Democrats seek Iraq embezzlement probe

The AP article below describes new demands by two Democratic Senators to request that the Treasury Department investigate Iraq corruption charges made at a recent Democratic Policy Committee hearing we described in an earlier post. It is based upon the highly emotional testimony of Judge Brennan and James Mattil. We previously posted the written transcripts, but you have to watch the video to see how charged the meeting was. Read my further comments and the AP article below.

Note: until my blog software rolls out a new revision, I can't edit the rest of the post. However, below, the article talks about the investigation being run by a specific Treasury official, Stuart A. Levey. Click here to see his background page on the US Treasury website.
vj

My comments:

I don't know why they asked the Treasury Dept., because I would figure they would ask GAO, but maybe the Senate uses Treasury for such requests, while the House uses the GAO.

When I was in Baghdad, the US "Finance" adviser to the Iraqi Finance Ministry was actually run by some Treasury detailees and they focused on banking and distributing cash payments (such as for Iraqi police payrolls) as needed. Iraq didn't have any checking or credit card system for individuals, so all payments, including government wages were made by cash, and probably still are because no investors will invest in the Iraqi banks to implement modern and international accounting and record keeping systems. The Treasury advisers didn't focus on improving business or accounting controls, or provide technical assistance to the Iraqi Board of Supreme Audit while I was there. They WERE the US liaison to BSA, but didn't have the background in audit and controls to provide technical assistance to them.

BUT, it is possible that Treasury has people who can track bank transfers by corrupt Iraqis to outside banks like in London. BUT, now the question is that if you find a corrupt individual has moved to London along with stolen funds, what can you do about it? That is where the UN's Convention on Corruption comes in. The UK has signed it, but articles this year (and in my earlier posts) seem to indicate that the UK is lax in allowing another country, like Iraq, to prosecute those Iraqi nationals living in the UK who moved bribes and corruption earnings to the UK.

Finally, at the end of the AP article below, the State Dept. says they are really doing something about corruption because they just appointed a coordinator for anti-corruption initiatives in Baghdad's embassy. However, we recently posted the SIGIR recent report that reviewed the Baghdad Embassy actions, and found that 10 of 12 anti-corruption recommendations from TWO YEARS AGO still were not implemented. My reading of the SIGIR report is that it was too wishy washy and sounded "hopeful" that State would actually do something. However, the report and the list of initiatives focused on new process steps, and NOT actual actions needed, such as getting the Iraq government to change a law that prevented prosecution of corruption of Ministry staff like the referenced Health IG unless a Minister approved it.

It is all a white wash, so stronger action is needed. Take anti-corruption initiative authority away from State and give it to the CIA or SIGIR or GAO AND give them authority to veto foreign aid spending if the Iraqi government doesn't allow and implement prosecution of the known 3000 pending corruption cases.
vj

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Link: The Associated Press: Democrats seek Iraq embezzlement probe.

Democrats seek Iraq embezzlement probe

By RICHARD LARDNER – 3 hours ago

WASHINGTON (AP) — Two Democratic senators have asked the Treasury Department to investigate allegations that Iraqi leaders have embezzled or misspent billions of U.S. tax dollars intended for the country's relief and reconstruction.

In a May 20 letter to Stuart Levey, the department's undersecretary for terrorism and financial intelligence, Sens. Byron Dorgan of North Dakota and Sheldon Whitehouse of Rhode Island called the scope of corruption within the Iraqi government staggering.

Levey's office, they said, should examine whether any Iraqi officials have set up bank accounts outside of Iraq "that might contain ill-gotten proceeds."

Citing recent congressional testimony from Arthur Brennan, a former State Department official, the senators said the inspector general of the Iraq's ministry of health had steered as much as $1 billion in medical supplies onto the black market and then pocketed the profits.

According to Brennan, it's likely some of that money is financing insurgent groups such as the Mahdi army, the militia loyal to Shiite cleric Muqtada al-Sadr.

"In our estimation, the theft, conversion or other misappropriation of U.S.-provided funds and supplies by Iraqi government officials severely undermines our troops' mission in Iraq," Dorgan and Whitehouse wrote. "It is even more outrageous when these resources are diverted to our enemies and help finance, arm and equip attacks against American soldiers."

John Rankin, a Treasury Department spokesman, said Levey's office had not yet seen the letter.

"We'll consider it carefully when it arrives," he said.

Brennan headed the State Department's office of accountability and transparency at the U.S. Embassy in Baghdad. He held the job for less than a month before resigning in July 2007 due to his wife's health problems. Before taking the job, he was a New Hampshire superior court judge.

Brennan and James Mattil, who worked as the office's chief of staff for a year, testified May 12 before the Democratic Policy Committee, which Dorgan chairs.

Brennan and Mattil told the policy committee their office was understaffed and its warnings and recommendations were ignored.

Brennan alleged that the State Department prevented a congressional aide visiting Baghdad from talking with staffers by insisting they were too busy. Office members actually were watching movies at the embassy and on their computers, he said. The staffers' workload had been cut dramatically because of Iraqi Prime Minister Nouri al-Maliki's "evisceration" of Iraq's top anti-corruption office, he said.

In response to Brennan's allegations, the State Department said the administration takes the issue of corruption seriously. Spokesman Tom Casey pointed to the recent appointment of Lawrence Benedict as coordinator for anti-corruption initiatives at the embassy in Baghdad.

Benedict's appointment "is another demonstration that we are working at very senior levels to help the Iraqis deal with this issue," Casey said after Brennan's testimony. "Any assertion that we have not taken this issue seriously or given it the attention it deserves is simply untrue."
On the Net:

* http://www.ustreas.gov/offices/enforcement/