Iraq's $1.8 Billion Heist

Wooooaaaaaah!

Via Blah3 comes the most incredible story of corruption, graft and outright theft ever told. The Independent newspaper today claims:

One billion dollars has been plundered from Iraq's defence ministry in one of the largest thefts in history, The Independent can reveal, leaving the country's army to fight a savage insurgency with museum-piece weapons.

The money, intended to train and equip an Iraqi army capable of bringing security to a country shattered by the US-led invasion and prolonged rebellion, was instead siphoned abroad in cash and has disappeared.

"It is possibly one of the largest thefts in history," Ali Allawi, Iraq's Finance Minister, told The Independent.

"Huge amounts of money have disappeared. In return we got nothing but scraps of metal."

The carefully planned theft has so weakened the army that it cannot hold Baghdad against insurgent attack without American military support, Iraqi officials say, making it difficult for the US to withdraw its 135,000- strong army from Iraq, as Washington says it wishes to do.

Read the whole thing before this disappears behind a pay-to-view firewall. Incredible! The Defense ministry was paying $1,600 for $200 guns, paid for helicopters and armoured vehicles that were utter scrap metal...graft and theft at every step. A lot of the money seems to have gone in the direction of Pakistan and crooked Polish arms dealers. The billion from Defense is only the single largest case. Others include up to $800 million from other ministries which could well go a long way to explaining things like the electricity and water shortfalls experienced by Iraqis.

The Iraqi Board of Supreme Audit says in a report to the Iraqi government that US-appointed Iraqi officials in the defence ministry allegedly presided over these dubious transactions.

Senior Iraqi officials now say they cannot understand how, if this is so, the disappearance of almost all the military procurement budget could have passed unnoticed by the US military in Baghdad and civilian advisers working in the defence ministry.

Government officials in Baghdad even suggest that the skill with which the robbery was organised suggests that the Iraqis involved were only front men, and "rogue elements" within the US military or intelligence services may have played a decisive role behind the scenes.

Given that building up an Iraqi army to replace American and British troops is a priority for Washington and London, the failure to notice that so much money was being siphoned off at the very least argues a high degree of negligence on the part of US officials and officers in Baghdad.

Boy, those Iraqis learned the George Bush definition of freedom as "freedom to rob the country blind" really fast!

Anyone out there want to hold their breath until the Bush administration self-investigates the allegations of their own people being involved and exonerates itself totally?

Update Juan Cole has more on the background including the news that this isn't the first time reports have been made on the scale of theft in Iraq. Senator Rick Santorum even wrote to Rumsfeld back in January following the suspicious deaths of two American arms contractors. Although true to Republican form the good Senator was only concerned about missing payments to his constituent's company.

Prof. Cole says:

Americans should be outraged at this news, which has now been reported twice by fine journalists in Iraq, but which has not become an issue in American politics. The embezzlement at the ministry of defense left the Iraqi military poorly equipped, and greatly delayed the moment at which it could take over from the US in providing security to the country. The embezzlement is directly tied to the Iraqi government losing control over its own capital, as reported here yesterday. The scale of it matches Saddam's kickbacks in the oil for food scandal, but the US journalists who were so outraged at the former don't seem to have the time of day for the embezzlement story.

Update Many reading this will immediately think "it must have been Iraqis, there can't possibly be that level of corruption in the US military." Oh yeah?

A civilian Army employee and two business owners were arrested in a kickback scheme to supply furnishings at a new Pentagon-run hotel in the Bavarian Alps that is used by troops on leave from Afghanistan and Iraq, the Justice Department said Monday.

Steven G. Potoski, 45, former contracting director at the Edelweiss Lodge and Resort in Garmisch, Germany, accepted more than $350,000 in bribes in cash, home renovations, trips, computers and tickets to such events as Oktoberfest and the Indianapolis 500, assistant Attorney General Alice Fisher said.

All told, Potoski is accused of accepting bribes from the two Americans, a British company and 12 German contractors to inflate costs and then split the profits for furnishings and other goods at the military-owned hotel. Think about it. The bribes totalled $350,000 so what must the splits of the inflated cost have been worth? Obviously enough for those bribes to show a profit commensurate with the risk.