sarettah
08-05-2004, 10:52 PM
http://www.sfgate.com/cgi-bin/article.cgi?...MNGAF82B6H1.DTL (http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2004/08/04/MNGAF82B6H1.DTL)
$1.9 billion for Halliburton being taken from Iraqi funds
U.S. provided minimal oversight of controversial deals
Ariana Eunjung Cha, Washington Post
Wednesday, August 4, 2004
--------------------------------------------------------------------------------
Washington -- Halliburton Co. and other U.S. contractors are being paid at least $1.9 billion from Iraqi funds under an arrangement set by the U.S.-led occupation authority, according to a review of documents and interviews with government agencies, companies and auditors.
Most of the money is for two controversial deals that originally had been financed with money approved by the U.S. Congress, but later shifted to Iraqi funds that were governed by fewer restrictions and less rigorous oversight.
For the first 14 months of the occupation, officials of the Coalition Provisional Authority provided little detailed information about the Iraqi money, from oil sales and other sources, that it spent on reconstruction contracts. They have said it was used for the benefit of the Iraqi people and that most of the contracts paid from Iraqi money went to Iraqi companies.
But the CPA, which formally went out of business on June 28 when sovereignty was returned to an interim Iraqi government, never released information about specific contracts and the identities of companies that won them, citing security concerns. Therefore, it has been impossible to know whether these promises were kept.
The CPA has said it had awarded about 2,000 contracts with Iraqi money. Its inspector general compiled records for the major contracts, which it defined as those worth $5 million or more each. Analysis of those and other records shows that 19 of 37 major contracts funded by Iraqi money went to U.S. companies, and that at least 85 percent of the total $2.26 billion was obligated to U.S. companies. The contracts that went to U.S. firms may be worth several hundred million more, once the work is completed.
That analysis and several audit reports released in recent weeks shed new light on how the occupation authority handled the Iraqi money it controlled. They show that the CPA at times violated its own rules, authorizing Iraqi money when it didn't have a quorum or proper Iraqi representation at meetings, and kept such sloppy records that the paperwork for several major contracts could not be found.
While it ran Iraq, the CPA had at its disposal at least $45 billion -- the biggest reconstruction fund since the Marshall Plan rebuilt Europe after World War II. The money included $22 billion that Congress appropriated in two supplemental spending bills, and $23 billion in two Iraqi accounts, one holding proceeds from oil sales and the other seized assets, including frozen overseas bank accounts from the Saddam Hussein years.
During the first half of the occupation, the CPA depended heavily on no- bid contracts that were questioned by auditors. And the occupation's shifting of projects that were publicly announced to be financed by U.S. money to Iraqi money prompted the Iraqi finance minister to complain that the "ad hoc" process put the CPA in danger of losing the trust of the people.
Kellogg Brown & Root Inc., a subsidiary of Halliburton, was paid $1.66 billion from the Iraqi money, primarily to cover the cost of importing fuel from Kuwait. The job was tacked on to a no-bid contract that was the subject of several investigations after allegations surfaced that a subcontractor for Houston-based KBR overcharged by as much as $61 million for the fuel.
Even Iraqi officials who served in the government during the occupation complained they had little say in the use of their own country's money. Mohammed Aboush, who was a director general in the oil ministry during the occupation, said he and other Iraqi officials were not consulted about expanding the KBR contract. But he said he informed his American "advisers" at the CPA that the Iraqis felt KBR's performance had been inadequate and that he'd prefer that another company take over its work.
Aboush said he was ignored and that he believes the decision to go with KBR was political. "I am old enough to know the Americans and their interests, and they are not always the same interests as the Iraqi interests," he said.
U.S. officials contend the CPA was faithful to the terms of a U.N. resolution that gave the United States authority to manage the Iraq oil money during the occupation. "We believe that contracts awarded with Iraqi funds were for the sole benefit of the Iraqi people, without exception," Brig. Gen. Stephen Seay, head of contracting activity for the successor to the CPA's office, wrote in a response to a critical CPA inspector general report released last week.
"With American firms charging 10 times as much as Iraqi firms for construction work, with sole-source contracts being awarded, with allegations of money-wasting ... is it likely that the CPA was doing its best to ensure Iraqi money was spent in Iraqi interests? It doesn't look like it," said Anthea Lawson, an analyst for Christian Aid, a nonprofit group that has been investigating the spending of Iraqi oil money.
$1.9 billion for Halliburton being taken from Iraqi funds
U.S. provided minimal oversight of controversial deals
Ariana Eunjung Cha, Washington Post
Wednesday, August 4, 2004
--------------------------------------------------------------------------------
Washington -- Halliburton Co. and other U.S. contractors are being paid at least $1.9 billion from Iraqi funds under an arrangement set by the U.S.-led occupation authority, according to a review of documents and interviews with government agencies, companies and auditors.
Most of the money is for two controversial deals that originally had been financed with money approved by the U.S. Congress, but later shifted to Iraqi funds that were governed by fewer restrictions and less rigorous oversight.
For the first 14 months of the occupation, officials of the Coalition Provisional Authority provided little detailed information about the Iraqi money, from oil sales and other sources, that it spent on reconstruction contracts. They have said it was used for the benefit of the Iraqi people and that most of the contracts paid from Iraqi money went to Iraqi companies.
But the CPA, which formally went out of business on June 28 when sovereignty was returned to an interim Iraqi government, never released information about specific contracts and the identities of companies that won them, citing security concerns. Therefore, it has been impossible to know whether these promises were kept.
The CPA has said it had awarded about 2,000 contracts with Iraqi money. Its inspector general compiled records for the major contracts, which it defined as those worth $5 million or more each. Analysis of those and other records shows that 19 of 37 major contracts funded by Iraqi money went to U.S. companies, and that at least 85 percent of the total $2.26 billion was obligated to U.S. companies. The contracts that went to U.S. firms may be worth several hundred million more, once the work is completed.
That analysis and several audit reports released in recent weeks shed new light on how the occupation authority handled the Iraqi money it controlled. They show that the CPA at times violated its own rules, authorizing Iraqi money when it didn't have a quorum or proper Iraqi representation at meetings, and kept such sloppy records that the paperwork for several major contracts could not be found.
While it ran Iraq, the CPA had at its disposal at least $45 billion -- the biggest reconstruction fund since the Marshall Plan rebuilt Europe after World War II. The money included $22 billion that Congress appropriated in two supplemental spending bills, and $23 billion in two Iraqi accounts, one holding proceeds from oil sales and the other seized assets, including frozen overseas bank accounts from the Saddam Hussein years.
During the first half of the occupation, the CPA depended heavily on no- bid contracts that were questioned by auditors. And the occupation's shifting of projects that were publicly announced to be financed by U.S. money to Iraqi money prompted the Iraqi finance minister to complain that the "ad hoc" process put the CPA in danger of losing the trust of the people.
Kellogg Brown & Root Inc., a subsidiary of Halliburton, was paid $1.66 billion from the Iraqi money, primarily to cover the cost of importing fuel from Kuwait. The job was tacked on to a no-bid contract that was the subject of several investigations after allegations surfaced that a subcontractor for Houston-based KBR overcharged by as much as $61 million for the fuel.
Even Iraqi officials who served in the government during the occupation complained they had little say in the use of their own country's money. Mohammed Aboush, who was a director general in the oil ministry during the occupation, said he and other Iraqi officials were not consulted about expanding the KBR contract. But he said he informed his American "advisers" at the CPA that the Iraqis felt KBR's performance had been inadequate and that he'd prefer that another company take over its work.
Aboush said he was ignored and that he believes the decision to go with KBR was political. "I am old enough to know the Americans and their interests, and they are not always the same interests as the Iraqi interests," he said.
U.S. officials contend the CPA was faithful to the terms of a U.N. resolution that gave the United States authority to manage the Iraq oil money during the occupation. "We believe that contracts awarded with Iraqi funds were for the sole benefit of the Iraqi people, without exception," Brig. Gen. Stephen Seay, head of contracting activity for the successor to the CPA's office, wrote in a response to a critical CPA inspector general report released last week.
"With American firms charging 10 times as much as Iraqi firms for construction work, with sole-source contracts being awarded, with allegations of money-wasting ... is it likely that the CPA was doing its best to ensure Iraqi money was spent in Iraqi interests? It doesn't look like it," said Anthea Lawson, an analyst for Christian Aid, a nonprofit group that has been investigating the spending of Iraqi oil money.