisoners being held by American forces, said Sadiq al-Rikabi, another al-Maliki adviser.

Both the Iraqi government and the U.S. military each hold more than 20,000 prisoners detained since the U.S.-led invasion of 2003.

It wasn't clear how many prisoners might be affected by the proposed ban. Al-Askari estimated that "80 percent of those held in Iraqi prisons are there for terrorist crimes, therefore the amnesty would be for a limited number."

The Cabinet vote came as U.S. officials forecast less violence in Iraq in 2008, despite a planned reduction of American troops.

The combination of more Sunni fighters in the Iraqi army and a recent backlash against militants will allow U.S.-led troops to leverage their ability to subdue violent areas, according to U.S. military spokesman Maj. Gen. Kevin Bergner.

"Those forces will help coalition forces fight above their weight. They will help offset the reduction in coalition numbers," he told reporters.

The Bush administration plans to withdraw 30,000 American troops from Iraq by July, a reduction which would put the U.S. force level there at about 135,000.

In northern Iraq, Kurdish officials have delayed for six months the explosive issue of a referendum to decide if the oil-rich city of Kirkuk will become part of their self-rule area or remain under control of the Shiite-dominated central government.

There was no immediate comment from the Iraqi government in Baghdad, but the referendum was widely expected to be delayed by months.

Kirkuk is an especially coveted city for both the Shiite-dominated Iraqi government in Baghdad and the Kurdish one in Irbil, largely because much of Iraq's oil wealth lies below it.

The Iraqi constitution requires that a referendum on the future status of the city be held to determine whether it will remain under Baghdad's control, become part of Kurdistan or gain autonomy from both.

Meanwhile, the U.S. military said an insurgent killed last month has been identified as a senior leader of al-Qaida in Iraq and a former associate of its late leader Abu Musab al-Zarqawi, who was slain by U.S. forces last year.

Abu Abdullah, also known as Muhammad Sulayman Shunaythir al-Zubai, was killed by coalition troops north of Baghdad on Nov. 8. He was described in a military statement as "an experienced bomb maker and attack planner who coordinated numerous attacks on Coalition and Iraqi forces over the past three years, using a variety of improvised explosive devices combined with small-arms fire."

The U.S. military said two soldiers were killed during fighting Wednesday in Ninevah province in the north. Three other soldiers were wounded. The names of the soldiers were withheld pending notification of family.

Separately, a bomb explosion in Ninevah killed three children and wounded another two, the U.S. military said, quoting Iraqi police.

South African President elect accused of Corruption

South Africa's political party, the African National Congress (ANC), just elected a leader, Jacob G. Zuma, who will be next in line for President, and who is under investigation for corruption charges. He claims the charges are being filed by the incumbent African President, Thabo Mbeki, in order to make Zuma ineligible for Presidency.

The article lists some of the charges, but not many details, other than bribery is involved, and Zuma has previously been tried in courts for accepting bribes. Below the original article is another one published a day later by the Los Angeles Times.

Here, however, we see that South Africa does not have a truly independent anti-corruption investigation agency. The article says the existing group reports to the incumbent President Mbeki, and they are called the Scorpions.

Thus, the accusations could indeed be politically based, since the Scorpions are NOT independent of the country leadership. Apparently, their lack of independence is known, because the ANC also voted to have the Scorpions disbanded. Or, it could be that the ANC members don't care about corruption charges, and want them quashed so their newly elected leader can take office.

Thus, a lesson learned is that a country's anti-corruption agency and their staff must be independent of the leadership. It was that way in Iraq with CPI (Commission of Public Integrity) until the independent Commissioner of CPI was replaced in a coup by the Maliki government who placed another person in charge without following existing laws or using due process.

Quote from the article below about the new President Elect:

"Mr. Zuma was fired as South Africa’s deputy president in 2005 after investigators tied him to a bribery scandal involving a multibillion-dollar military contract for a French manufacturer. Mr. Zuma fended off a related corruption charge on procedural grounds earlier this year, but the accusations against him have never really gone away."

vj

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from NyTimes.com at:
http://www.nytimes.com/2007/12/21/world/africa/21safrica.html?_r=1&oref=slogin
Dec. 21, 2007

Prosecutor Says Zuma Charges Near

By MICHAEL WINES and GRAHAM BOWLEY
Published: December 21, 2007

JOHANNESBURG — South Africa’s chief prosecutor indicated Thursday that his agency would soon bring criminal corruption charges against the Zulu politician Jacob G. Zuma, two days after Mr. Zuma’s election as leader of the African National Congress put him in line to be the nation’s next president.

The acting head of the National Prosecuting Authority, Mokotedi Mpshe, said in a radio interview that a lengthy investigation of Mr. Zuma was complete and that “the evidence we have now points to a case that can be taken to court.”

Asked whether that meant that prosecution of Mr. Zuma was imminent, Mr. Mpshe replied, “I should say so.”

Mr. Mpshe’s remarks, broadcast on the Johannesburg station Talk Radio 702, signaled the advent of what is likely to be a long stretch of political turmoil until allegations of corruption against Mr. Zuma are resolved.

A criminal conviction would end Mr. Zuma’s political career, for South Africa’s constitution bars felons from becoming president of the country. Mr. Zuma has repeatedly suggested through his lawyer that the corruption inquiry is an attempt by enemies to destroy him politically, a charge many say is directed at South Africa’s president, Thabo Mbeki.

Mr. Zuma’s lawyer, Michael Hulley, repeated that on Thursday, telling Reuters: “I can only speculate that the actions of the national director are fueling and lending credence to the idea that state resources are being used against my client.”

Mr. Zuma soundly defeated Mr. Mbeki this week in the race for the leadership of the A.N.C. As president, Mr. Mbeki oversees the national agency that both investigated the corruption allegations against Mr. Zuma and is now preparing to bring charges. The A.N.C. adopted a policy statement this week urging that that agency’s investigative unit, nicknamed the Scorpions, be disbanded.

Both Mr. Mbeki and Mr. Zuma have vigorously denied any political enmity, and they took pains after this week’s leadership vote to make a show of unity and friendship, but political analysts generally agree that their rivalry runs deep.

Adam Habib, a leading analyst who heads a governance project at the Human Sciences Research Council, a research organization here, said it was unlikely that Mr. Mbeki was behind Mr. Mpshe’s announcement of an impending prosecution of Mr. Zuma.

Rather, he said, Mr. Mpshe probably intended to remove any doubt that Mr. Zuma’s new status as a political leader would deter his prosecution, which Mr. Habib said could begin early next year.

“They want to signal that it’s going to happen,” he said, “and I think they’ve made a strategic decision that they’re going to do so in a kind of off-the-cuff remark, to prepare the groundwork.”

The A.N.C.’s secretary-general, Kgalema Motlanthe, indicated at the A.N.C.’s national conference in Polokwane this week that Mr. Zuma would likely remain the party’s president throughout any criminal proceedings, saying it would be “very hard to act against somebody on the basis of allegations.”

Mr. Zuma was fired as South Africa’s deputy president in 2005 after investigators tied him to a bribery scandal involving a multibillion-dollar military contract for a French manufacturer. Mr. Zuma fended off a related corruption charge on procedural grounds earlier this year, but the accusations against him have never really gone away.

Prosecutors have long said that they were preparing to file new charges. But the comments Thursday come at a particularly sensitive time, two days after he ousted Mr. Mbeki as the party’s leader, and on the day when he planned a closing victory speech at the A.N.C. national conference.

Ahead of the A.N.C. election last week, South African newspapers quoted the prosecutors as saying that they had gathered enough new evidence on alleged bribes paid to Mr. Zuma to bring charges.

On Tuesday, after three days of politicking at the national conference , the A.N.C.’s 3,900 delegates voted to oust Mr. Mbeki as leader of the party and give the job to Mr. Zuma, whose popularity has surged despite facing the corruption charges and other rape charges. With his election, Mr. Zuma became the favorite to succeed Mr. Mbeki as president when Mr. Mbeki’s second term ends in early 2009.

Michael Wines reported from Johannesburg and Graham Bowley from New York.

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from Los Angeles Times on Thurs., Dec. 20, 2007
http://www.latimes.com/news/nationworld/world/la-fg-soafrica21dec21,1,692432.story?coll=la-headlines-world&ctrack=1&cset=true

S. Africa's Zuma may be prosecuted

The new leader of the nation's ruling party and presidential hopeful could face corruption charges.
By Robyn Dixon, Los Angeles Times Staff Writer
December 21, 2007

POLOKWANE, SOUTH AFRICA -- A top prosecutor said Thursday that South Africa's controversial new president-in-waiting, Jacob Zuma, could be charged with corruption within weeks, an action that could threaten Zuma's bid to take over the country's leadership.

The acting director of the National Prosecuting Authority, Mokotedi Mpshe, said there was enough evidence to prosecute him on corruption charges, stealing Zuma's thunder just before his first public speech as newly elected leader of the African National Congress, the country's ruling party. A conviction would dash his presidential ambitions.

Despite the legal cloud, Zuma took to the stage in the final hours of the ANC's national conference, where he was voted in as party leader this week, swaying with both arms raised and singing a victorious rendition of his trademark song, "Bring Me My Machine Gun."

In a news conference later, Zuma repeatedly sidestepped questions about the possibility of criminal charges being filed.

"I am not charged. There is no charge. Why should I discuss speculation about something that doesn't even exist? I would not be allaying fears, I would be raising fears."

He said there was no strategy in the ANC to deal with the possibility that he could be charged and face a lengthy court case.

If Zuma were convicted, his ally and the new ANC deputy leader, Kgalema Motlanthe, would step up as heir apparent to the country's president, Thabo Mbeki, whose term ends in 2009.

Mbeki, formerly a close ally, sacked Zuma as the country's vice president in 2005 after Zuma's former financial advisor, Schabir Shaik, was convicted of graft in a multibillion-dollar arms deal. Shaik was convicted of soliciting a $72,500-a-year bribe on Zuma's behalf from the French arms company Thint.

Shaik was also convicted of paying Zuma to push Shaik's business interests. Zuma later was charged, but the case was thrown out of court on a technicality; however, a court judgment this year opened the way for charges to be filed again.

A new court affidavit was filed last week outlining evidence that bribes taken by Zuma were as much as three times higher than previously thought. Zuma's legal team has fought to exclude some evidence in the case, while he mounted his campaign for party president.

His supporters insist that the charges were cooked up by his enemies to block him from the top ANC job.

In an unrelated case, Zuma was acquitted of rape last year.

One Mbeki supporter from the president's home town of Dutywa in Eastern Cape province, Victor Stofile, 42, a local councilor and conference delegate, said the renewed possibility of charges was problematic for the ANC.

"You can't take a person who has this doubt hanging over him and make him president of the ANC," he said.

In his speech to delegates, Zuma called for unity and sought to mend fences with Mbeki, his rival for the party presidency, referring to him as a friend, a comrade and a brother.

Zuma insisted that there was no bad blood between supporters of the two leaders who fought over every party position.

The Zuma camp, however, omitted the finance minister, Trevor Manuel, and the head of policy in Mbeki's presidency, Joel Netshitenzhe, from its ticket for the ANC's governing body, the national executive committee.

Zuma repeatedly brushed off questions about why Manuel, who is seen internationally as the linchpin of South Africa's economic stability, was not on the ticket. He said Manuel had done a good job of achieving fiscal discipline.

But perceptions that Manuel is being eased out by the Zuma camp and might be excluded from a future Zuma Cabinet will fuel unease in the business community and among investors about the country's economic direction.

Zuma's allies in the Communist Party and the unions complain that under Manuel, the government's policies have been too pro-business. Zuma, for his part, denied Thursday that there was concern in the business community about his links to the unions and the Communist Party, while pledging more consultation with his allies.

There were already signs emerging Thursday of a future clash between the two rival centers of power -- the ANC and the Mbeki government. One of the first battles is likely to be fought over the board of the state-owned network, the South African Broadcasting Corp., which is perceived as being supportive of Mbeki and the government.

Another issue will be the future of the Scorpions, the corruption task force that operates within the National Prosecuting Authority and has pursued high-profile investigations of Zuma and others. As well as electing Zuma, the ANC national conference voted to urge the government to dismantle the Scorpions and move a corruption and graft unit into the police force.

He has been reported as supporting a renewal of debate on the return of the death penalty, but denied raising the issue. However, he said that if the people of South Africa wanted to debate the issue, they should.

Before being voted in as leader, Zuma had hinted at a different approach than Mbeki's "quiet diplomacy" on Zimbabwe -- refraining from criticism of human rights abuses in order to engage the government of President Robert Mugabe.

But Zuma pledged to continue the quiet diplomacy, saying the targeted sanctions of Western countries against Mugabe and other Zimbabwean officials had achieved nothing.

robyn.dixon@latimes.com

SIGIR being investigated for Questionable Iraq Auditing Work Practices

The Washington Post published a large article (see bottom of this post) about 4 investigations of SIGIR work practices .(Special Inspector General for Iraq Reconstruction - see www.Sigir.mil ) I worked with some of the SIGIR people in Baghdad, and met Stuart Bowen. They were probably the most effective audit group there (not the DoD or Dept. of State IG's, or USAID's IG, or DCAA or the military IG's). The GAO wasn't allowed there by the State Dept, but SIGIR had many skilled ex-GAO auditors. Visit their website if you want to see a huge amount of audit reports and white papers on Iraq spending.

Keep in mind they were only authorized to examine Iraq reconstruction spending, not US Military, or other non-reconstruction spending (i.e. USAID spending from non-reconstruction funded sources).

However, I had some disagreements with SIGIR -

1) They wouldn't audit USAID programs, even though USAID had $4-billion in reconstruction projects.

2) They wouldn't do front end audits of contracts - which is where you walk through a contract and describe work process improvements needed BEFORE spending happens, rather than wait until all the mistakes are made, then audit at the end to catch mistakes. Business has been doing such front end audits for years, but not most government agencies, which focus on compliance and "close out" audits.

3) They wouldn't do operational audits of the US Army run procurement system used for reconstruction spending, thus I couldn't get them to investigate, and write recommendations on US Army system weaknesses that allowed LOTS of mismanagement. SIGIR seemed to focus on contract and spending compliance with regulations, and not on mismanagement. Operational audits are a focus of professional internal auditors certified by the Institute of Internal Auditors. Most government auditors don't have that certification.

4) At the time I was there in 2004-early 2006, SIGIR only had about 10-20 auditors in Baghdad, but about 130+ staff back in Washington, DC. WHY?? Lots of people back in DC had cushy administration jobs, and wrote some naive white papers, while more auditors (or accounting analysts to fix system problems) were needed in Baghdad. One partial reason is that the State Dept. wouldn't give them much space or living quarters because State didn't like having an outside agency (SIGIR was established as an independent audit group under a Presidential Directive) looking at their turf (after State took over responsibility for the Iraq Reconstruction Management Office in July, 2004). State's IG staff was nowhere near the level of the SIGIR auditors. (We already discussed their IG, Krongard, in earlier posts).

5) SIGIR's appointee leader, Stuart Bowen, was a lawyer appointed by Pres. Bush, and gave direction for headline resulting audits, not more appropriate technical audits that would have fixed system problems early. Instead, they did "close out" audits AFTER spending was done, so he could issue audits that got news headlines. However, by getting publicity, he probably encouraged faster oversight by House and Senate oversight committees, who always interviewed him. Bowen was also known for disappearing for days at a time from the DC office where he mostly was "based". He only visited Baghdad about 1-week of each quarter.

However, SIGIR was still better than the other audit groups, and had independent clout. The guys in Baghdad were good, but I didn't hear that about the non-audit, top heavy staff in DC.

And, here are my comments about specific topics in the article below:

1. Huge overtime for auditors - early on, there were only about 10 auditors, and they earned their money. I even talked to them once about working for SIGIR, but decided to stay with CPI. The article says people complained about big auditor overtime, but what they don't say is that that most auditors were very experienced, and were earning $125k already in normal Federal salaries, and when they added the two 25% standard bonuses (for danger zone, and hardship pay - now they are 35% each for a total of 70%), they could easily reach the Federal salary cap of about $210,000 before the end of 12 months. Because of the add-ons, they actually didn't ALL need overtime, and they couldn't work more OT to meet Bowen's aggressive audit schedules. So, some were pushed into more OT because Bowen wanted more work done, and they had a hard time hiring people in 2004 and 2005. EVERYBODY in Baghdad was getting the add-ons (my words, not theirs), working overtime and many in IRMO reached the salary cap. The article mentions one auditor who got $346,000 - I don't see how if the salary cap was $215,000 in 2006. One way some got higher amounts was to work in one year with overtime until they hit the limit, then take leave until the next year, then return and work overtime for a new salary cap. One Sr. Advisor for Telecommunications was notorious and did it TWICE in two sessions of about 6-months in 2004 and 2005. He is the one that should have been audited and I bet some complaints about him were filed with IG's or SIGIR. I tried to get IRMO to set up their own internal audit group, but it didn't happen. However, unofficially, I acted as a reviewer of some SIGIR audit reports for them before they were issued to evaluate accuracy. SIGIR staff were much more sophisticated than most IRMO staff regarding audit evidence and reports, thus they kind of ran over IRMO since they did not have a trained CFO or internal auditor to stand up to them about the contents in the reports.

2) Spending $3.5-million on a book project. I read one of the early versions for factual accuracy for IRMO while in Baghdad, and it was all external research by people in Washington DC who talked to early staff who worked in Iraq, but the writers (Deloitte & Touche? mentioned also in the article) NEVER actually visited Iraq or talked to staff still working in Iraq at the time of writing the book. I had to review it for accuracy on behalf of IRMO, and told them it was all old information that didn't make any real recommendations and was not about current situations. It was more like a history of IRMO book with over 100 pages and was later posted on Sigir.mil . I had been told in early 2006 that the contractor that had people writing the book were "good friends" of someone in SIGIR (Ginger Cruz - mentioned in the article which says she used to work at D&T). Many of the workers in IRMO hq in DC were contractors, from what I was told. In my mind, they had too much money, and found people to help spend it on non-audit activities Most normal audit departments focus on having auditors in the field, and they should have had 60-80% of their staff in the field in Baghdad, not sitting in DC. However, as a record of how processes failed in Iraq, the book had merit.

3. Snooping in email messages of staff members - SIGIR used military email plus they had State Dept. emails like we did. (Originally, in 2004, everyone had email on a dedicated IRMO internal email system, then we moved to a military system, then State Dept. - the story about screwed up email systems and planning could be a book by itself...) However, if they snoop in late 2004 or 2005 SIGIR emails, they might find emails from me to SIGIR leaders documenting the breakdowns in the US Army procurement system for IRMO, and pleading to get an audit of them and USAID projects. I know I got so mad at the US Army's procurement mismanagement one time I sat down and wrote for about 4 hours straight and sent the emotional email to the SIGIR Baghdad leader. As for snooping, we were always told that our email was subject to reviews, and IT security caught some military officers who posted Secret documents on the public email, and the State Dept. researched emails from the new CFO in early 2006 and fired him for emailing info to the press (that was the rumor ) - I had no direct info on that, but they turned off his email before they fired him, and came and took his PC's hard drive in the same day - but I was there in the office when it happened. Oh, and he had no CFO experience - they replaced him with an ex figher pilot and retired Lt. Col from the Air Force who didn't understand any accounting. That is when I decided to leave - not one guy in the new CFO office was experienced in accounting and finance except me and one Captain. They were all hired through Bearingpoint because the DC based office of IRMO lost their good recruiter, and a very weak one couldn't find any candidates.

As mentioned at the top, I thought the SIGIR auditors still did a great job, but their audit reports were modified in DC for publicity gains and Bowen demanded extravagant statements of potential losses not supported by audit evidence - and the DC staff was overstaffed vs the number of auditors in Baghdad. For instance, some 2005 reports took "shots" at IRMO in unprofessional ways, and discussions with the local Baghdad SIGIR auditors indicated the reports were rewritten in DC to use inflammatory words to get publicity. Thus I volunteered to review the SIGIR reports for accuracy on behalf of IRMO in late 2005 and early 2006 and we reduced some of the extravagant claims. That is supported by the article below which says they revised a total "savings" over $1-billion down to $95-million. They could have found much more if they did operational audits like businesses do.

Review of the Comments submitted on the Washington Post website

- Some people complained that the writer and other investigations were doing hit pieces against Bowen as repayment for exposing problems in Iraq. When I was in Iraq, we all thought Bush was showing courage to let SIGIR report on issues to clean stuff up rather than hide it. Believe me, the State Dept. and USAID resisted any oversight by outsiders, and they needed reviews. IRMO, and its spending was supervised by two past US State Dept. Ambassadors who had no business or project management experience. Procurement was run by US Army systems that Bush had no control over - the military just didn't focus much on cost control or accounting controls or "efficiency, effectiveness and economy". In comparison, the much maligned KBR (Halliburton) ran the camp and food operations very well.

So, even though SIGIR was still somewhat effective, and the SIGIR auditors I knew in Baghdad were professional, next time, Bush or future presidents should appoint experienced audit professionals, not attorneys, to run SIGIR type operations (and also Cabinet Inspector Generals!!!). Then many findings might have been solved in private earlier to improve the credibility of the reconstruction program. Attorneys don't understand accounting or controls, and try to turn reports on them into flamboyant statements to get attention, rather than focus on improving the systems in place.
vj

==================================================
from the Washington Post on Friday, December 14, 2007 at:
http://www.washingtonpost.com/wp-dyn/content/article/2007/12/13/AR2007121302178_pf.html

Note: As of 4 days later, there were 60+ comments posted to the Washington Post's website about this article - so go to the above web address if you want to see them.

Inspector General for Iraq Under Investigation
FBI, Congress Among Those Probing Allegations of Overspending, Mismanagement

By Robin Wright
Washington Post Staff Writer
Friday, December 14, 2007; A01

Over the past four years, Inspector General Stuart W. Bowen Jr. and his staff have probed allegations of waste and fraud in the $22 billion U.S. effort to rebuild Iraq. Their work has led to arrests, indictments and millions of dollars in fines. And it has earned Bowen, who had been a legal adviser to President Bush, many admirers among both parties on Capitol Hill for his efforts to identify overspending and mismanagement.

But Bowen's office has also been roiled by allegations of its own overspending and mismanagement. Current and former employees have complained about overtime policies that allowed 10 staff members to earn more than $250,000 each last year. They have questioned the oversight of a $3.5 million book project about Iraq's reconstruction modeled after the 9/11 Commission report. And they have alleged that Bowen and his deputy have improperly snooped into their staff's e-mail messages.

The employee allegations have prompted four government probes into the Office of the Special Inspector General for Iraq Reconstruction (SIGIR), including an investigation by the FBI and federal prosecutors into the agency's financial practices and claims of e-mail monitoring, according to law enforcement sources and SIGIR staff members. Federal prosecutors have presented evidence of alleged wrongdoing to a grand jury in Virginia, which has subpoenaed SIGIR for thousands of pages of financial documents, contracts, personnel records and correspondence, several sources familiar with the probe said.

The House Oversight and Government Reform Committee, the Presidential Council on Integrity and Efficiency, and the Army's Equal Employment Opportunity Office are also engaged in separate investigations into complaints from SIGIR staff members, according to current and former SIGIR officials and others familiar with the individual probes. The allegations range from retaliatory firing of a whistle-blower to "sustained patterns of inappropriate behavior," according to employee complaints obtained by The Washington Post.

Bowen declined a request for an interview but addressed several questions by e-mail. He said that "no current SIGIR official has been notified that he or she is the subject or target of any such investigation." He also said the congressional investigation had ended, and he refused to comment on the complaint to the Army.

Spokesmen for the FBI, the U.S. attorney for the Western District of Virginia and the presidential council refused to comment, but law enforcement sources said all three investigations are continuing. David Marin, the minority staff director of the House oversight committee, said yesterday that the congressional investigation, which focuses on charges made by SIGIR whistle-blowers, "is ongoing."

There are now so many probes that a senior SIGIR official said the agency's Crystal City headquarters is "gripped by paranoia. It's almost a siege mentality."

That official, and more than two dozen other current and former SIGIR employees interviewed for this article, spoke on the condition of anonymity because FBI and presidential council officials have asked them to refrain from public comments while the investigations proceed. Others did not want to be quoted by name because of fear of retribution by top SIGIR officials.

SIGIR was created by Congress in 2004 to act as the chief watchdog over the effort to stabilize Iraq by building hospitals and schools, training security forces and increasing electricity production. The agency quickly earned a reputation as a tenacious, apolitical investigative body, identifying cases of corruption, wasteful spending and mismanagement that have led to 13 arrests and more than $17 million in fines.

Members of Congress have heaped praise on Bowen, who served as a legal adviser to Bush when he was governor of Texas. He has been asked to testify at dozens of congressional hearings. Democrats have expressed particular delight that a close ally of the president's was willing to speak out about problems with Iraq's reconstruction.

SIGIR claimed in an October 2006 report that its "financial impact" -- the cost savings resulting from its work, the funds it recovered and other benefits -- was as much as $1.87 billion. The report led to an extension of SIGIR's mandate last December. "SIGIR's oversight during this process has been essential to ensuring that the taxpayers' dollars are being used effectively and efficiently," Sen. Norm Coleman (R-Minn.) said at the time.

But after other government agencies challenged that figure, arguing that proper accounting standards were not used in calculating the estimate and that SIGIR did not distinguish between U.S. funds and Iraqi funds, SIGIR revised the number in a report this summer. The new estimate was less than $95 million, only 5 percent of the previous claim.

Government investigators have requested copies of many SIGIR records on costs and savings, according to an investigative document and people familiar with the probe. SIGIR changed its calculations this year, Bowen said, to reflect actual savings and not potential savings.

As SIGIR grew in prominence, dissension was growing within the agency's offices. In 2006, several former SIGIR employees sent an eight-page complaint to the presidential council, an executive-branch oversight body, alleging that the agency's leaders had engaged in fraud, violated federal regulations, created a hostile workplace, abused their positions and "sustained patterns of inappropriate behavior." The council launched an investigation and eventually referred some of the matters to the FBI.

In an e-mail to SIGIR staff members, Bowen described the complaint filed with the presidential council as a result of "disgruntled former employees."

Since then, investigators have broadened their inquiry to include allegations that SIGIR management may have tried to influence staff members who were sought for questioning by investigators, according to people familiar with the inquiry.

Among the issues that have sparked the most internal tension have been SIGIR's overtime practices. Last year, 30 agency employees earned more than the $165,200 salary of a senator or a congressman, according to internal SIGIR documents obtained by The Post. Seven earned $100,000 or more above their salaries, the documents show. More than two dozen earned more than the $174,900 in salary and benefits paid last year to Gen. David H. Petraeus, the top U.S. military commander in Iraq. One SIGIR inspector, who had a $142,000 base salary, earned $346,017 last year, in part by claiming more than 1,200 hours of overtime.

SIGIR staff members, like other federal civilian employees, receive hazard and hardship pay equal to 70 percent of their salaries when they are in Iraq.

At least 30 SIGIR employees charged between 800 and 1,400 hours of overtime and compensatory time in 2006 -- up to almost nine months of additional work stuffed into the year. Thirty-seven others charged between 200 and 725 hours of overtime and comp time.

"The number of hours didn't wash," said a senior SIGIR official. "It's physically and mentally impossible to work that many hours."

Bowen's deputy, Ginger Cruz, said SIGIR's overtime practices are "cost-effective" because one employee earning maximum overtime is cheaper than hiring two people. She said SIGIR this year reduced overtime allowances to 24 hours per two-week pay period. She also noted that other U.S. government agencies provide generous financial packages to employees serving in Iraq.

Federal employee salaries are subject to an annual cap, which is $215,000 for this year. But additional earnings can be paid out the following year or after workers leave the agency.

Government investigators are also probing SIGIR's other expenses, including the book project about Iraq's reconstruction, according to staff members questioned by investigators. The presidential council informed SIGIR last year that the agency was being investigated for "possible fraud, waste and abuse in connection with the printing of the SIGIR history book and possible false statements made to the Office of Management and Budget to justify SIGIR funding," according to a copy of a letter from the council to SIGIR obtained by The Post.

Bowen described the book as SIGIR's "potentially most important project" in a memo he sent last month to the secretaries of state and defense and eight congressional committees.

According to people questioned by investigators and documents obtained by The Post, one of the most serious allegations that the FBI and federal prosecutors are probing is whether top SIGIR officials broke federal laws by accessing employee e-mail messages stored on computers maintained by the Army without proper authorization.

At least four former senior SIGIR officials said they told investigators that Bowen and Cruz looked at employee e-mail. One of them claimed to be an eyewitness to Bowen going through the e-mail of three employees. Another said Bowen and Cruz read the messages "to find out who was loyal and who was not."

The former officials said the e-mail monitoring began in 2005, before the government investigations commenced. They said the monitoring continued into this year in an effort to identify employees suspected of speaking with investigators and other government agencies.

In an interview, Cruz said she participated in administrative investigations "some time ago" that involved a "limited review" of three people's e-mail. Bowen said that "SIGIR policy states that employees do not have an expectation of privacy in the use of their government computers. . . . E-mail reviews can, and have been, conducted by SIGIR management to investigate allegations of work-related misconduct."

The investigations are focusing largely on the actions of Bowen and Cruz, according to current and former senior staff members who have been questioned, as well as congressional sources and other U.S. officials familiar with the probes.

Cruz, a former spokeswoman for the governor of Guam, originally joined SIGIR as a contractor working for the accounting firm Deloitte & Touche. Current and former SIGIR employees have told investigators that Cruz threatened to put hexes on employees and made inappropriate sexual remarks in the presence of staff members. Cruz is a self-described wiccan, a member of a polytheistic religion of modern witchcraft. "We warned Ginger not to talk about witchcraft, that it would scare people," a former SIGIR employee said.

Cruz denied making comments of a "sexual nature" and noted that she was cleared of any wrongdoing by an internal SIGIR investigation into the claim.

After the detailed but anonymous complaint was sent to the presidential council, Cruz sought special dispensation from Bowen for SIGIR to pay her legal fees -- an uncommon practice within government, according to U.S. officials. So far, the agency has paid for more than $32,000 of Cruz's legal fees, according to copies of the invoices provided by SIGIR under a Freedom of Information Act request. Bowen said the agency's general counsel advised him that the payment of Cruz's legal fees was permissible.

The Army's Equal Employment Opportunity Office probe is focusing on a complaint by a former employee who had raised allegations of SIGIR discrimination in the dismissal of her African American assistant, which she charges led to her own dismissal in retaliation. The employee, Denise Burgess, stated in her complaint that she was terminated on the same day she spoke to the presidential council, just two months after receiving an $8,500 bonus from Bowen for exemplary work. Current and former SIGIR employees said they have been asked by FBI investigators about Burgess's termination.

Several staffers interviewed at the suggestion of SIGIR expressed loyalty to Bowen. One senior staff member said he has not seen any firsthand evidence of illegal or inappropriate behavior.

Several current and former officials expressed concern that the practices of SIGIR's leaders are discrediting the work of the agency. "SIGIR's purpose was to look at reconstruction and then go away," said a former senior official. "Are they contributing to the good anymore? No. Were they before? Yes. But they should have stuck to the plan and been willing to stand down in 2008."

Staff researcher Julie Tate contributed to this report.

Barack Obama's Stand on Foreign Aid & Corruption

Presidential Barack Obama is considered to be a Kenyan-American. This article popped up on a website with lots of details related to Barack Obama's stand on foreign policy, foreign aid, and some comments about corruption related to US foreign aid. You have to go near the end of the article to find the info on corruption.

The interesting quotes on corruption are:

"Mr Obama’s international policy proposals are not limited to feel-good appeals to help poor nations.

The Kenyan-American candidate also calls for intensified US efforts to combat corruption in the developing world. The aim should be not only to prevent waste of American taxpayers’ money but to alleviate the injustices experienced by bribe-payers, Mr Obama says. His policy paper cites the graft routinely demanded in “police encounters, school admissions processes and housing accessibility.”

The senator promises to add a section on corruption to the State Department’s annual country reports on human rights.

Mr Obama makes clear that he will take a hard line on international terrorism. Calling for a $5 billion global offensive, he pledges to “take down terrorist networks from the remote islands of Indonesia to the sprawling cities of Africa.”"

My Comments:
- It seems that Obama has enough ties to Kenya (which has a VERY low ranking on the Transparency International Corruption Index) that he seems more sensitive to foreign aid issues, and the effects of corruption and bribes in African nations.
- Caveat - I don't know who the "special correspondent" is, so some information might be incorrect.
vj
=================================================
from the East African news section of Nationmedia.com
http://www.nationmedia.com/eastafrican/current/News/news1712200710.htm

How a President Obama would fix Africa

By KEVIN J KELLEY
Special Correspondent

Citing his status as “the son of a Kenyan goat herder [with] family in Kenya,” Senator Barack Obama is arguing that his life experience makes him “uniquely suited to show the world a new face of America.”

Should he be elected president of the United States, Mr Obama adds in a campaign paper on global development, he will encourage a more favourable view of the US by engaging with “all nations — foe and friend.”

This inclusive approach will reverse a widespread perception of “American arrogance and obstrutionism,” the candidate declares.

Mr Obama also pledges to double US assistance to developing countries, bringing the total amount of American aid to $50 billion a year by 2012. Such an investment would pay dividends, he says, because “the security and wellbeing of each and every American is tied to the security and wellbeing of those who live beyond our borders.”

US relations with African nations are given emphasis in Mr Obama’s set of international policy proposals.

He promises, for example, to launch an Add Value to Agriculture Initiative aimed at triggering a Green Revolution in Africa. This programme would forge US government partnerships with charities, universities and businesses to spur research on “improved seeds, irrigation methods and affordable and safe fertilisers.”

Mr Obama would also commit the US to helping African nations achieve the Millennium Development Goals. He promises to use new US aid to “build healthy and educated communities, reduce poverty, develop markets, and generate wealth.”

The paper’s focus on issues of high concern to Africa reflects the influence of Susan Rice, a former assistant secretary of state for African affairs. Ms Rice ranks as one of Senator Obama’s top foreign policy advisors. She worked in the administration of President Bill Clinton, as did former National Security Advisor Tony Lake, another key figure in the Obama campaign.

These Clinton administration officials’ alignment with Mr Obama indicates that they view him as potentially more effective than Senator Hillary Clinton.

The London-based Economist magazine recently described Mrs Clinton’s global vision as “mostly dull but sensible.” The former first lady has offered proposals similar to Mr Obama’s in some respects and likely to be viewed by many Africans as superior to the policies pursued by President George W. Bush.

But among the leading Democratic presidential candidates, “Barack Obama has probably thought the hardest about foreign policy,” the Economist observed. “When replying to questions, he tries to answer them, rather than simply shooting out scripted sound-bites.”

Sarah Jane Hise, a Washington-based researcher with the non-governmental Centre for Global Development, agrees that Senator Obama’s global policy proposals stand out among those offered by the Democratic candidates.

“Obama has so far been the most complete in covering a range of global development issues beyond just aid, including agricultural development, trade, climate change, investment and security,” Ms Hise says.

She also gives Ms Clinton a positive evaluation. The New York senator “does a good job of focusing on specific policies related to health and education, including a proposal to spur innovation and the development of drugs to treat diseases that primarily affect poor countries, such as malaria and pneumococcal disease, through an advance market commitment for vaccines,” Ms Hise observes.

But the two leading Democratic candidates can be sharply critical of one another’s views and records.

In a testy exchange two weeks ago, Senator Clinton derided Senator Obama’s claim that the four childhood years he spent in Indonesia helps him understand the world better than his rivals. The Obama campaign shot back by linking Mrs Clinton to the disastrous war in Iraq.

Voters will judge whether living in a foreign country at the age of 10 prepares one to face the big, complex international challenges that the next president will face,’’ Mrs Clinton said. “I think we need a president with more experience than that.’’

As the race for the Democratic Party’s presidential nomination tightens, the frontrunning Senator Clinton, 60, has been suggesting that the 46-year-old Senator Obama cannot match the knowledge she has acquired by living in the White House for eight years and by visiting Iraq, Russia and African countries.

Referring to the US vice president and to the former Pentagon chief, an Obama campaign spokesman said in response to Mrs Clinton’s criticisms: ‘’Dick Cheney and Don Rumsfeld have spent time in the White House and travelled to many countries as well. But along with Hillary Clinton, they led us into the worst foreign policy disaster in a generation.’’

As a US senator, Mrs Clinton voted to authorise the invasion of Iraq. Senator Obama, then a member of the Illinois state legislature, strongly opposed the 2003 US invasion.

Mr Obama’s international policy proposals are not limited to feel-good appeals to help poor nations.

The Kenyan-American candidate also calls for intensified US efforts to combat corruption in the developing world. The aim should be not only to prevent waste of American taxpayers’ money but to alleviate the injustices experienced by bribe-payers, Mr Obama says. His policy paper cites the graft routinely demanded in “police encounters, school admissions processes and housing accessibility.”

The senator promises to add a section on corruption to the State Department’s annual country reports on human rights.

Mr Obama makes clear that he will take a hard line on international terrorism. Calling for a $5 billion global offensive, he pledges to “take down terrorist networks from the remote islands of Indonesia to the sprawling cities of Africa.”

Kenyans campaigning for their country’s inclusion in World Bank and International Monetary Fund debt-forgiveness initiatives will be disappointed by this section of Senator Obama’s policy paper. It urges full funding for the IMF’s Heavily Indebted Poor Countries programme (HIPC) but does not call for countries such as Kenya to be made eligible for HIPC debt relief.

Senator Obama also makes only vague references to the reforms of the World Bank and IMF that he says he would seek as president.

The US Agency for International Development, which underwent significant downsizing during the Bush years, would be “restructured and empowered” by an Obama administration, the paper says. An expanded global Aids relief programme and the Millennium Challenge aid initiative would be consolidated within USAid along with other international assistance efforts now housed in more than 20 US government agencies.

Iraq Warehouse Builder from Kuwait benefits from DoD

Well, I don't have a WSJ account, but the beginning of their article below indicates that for the Iraq war, the US military used a Kuwaiti firm to build warehouses, and there might be some corruption involved...

So, this is a placemarker until I find more about it from other sources.
vj
=========================================
from:
http://online.wsj.com/article/SB119785868811632829.html?mod=googlenews_wsj

How Iraq Conflict Rewards A Kuwaiti Merchant Family
By Cam Simpson and Glenn R. Simpson
Word Count: 2,147 | Companies Featured in This Article: Sara Lee, ConAgra Foods

KUWAIT CITY -- The war in Iraq, like all wars, has yielded a bonanza for military suppliers. Few have prospered as spectacularly as the Sultan Al-Essa family of Kuwait.

Delivering everything from machinery to T-bone steaks to U.S. forces, a company the Sultans dominate, Public Warehousing Co., has landed billions of dollars in work for the U.S. Defense Department.

It's a risky business. Dozens of employees have been killed in Iraq. But through tough tactics and adroit maneuvering, Public Warehousing and the Kuwaiti merchant family behind it have provided U.S. commanders in Iraq with what they need -- lots of ...

Corruption House - Republicans Accused, but really aren't guilty

This is a great blog article on corruption in a specific country. At first, it appears to be about the US government, but really isn't - you have to read the ENTIRE article for the surprise ending!
vj

=========================================

from
http://www.thoughtleader.co.za/thespike/2007/12/04/corruption-house/

Corruption House
by Ivo Vegter
Dec. 4, 2007

US Vice-President Dick Cheney, before entering office, resigned from oil services company Halliburton and ring-fenced any remaining shareholding interests he has in the firm to ensure that he could in no way personally benefit from (or be financially hit by) the company’s performance.

The company has since won services contracts worth at least $1,7-billion from the US Department of Defence. Most of them involve the reconstruction of post-invasion Iraq. Calls for impeaching Cheney or Bush or both haven’t got far, mostly because it couldn’t be shown that anybody in the Bush administration stood to gain by the contracts in any way.

But this isn’t the end of the story. It has now emerged that members of the Republican party, including its treasurer, play an active role in managing a company that owns a 25% stake in Halliburton. Worse, senior Republican Party officials have admitted that the sole purpose of this vehicle is to fund the GOP itself. So, the Grand Old Party has grandly profited from the reconstruction contracts awarded after the invasion of Iraq.

This, surely, will put the final nail in the coffin of the Bush administration? Surely, in any civilised democracy, such a government must fall?

Except … none of this is true. At least, this picture isn’t true unless you change a few names.

Meet Mendi “Money Man” Msimang (photo courtesy M&G)Substitute ANC for GOP. Change Halliburton to Hitachi Africa. Let state-owned utility Eskom play the role of the Department of Defence. Replace reconstructing Iraq with upgrading South Africa’s neglected and decrepit power-generation infrastructure. For the Republican party treasurer, insert the name of ANC treasurer Mendi Msimang, and for the senior Republican party officials, substitute the name of Kgalema Motlanthe, the ANC’s secretary general.

The value of $1,7-billion, however, is just about right. That’s roughly equivalent to the 60% share of the R20-billion contract that Hitachi Africa will handle to build six utility steam generators for the Medupi power station. Medupi, in the Limpopo province, is the first new base-load station to be built in two decades. The contract in question is the largest slice of the R80-billion project and the largest contract Eskom has ever awarded. By comparison, the largest arms-deal component, for the Gripen jet fighters and Hawk trainers, was worth less: a trifling R16-billion and change.

And to match the final detail in the picture sketched earlier, Hitachi Africa has a 25% shareholder in the form of Chancellor House, which has been described by none other than Motlanthe as funding vehicle for the ANC. This is according to the Mail & Guardian’s exposé on the deal, written by veteran corruption-busters Stefaans Brümmer and Sam Sole. The paper also wrote an editorial explaining why the use of public money to fund the private political ambitions of the ruling party is a problem.

This, surely, will put the final nail in the coffin of the Mbeki administration? Surely, in any civilised democracy, such a government must fall?

The growth of state corporatism and the corrupt cronyism it breeds is a very troubling development in South Africa. I’ve argued before why the notion that it’s OK for politicians to own interests in media companies needs revisiting. Perhaps it goes too far to argue that they shouldn’t have any private interests at all, but if they are permitted to own and operate private businesses, surely they should not benefit from juicy government contracts paid for by taxpayers? Even when such deals are not intrinsically corrupt, the scope for embezzlement and political gain bought at the public’s expense should be cause for alarm.

I’m surprised this case has received so little media coverage in the 10 days since the M&G first broke the story. But the silence of the usually strident media may be a blessing in disguise. The ANC could take the moral high ground and hand out leaflets to its members at its national congress explaining the difference between outright corruption and mere crony capitalism. It could even stage an informative public debate: Jacob Zuma and Thabo Mbeki could each take a side, and explain why their version is the more honest and defensible way of spending taxpayers’ hard-earned money.

Background on new Embassy Baghdad Office of Accountability

I just found these March, 2007 blog reports describing a short interview with Boots Poliquin, the new (March, 2007) head of the Embassy Baghdad Office of Accountability & Transparency. He seems to be talking about things I wrote in white papers in 2005 and early 2006, but the State Dept. wouldn't even have meetings on the subject. In mid-2007 I found out about him and wrote an email, but never got a response. He graduated law school about 2000, and is not an accountant or auditor.

Unfortunately, that means he will take a legal approach to issues, rather than a business or accounting control process approach.

And, these articles are all from a formal press conference held with Poliquin in March. The State Dept. would never let us (CPI) or other Iraq Reconstruction Management Office (IRMO) advisors talk to the press in 2004-2006 when I was there, thus we couldn't tell the press that we already were doing or knew all the things that Poliquin discussed in this press conference.

He is too young - he won't get the respect of any of the leaders in the Iraqi Inspector General's offices, or the Board of Supreme Audit, or CPI. And, since he isn't an accountant or auditor, and doesn't have relevant certifications in the field, the IG's and BSA leadership won't respect his opinions. (I have gray hair!)

vj

=============================================
From Reuters
http://www.alertnet.org/thenews/newsdesk/PAR644015.htm

Ministerial veto, violence block Iraq graft fight
06 Mar 2007 14:06:47 GMT

By Claudia Parsons

BAGHDAD, March 6 (Reuters) - Lack of security for investigators and ministerial vetoes of investigations are hampering efforts to tackle graft in Iraq, one of the world's most corrupt countries, a U.S. official said on Tuesday.

Boots Poliquin, director of the newly formed U.S. Office of Accountability and Transparency (OAT) in Baghdad, said he was working to set up a Joint Anti-Corruption Council to help Iraq's graft watchdogs work better together.

Poliquin told a news conference in Baghdad that the Iraqi ministry with the most allegations of corruption was the oil ministry, followed by the interior and defence ministries.

"Those are the top three where we see allegations," he said. "But remember, an allegation is simply that. It's an allegation until a case has fully gone through the system."

Bringing cases to prosecution, however, has proved difficult. Poliquin said that since the establishment of a Commission on Public Integrity in 2004, around 2,627 cases had been brought to it, of which 450 had moved forward to court.

"(That) has resulted in 80 arrests and from that six formal adjudications," Poliquin said.

Transparency International, an independent watchdog that monitors corruption around the world, placed Iraq second from bottom on its 2006 survey of 163 countries.

Critics say many Iraqi ministries are run as fiefdoms of the political party in charge with cronyism and corruption rampant, particularly in the oil sector. A U.N.-sponsored audit last year found hundreds of millions of dollars of oil revenue wrongly tallied or simply missing entirely in 2005.

SECURITY CHALLENGE

Amid sectarian violence that killed more than 34,000 civilians last year, according to U.N. figures, those who investigate corruption are obvious targets.

Poliquin said security was "one of the great challenges" facing anti-corruption bodies.

"The security issue does effect the ability to move cases forward," he said, adding that part of his budget would be allocated to providing safe offices for corruption investigators within the fortified international Green Zone in Baghdad.

Poliquin said his office had offered funding for armoured vehicles.

"I think as the security situation improves, or as we assist in getting a more secure environment for these individuals, more cases will be brought forward," he said. But violence was not the only obstacle to prosecuting cases.

"One of the more prevalent reasons we're seeing is that when a case moves along ... there is an article that the relevant minister can invoke to basically stop a case," he said.

"There are a number of ministers that have done that," he said, declining to say which ministers.

"That's part of the law," he said. "If you don't like it, the organisations need to work together to change the law."

Asked if that amounted to institutionalised corruption, Poliquin said: "It could be seen as that."

But, he added, it could also be argued the article was meant to avoid frivolous allegations from crippling official business.

==========================================
from NBC Around the World Blog at:
http://worldblog.msnbc.msn.com/archive/2007/03/09/85910.aspx

Posted: Friday, March 09, 2007 9:44 AM
Filed Under: Baghdad, Iraq
By Bruno Silvestre, NBC News Producer

A few months ago, the watchdog group Transparency International published its yearly Corruption Perceptions Index. Out of 163 countries surveyed in 2006, only two, Myanmar and Haiti, were found to be more corrupt than Iraq.

This country was described as "one of the greatest corruption nightmares on the planet."

"That has to change" was the message delivered earlier this week by Boots Poliquin, the American director of the Office of Accountability and Transparency (OAT) in Baghdad. "We want to try and develop [a] sense of accountability and transparency within the system of Iraq."

His agency has been up and running for 45 days and Poliquin said he was extremely satisfied with the response and the cooperation he’s received from the Iraqi authorities. However, the local culture, the ongoing cases against unscrupulous contractors, and Paragraph 136B of the Iraqi Criminal Procedure Code are likely to render his job almost impossible.

Different rules for elites
For years, corruption was taken for granted in Iraq. But like in many Middle Eastern countries, receiving or making a gift was not automatically associated with bribery.

Iraq is a tribal society where the elite -- maintaining decades-old practices -- support and promote their own. That was true under Saddam. It is still true today. Rules regulating conflicts of interest are non-existent. In other words, tackling "corruption" will require a complete change of mindset within the Iraqi society.

It was revealed after the war that Saddam diverted hundreds of millions from the U.N.-administered Oil-for-Food program. The corruption scandal stained the United Nations and was cited by the Bush administration supporters as evidence of the international body’s failings.

But that program’s successor -- the Development Fund for Iraq which was created after the fall of Baghdad -- is hardly a perfect example of transparency either.

In May 2006, a U.S. congressional report on work projects in Iraq revealed it was investigating 72 cases of alleged fraud and corruption. There have been numerous instances where contractors were caught overcharging the occupation authorities and out of the billions earmarked and spent on the rebuilding of Iraq, $8.8 billion remains unaccounted for.

Loop hole in criminal code
But the most serious handicap in dealing with corruption may be a small paragraph of the Iraqi Criminal Procedure Code, written in 1971 while Saddam was the driving force behind the powerful Baath Party, and still valid today.

Paragraph 136B stipulates: "The transfer of the accused for trial in an offense committed during performance of an official duty, or as a consequence of performance of this duty, is possible only with permission of the minister responsible."

What it means, explained Poliquin, is quite simple. "The ministers have the ability to say: I just don’t want this case to go forward, invoke article 136B and the case stops. And that option is being invoked more often than we would perhaps like to see it invoked."

Does 136B represent institutional corruption? Maybe not. But it is clear that before long Iraqis will have to do something about this paragraph if they are genuinely prepared to stand by Poliquin and give him a hand in clamping down on corruption.

Since the Commission on Public Integrity in Iraq was established in 2004, 2,627 cases of corruption have been brought forward. Of those cases, only 17 percent were moved to the Central Criminal Court of Iraq, resulting in 80 arrests and 5 final adjudications. As long as this conviction rate remains so low, there is little chance Iraq will climb up the Transparency International list any time soon.

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from
http://www.prospect.org/csnc/blogs/tapped_archive?month=03&year=2007&base_name=post_3025&6

LIVE FROM BAGHDAD. TAP senior correspondent Spencer Ackerman is currently embedded in Iraq and will be filing periodic reports for Tapped in the coming weeks. His first dispatch is below.

--The Editors

---

GANGSTER'S PARADISE. Welcome to the Green Zone, Tapped readers. I'm here for another hour and a half before I join the unit I'm supposed to embed with elsewhere in Baghdad, but I wanted to give you something of a corruption update.

Earlier today, a U.S. Embassy official named Boots Poliquin briefed reporters on his brand-new Office of Accountability and Transparency, an anti-corruption effort meant to "train, promote and develop" the Iraqi government's institutional bulwarks against the rampant cronyism and corruption that NGOs like Transparency International have identified. Poliquin told us that he's working with Iraq's multiple layers of watchdogs -- the ministerial inspectors-general, the Commission on Public Integrity and the Board of Supreme Audit -- to identify better practices for ensuring that public money gets spent the way it's intended.

Some of us -- well, I'll speak for myself -- had a hard time understanding exactly what the trouble is. It wasn't political will among the Iraqis, he assured us. Security was a problem, sure, but he added that the IGs especially needed to know how to "identify waste, fraud and abuse, and to develop standards" for determining corruption -- but such remedial instruction makes it sound like the IGs don't know how to be IGs. Then, almost as an afterthought, Poliquin said that a significant impediment to the successful adjudication of corruption investigations is that a law known as Article 136B allows the ministers under investigation to "essentially stop a case. That's the law." The biggest corruption targets? Just the crucial ministries of oil, defense and interior.

Whoa. In Iraq, the target of a corruption investigation can quash the investigation, "completely as the prerogative of the minister." I asked Poliquin if Article 136B amounts to institutional corruption. "It could be seen as you describe it," he replied. Or, another way of putting it, he said, was that "it's in place because it could stop otherwise frivolous allegations." He declined to say how the anti-corruption agencies his office works with see the law.

One indicator of how to view it: the law is a remnant of Iraq's Saddam-era criminal code. I asked another official if the Coalition Provisional Authority hadn't abolished that code. The official replied that it had, but his understanding is that ex-Prime Minister Ibrahim Jaafari resurrected the provision. Given that the Jaafari government wasn't exactly renowned for its cleanliness, it's unlikely frivolous accusations were such a pressing issue for the administration.

As long as Article 136B remains in place, Stuart Bowen, the U.S. special inspector-general for Iraq reconstruction spending, is going to have no shortage of muck to rake. (Luckily, Congress last year basically forced Bowen out of business for his diligence, so don't expect the U.S. to lead the Iraqi government by example.) Bowen recently testified that Iraq is increasingly taking over reconstruction disbursement, so if you're a corrupt contractor, now is as good as ever to exploit U.S. taxpayers and Iraqi citizens.

--Spencer Ackerman

Posted by Spencer Ackerman on March 6, 2007 2:09 PM | Permalink

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We Get Interviewed by UK's Accountancy Age

While searching for articles to use for this blog, I found an article on UK's Accountancy Age about Iraq and problems with fraud. I posted a comment, and a few days later, got a call from a writer from Accountantcy Age. However, I found she didn't understand much about Iraq, UK, or Accounting . It turned out she was a cub reporter from some African Nation working in London, and didn't even know the names of some of the UK agencies I mentioned.

Anyway, they wrote the following article, which isn't too far off from what I said. However, she mixed up recent efforts to "improve Iraq's Ministries" with what I discussed, which was through March of 2006. Those recent efforts were capacity building programs launched by USAID for about $300-million. The problem is that USAID don't have people that understand business systems, so they got contractors who may not be the best in the subjects. My theory is you don't just teach classes (which is always their approach), but you have to have consultants actually in the Ministries working with the Iraqis to change the internal business systems.

But, as I have written earlier, the main point is that the US and coalition partners never invested time or work to straighten out the internal accounting and business systems of the ministries, although they sent bunches of attorneys to revise the legal system, agronomists to fix agriculture, Dept of Energy people and experts to fix oil and electricity, but no accountants or consultants to fix the internal Iraqi business and accounting systems, thus they still use archaic, 30 year old systems that won't detect or work to prevent fraud and corruption.
vj
PS - I also found this interesting article about a UK Accountant working in the MoD (Ministry of Defence) group run by the UK in Baghdad...
http://www.pcw.co.uk/accountancyage/features/2190635/profile-euan-fraser-mod

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from
http://www.accountancyage.com/accountancyage/analysis/2203019/saddam-accounting-systems-place

Saddam's accounting systems still in place

Attempts to reform the Iraqi accounting system are being hampered by a lack of expertise

Written by Penny Sukhraj

Accountancy Age, 08 Nov 2007

The US government has failed to implement a western accounting system in Iraq and root out the previous regime’s corrupt infrastructure, an insider who worked in Iraq has said.

A system that was designed to cover up the flow of oil money to corrupt officials and third parties has not been rooted out and the country’s fledgling government is being left open to fraud as a result.

The extraordinary claims are only just emerging from the war-torn country, where the accounting failures have mirrored the US government’s broader failure to plan for the post-invasion scenarios.

So says Vance Jochim, an American accountant who served 23 months in Iraq as chief auditor for the Centre for Public Integrity.

Jochim, a former internal auditor, whose experience includes stints for Nissan in the US and for the Los Angeles County, told Accountancy Age that the accounting system used by the new administration in Iraq today is just a ‘budgeting’ system.

‘They had lots of advisers from the coalition of countries, but nobody to review and improve accounting systems and government.’

As US congress turns its attention to the issue, Jochim contends that the millions spent have failed to get rid of decades-old accounting structures and that the occupying authorities know too little about accounting, or don’t see it as a priority.

‘[The system in place] was, in fact, a communist-based, 30-year-old accounting system which did not follow any of the transparency and visual analysis of western accounting systems,’ he said.

Jochim says it was a struggle to bring this to the attention of the coalition ­ largely led by UK and US senior figures.

‘A few of us tried. I was there 23 months and wrote white papers and policy documents about this, but trying to get anyone [in the coalition] to get the Iraqi government to adopt accounting standards was very difficult. They didn’t understand accounting issues and there were just so many levels of people to go through to get to this. State diplomats are not technical people. They didn’t have subject matter expertise and didn’t understand the problems enough to fix them,’ said Jochim.

He added that the US state department did not see the significance of the lack of a robust accounting system.

‘They didn’t see it as a priority and therefore didn’t make it an issue to carry forward to the Iraqi State Department,’ he said.

The problems are particularly acute since the amount of money being channelled to Iraq are so huge.

According to a recent US Government Accountability Report, $300m (£143.5m) has been spent in the past two years to improve Iraq’s ministries, with a further £225m being sought for next year.

‘But still, there isn’t a system in place to account for how this is spent ­ it’s going to get worse,’ Jochim said.