Billions given away in Baghdad free-for-all

By Stephanie Kirchgaessner in Washington

Published: February 6 2007 18:40 | Last updated: February 6 2007 20:54

The Bush administration went on a $5bn spending spree in Iraq in 2004 just six weeks before returning control of the government to Iraqis, according to a Democratic lawmaker investigating the payments.

Huge sums were doled out, sometimes in dollar bills from the back of pick-up trucks, it was alleged.

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In a hearing before the chief House oversight committee, Democrats on Tuesday demanded answers from Paul Bremer, who headed the Coalition Provisional Authority, Iraq’s first post-occupation government, and oversaw the disbursement of $12bn in cash in reconstruction funds in the months after the invasion.

In his first appearance before Congress since leaving Iraq, Mr Bremer admitted making mistakes during his 13-month tenure. However, he emphasised that Iraq was in a “desperate situation” in May 2003 and that the CPA could not have waited to install a “modern financial system” before beginning the process of getting the defunct Iraqi government and various ministries reinstated.

The payments in question comprised of Iraqi funds that had been held by the Federal Reserve Bank in New York before the invasion and consisted of a fund that succeeded the United Nations Oil for Food programme and seized Iraqi assets.

“I acknowledge that I made mistakes and that, with the benefit of hindsight, I would have made some decisions differently. But on the whole, we made great progress under some of the most difficult conditions imaginable,” Mr Bremer told the committee.

Mr Bremer’s remarks did little to quell criticism by Congressman Henry Waxman, chairman of the oversight committee, and others that the lack of accountability raised questions about whether the “cash shipped into the Green Zone ended up in enemy hands”.

Mr Waxman took Mr Bremer to task for the manner in which US officials disbursed $20bn (€15.5bn, £10.2bn), including $12bn in cash, in Iraq between March 2003 and June 2004.

Mr Waxman said that, in a 13-month period, the US government had shipped 360 tonnes of cash to Iraq. “Who in their right minds would send 360 tonnes of cash into a war zone? But that’s exactly what [this government] did.”

One official from the provisional authority described an environment awash with $100 bills, said a memo released by Mr Waxman’s office.

“One contractor received a $2m payment in a duffel bag stuffed with shrink-wrapped bundles of currency.” In some cases, cash was stored in unguarded sacks in Iraqi ministry offices.

Questions about the lack of transparency in how the US spent the Iraqi funds were supported by a January 2005 report by Stuart Bowen, the special inspector-general for Iraq reconstruction, which found that the provisional authority did not implement adequate managerial controls over $8.8bn in funds that were meant to finance various Iraqi ministries.

Many of the critics of the Bush administration’s handling of the war have pointed fingers at Mr Bremer’s tenure at the CPA, asserting that his early missteps, from the de-Ba’athification policies he put in place, to the disbandment of the Iraqi armed forces, set the stage for the turmoil in Iraq today.

Mr Waxman also hinted that he might subpoena Tim Carney, a new State Department official in charge of co-ordinating reconstruction in Iraq.

Mr Carney had been invited to the hearing but the State Department had kept him from testifying, in spite of his willingness to do so, Mr Waxman said.