Iraq Lies: Follow The Money... Down The Hole

Via Informed Comment:

Iraq issued indictments against 27 officials of the government of Iyad Allawi, charging them with over $1 billion worth of fraud. The accused include the Minister of Defense, Hazem Shaalan, and 4 other cabinet ministers. Most of these former officials, installed by old-time CIA asset Iyad Allawi when he was shoe-horned in as prime minister by the US and the UN in late June 2004, have fled the country.

Meanwhile:

The U.S. government is running out of money. The higher than expected cost of protecting workers against insurgent attacks - about 25 cents of every reconstruction dollar now pays for security - has sent the cost of projects skyward.

The result: Some projects have been eliminated and others cut back.

"American money has dried up," says Brent Rose, chief of program/project management for the Army Corps of Engineers in southern Iraq.

And tracking the billions of dollars that flooded into a war zone in the wake of the U.S.-led invasion has proved difficult, too. Nearly $100 million in reconstruction money is unaccounted for...

The Ministry of Municipalities and Public Works initially planned to use U.S. funds for 81 much-needed water and sewage treatment projects across the country, says Humam Misconi, a ministry official. That list has dwindled to 13...

Some progress has been made. More than 2,800 projects have begun since the transfer of sovereignty last summer, and 1,700 of those have been completed, according to the Army Corps of Engineers. They include refurbished schools, new police stations, hospitals, bridges and new roads.

It is the larger, more expensive projects such as water treatment plants, sewage networks and power grids that are being cut back. [gandhi: bold case, just in case Mr. Chrenkoff and/or the Fadhil's are reading!]

Nearly half of all of Iraqi households still don't have access to clean water, and only 8% of the country, excluding the capital, is connected to sewage networks.

And despite progress in fixing Iraq's antiquated oil production system, the country's oil wells produce about 1.9 million barrels of crude oil a day, lower than 2003 levels and well under the 3.5 million barrels Iraq was producing before the 1991 Gulf War...

So much for all that talk about a "free and prosperous Iraq"!

This little tidbit of info could help explain a lot:

Much of the security cost is buried in "cost-plus" contracts in which companies get reimbursed for all costs plus a percentage of those costs as a fee.

All 11 multinational firms working on projects through the Iraqi Project and Contracting Office have "cost-plus" contracts, says Karen Durham-Aguilera, the office's director of programs.

So the more you spend, the more you make... Sounds like a recipe for disaster, and it is:

One "cost-plus" project is the water treatment plant under construction here, which is managed jointly by London-based AMEC and California-based Fluor Corp. The project was originally estimated to cost $80 million, according to Army Corps of Engineers records.

But the original Iraqi subcontractor pulled out after he was threatened. Delays, drive-by shootings and land-acquisition snags followed, driving security and other costs up, according to Corps officials and records. The project's estimated completion cost rose to $200 million, the corps said.

And as ever:

Iraqi contractors, not saddled by steep security costs, say they can do the work for less..

"We keep saying, 'Give us the money and we could do it better, cheaper,'" Misconi says.

I remember Riverbend making the same point about two years ago.