M
Michigan Farmer
Guest
- - - > As private forces take over the government completely, one wonders what this
new style of power should be called; neo-fascist, to denote the linking of corporatism
with government power? Or would neo-feudalism serve better to denote the monarchical
nature of the central state that is linked to wealthy moneyed interests who have the
moral sanctions of the official religion? How about thuggery?
The Spoils of War: Billions Over Baghdad
By Donald L. Barlett and James B. Steele Vanity Fair
October 2007 Edition
Between April 2003 and June 2004, $12 billion in US currency - much of it
belonging to the Iraqi people - was shipped from the Federal Reserve to Baghdad, where
it was dispensed by the Coalition Provisional Authority. Some of the cash went to pay
for projects and keep ministries afloat, but, incredibly, at least $9 billion has gone
missing, unaccounted for, in a frenzy of mismanagement and greed. Following a trail
that leads from a safe in one of Saddam's palaces to a house near San Diego, to a P.O.
box in the Bahamas, the authors discover just how little anyone cared about how the
money was handled.
Hidden in plain sight, 10 miles west of Manhattan, amid a suburban community of
middle-class homes and small businesses, stands a fortress-like building shielded by
big trees and lush plantings behind an iron fence. The steel-gray structure, in East
Rutherford, New Jersey, is all but invisible to the thousands of commuters who whiz by
every day on Route 17. Even if they noticed it, they would scarcely guess that it is
the largest repository of American currency in the world.
Officially, 100 Orchard Street is referred to by the acronym eroc, for the East
Rutherford Operations Center of the Federal Reserve Bank of New York. The brains of
the New York Fed may lie in Manhattan, but eroc is the beating heart of its operations
- a secretive, heavily guarded compound where the bank processes checks, makes wire
transfers, and receives and ships out its most precious commodity: new and used paper
money.
Pallets of American currency arriving in Baghdad.
On Tuesday, June 22, 2004, a tractor-trailer truck turned off Route 17 onto
Orchard Street, stopped at a guard station for clearance, and then entered the eroc
compound. What happened next would have been the stuff of routine - procedures
followed countless times. Inside an immense three-story cavern known as the currency
vault, the truck's next cargo was made ready for shipment. With storage space to rival
a Wal-Mart's, the currency vault can reportedly hold upwards of $60 billion in cash.
Human beings don't perform many functions inside the vault, and few are allowed in; a
robotic system, immune to human temptation, handles everything. On that Tuesday in
June the machines were especially busy. Though accustomed to receiving and shipping
large quantities of cash, the vault had never before processed a single order of this
magnitude: $2.4 billion in $100 bills.
Under the watchful eye of bank employees in a glass-enclosed control room, and
under the even steadier gaze of a video surveillance system, pallets of shrink-wrapped
bills were lifted out of currency bays by unmanned "storage and retrieval vehicles"
and loaded onto conveyors that transported the 24 million bills, sorted into "bricks,"
to the waiting trailer. No human being would have touched this cargo, which is how the
Fed wants it: the bank aims to "minimize the handling of currency by eroc employees
and create an audit trail of all currency movement from initial receipt through final
disposition."
Forty pallets of cash, weighing 30 tons, were loaded that day. The
tractor-trailer turned back onto Route 17 and after three miles merged onto a
southbound lane of the New Jersey Turnpike, looking like any other big rig on a busy
highway. Hours later the truck arrived at Andrews Air Force Base, near Washington,
D.C. There the seals on the truck were broken, and the cash was off-loaded and counted
by Treasury Department personnel. The money was transferred to a C-130 transport
plane. The next day, it arrived in Baghdad.
That transfer of cash to Iraq was the largest one-day shipment of currency in the
history of the New York Fed. It was not, however, the first such shipment of cash to
Iraq. Beginning soon after the invasion and continuing for more than a year, $12
billion in U.S. currency was airlifted to Baghdad, ostensibly as a stopgap measure to
help run the Iraqi government and pay for basic services until a new Iraqi currency
could be put into people's hands. In effect, the entire nation of Iraq needed
walking-around money, and Washington mobilized to provide it. . . . . .
Coalition of the Billing
The first shipment of cash to Iraq took place on April 11, 2003 - it consisted of
$20 million in $1, $5, and $10 bills. It was arranged in small bills on the theory
that these could quickly be circulated into the Iraqi economy "to prevent a monetary
and financial collapse," as one former Treasury official put it. Those were the days
when American officials worried that the gravest threat facing Iraq might be low-grade
civilian unrest in Baghdad. They didn't have a clue as to the power of the insurgency
that was to come. The initial $20 million came exclusively from Iraqi assets that had
been frozen in U.S. banks as long ago as the Gulf War, in 1990. Subsequent airlifts of
cash also included billions from Iraqi oil revenues controlled by the United Nations.
After the creation of the Development Fund for Iraq (D.F.I.) - a kind of holding pit
of money to be spent for "purposes benefiting the people of Iraq" - the U.N. turned
over control of Iraq's oil billions to the United States.
When the U.S. military delivered the cash to Baghdad, the money passed into the
hands of an entirely new set of players - the staff of the American-led Coalition
Provisional Authority. To many Americans, the initials C.P.A. would soon be as
familiar as those of long-established government agencies such as D.O.D. or hud. But
the C.P.A. was anything but a conventional agency. And, as events would show, its
initials would have nothing in common with "certified public accountant." The C.P.A.
had been hastily created to serve as the interim government of Iraq, but its legality
and paternity were murky from the start. The Authority was in effect established by
edict outside the traditional framework of American government. Not subject to the
usual restrictions and oversight of most agencies, the C.P.A. during the 14 months of
its existence would become a sump for American and Iraqi money as it disappeared into
the hands of Iraqi ministries and American contractors. The Coalition of the Willing,
as one commentator observed, had turned into the Coalition of the Billing.
The first mention of the C.P.A. came on April 16, 2003, in a so-called freedom
message to the Iraqi people by General Tommy R. Franks, commander of the coalition
forces. A week after mobs ransacked Iraq's National Museum of its treasures,
unchallenged by American troops, General Franks arrived in Baghdad for a six-hour
whirlwind tour. He met with his commanders in one of Saddam Hussein's palaces, held a
video conference with President Bush, and then quickly flew off. "Our stay in Iraq
will be temporary," General Franks wrote, "no longer than it takes to eliminate the
threat posed by Saddam Hussein's weapons of mass destruction, and to establish
stability and help Iraqis form a functioning government that respects the rule of
law." With that in mind, General Franks wrote that he created the Coalition
Provisional Authority "to exercise powers of government temporarily, and as necessary,
especially to provide security, to allow the delivery of humanitarian aid and to
eliminate weapons of mass destruction." Three weeks later, on May 8, 2003, the U.S.
and British ambassadors to the United Nations sent a letter to the U.N. Security
Council, effectively delivering the C.P.A. to the United Nations as a fait accompli.
The day before, President Bush had appointed L. Paul Bremer III, a retired
diplomat, as presidential envoy to Iraq and the president's "personal representative,"
with the understanding that he would become the C.P.A. administrator. Bremer had held
State Department posts in Afghanistan, Norway, and the Netherlands; had served as an
assistant to Henry Kissinger and Alexander Haig; and had closed out his diplomatic
career in 1989 as ambassador-at-large for counterterrorism. More recently, he had been
the chairman and chief executive officer of a crisis-management business called Marsh
Crisis Consulting. Despite his State Department background, Bremer had been selected
by the Pentagon, which had elbowed aside all contenders for authority in post-invasion
Iraq. The C.P.A. itself was a creature of the Pentagon, and it would be Pentagon
personnel who did the C.P.A.'s hiring.
Over the next year, a compliant Congress gave $1.6 billion to Bremer to
administer the C.P.A. This was over and above the $12 billion in cash that the C.P.A.
had been given to disburse from Iraqi oil revenues and unfrozen Iraqi funds. Few in
Congress actually had any idea about the true nature of the C.P.A. as an institution.
Lawmakers had never discussed the establishment of the C.P.A., much less authorized it
- odd, given that the agency would be receiving taxpayer dollars. Confused members of
Congress believed that the C.P.A. was a U.S. government agency, which it was not, or
that at the very least it had been authorized by the United Nations, which it had not.
One congressional funding measure makes reference to the C.P.A. as "an entity of the
United States Government" - highly inaccurate. The same congressional measure states
that the C.P.A. was "established pursuant to United Nations Security Council
resolutions" - just as inaccurate. The bizarre truth, as a U.S. District Court judge
would point out in an opinion, is that "no formal document ... plainly establishes the
C.P.A. or provides for its formation."
Accountable really to no one, its finances "off the books" for U.S. government
purposes, the C.P.A. provided an unprecedented opportunity for fraud, waste, and
corruption involving American government officials, American contractors, renegade
Iraqis, and many others. In its short life more than $23 billion would pass through
its hands. And that didn't include potentially billions more in oil shipments the
C.P.A. neglected to meter. At stake was an ocean of cash that would evaporate whenever
the C.P.A. did. All parties understood that there was a sell-by date, and that it was
everyone for himself. An Iraqi hospital administrator told The Guardian of England
that, when he arrived to sign a contract, the army officer representing the C.P.A. had
crossed out the original price and doubled it. "The American officer explained that
the increase (more than $1 million) was his retirement package." Alan Grayson, a
Washington, D.C., lawyer for whistle-blowers who have worked for American contractors
in Iraq, says simply that during that first year under the C.P.A. the country was
turned into "a free-fraud zone."
Bremer has expressed general satisfaction with the C.P.A.'s work while at the
same time acknowledging that mistakes were made. "I believe the C.P.A. discharged its
responsibilities to manage these Iraqi funds on behalf of the Iraqi people," he told a
congressional committee. "With the benefit of hindsight, I would have made some
decisions differently. But on the whole, I think we made great progress under some of
the most difficult conditions imaginable, including putting Iraq on the path to
democracy."
The Bottomless Vault
To be fair, the C.P.A. really did need money desperately, and it really did need
to start spreading it among the traumatized Iraqi population. It also needed to
jump-start Iraq's basic services. As the C.P.A. demanded ever greater amounts of cash,
the pallets of $1, $5, and $10 bills were soon replaced by bundles of $100 bills.
During the C.P.A.'s little more than a year of life, the New York Federal Reserve Bank
made 21 shipments of currency to Iraq totaling $11,981,531,000. All told, the Fed
would ship 281 million individual banknotes, in bricks weighing a total of 363 tons.
After arriving in Baghdad, some of the cash was shipped to outlying regions, but
most of it stayed in the capital, where it was delivered to Iraqi banks, to
installations such as Camp Victory, the mammoth U.S. Army facility adjacent to the
Baghdad airport, and to Saddam's former presidential palace, in the Green Zone, which
had become the home of Bremer's C.P.A. and the makeshift Iraqi government. At the
palace the cash disappeared into a vault in the basement. Few people ever saw the
vault, but the word was that during one short period it held as much as $3 billion.
Whatever the figure, it was a major repository of the banknotes from America during
the brief time the cash was under the care of the C.P.A. The money flowed in and out
rapidly. When someone needed cash, a unit called the Program Review Board, composed of
senior C.P.A. officials, reviewed the request and decided whether to recommend a
disbursement. A military officer would then present that authorization to personnel at
the vault.
Even those who picked up large sums usually did not actually see the vault. Once
a disbursement had been made, the cash was brought to an adjoining room for pickup.
This "secure room," as one military officer called it, looked a lot like a vault
itself: a thick metal door at the entrance, with the room beyond starkly furnished
with only a table and chairs. The table would be piled high with cash. An authorized
officer would sign papers for the money, then begin carting it upstairs - sometimes in
sacks or metal boxes - to the Iraqi ministry or C.P.A. office that had requested it.
Upon turning over the cash, the officer would be required to obtain a receipt -
nothing more.
C.P.A. officials tried to keep a rough running tab on the amount disbursed to
individual Iraqi agencies such as the Ministry of Finance ($7.7 billion). But there
was little detail, nothing specific, on how the money was actually used. The system
basically operated on "trust and faith," as one former C.P.A. official put it. Once
the cash passed into the hands of the Iraqis or any other party, no one knew where it
went. The C.P.A. turned over $1.5 billion in cash to Iraqi banks, for instance, but
later auditors could account for less than $500 million. The United Nations retained a
team of auditors to look over American shoulders. They didn't see much, because they
were largely cut off from access while the C.P.A. held power. As a report by the
U.N.'s accounting consultant, KPMG, noted dryly, "We encountered difficulties in
performing our duties and meeting with key C.P.A. personnel."
"There was corruption everywhere," said one former military officer who worked
with the C.P.A. in Baghdad in the months after the invasion. Some of the Iraqis who
were put in charge of ministries after Saddam's fall had never run a government agency
before. Their inexperience aside, he said, they lived in constant fear of losing their
jobs or their lives. All many cared about, he added, was taking care of themselves.
"You could see that a lot of them were trying their best to get a quick retirement
fund before they were ousted or killed," he added. "You just get what you can while
you're in that position of power. Instead of trying to build the nation, you build
yourself."
Did any withdrawals from the vault pay for secret activities by government
personnel? It is an obvious possibility. Much of the cash was clearly destined for
American contractors or Iraqi subcontractors. Sometimes the Iraqis came to the palace
to collect their cash; other times, when they were reluctant to show up at the
American compound, U.S. military personnel had to deliver it themselves. One of the
riskier jobs for some U.S. military men was to fill up a car with bags of cash and
drive the money to contractors in Baghdad neighborhoods, handing it over like a postal
worker delivering mail.
"Fraud" was simply another word for "business as usual." Of 8,206 "guards"
drawing paychecks courtesy of the C.P.A., only 602 warm bodies could in fact be found;
the other 7,604 were ghost employees. Halliburton, the government contractor once
headed by Vice President Dick Cheney, charged the C.P.A. for 42,000 daily meals for
soldiers while in fact serving only 14,000 of them. Cash was handed out from the backs
of pickup trucks. On one occasion a C.P.A. official received $6.75 million in cash
with the expectation he would shell it out in one week. Another time, the C.P.A.
decided to spend $500 million on "security." No specifics, just a half-billion dollars
for security, with this cryptic explanation: "Composition TBD" - that is, "to be
determined."
The pervasiveness of this Why-should-I-care? attitude was driven home in an
exchange with retired admiral David Oliver, the C.P.A.'s director of management and
budget. Oliver was asked by a BBC reporter what had happened to all the cash airlifted
to Baghdad:
Oliver: "I have no idea - I can't tell you whether or not the money went to the
right things or didn't - nor do I actually think it's important."
Q: "Not important?"
Oliver: "No. The coalition - and I think it was between 300 and 600 people,
civilians - and you want to bring in 3,000 auditors to make sure money's being spent?"
Q: "Yes, but the fact is that billions of dollars have disappeared without a trace."
Oliver: "Of their money. Billions of dollars of their money, yeah, I understand.
I'm saying what difference does it make?"
The difference it made was that some American contractors correctly believed they
could walk off with as much money as they could carry. The circumstances that surround
the handling of comparatively small sums help explain the billions that ultimately
vanished. In the south-central region of Iraq a contracting officer stored $2 million
in a safe in his bathroom. One agent kept $678,000 in an unsecured footlocker. Another
agent turned over some $23 million to his team of "paying agents" to deliver to
contractors, but documentation could be found for only $6.3 million of it. One project
officer received $350,000 to fund human-rights projects, but in the end could account
for less than $200,000 of it. Two C.P.A. agents left Iraq without accounting for two
payments of $715,000 and $777,000. The money has never been found.
To Frank Willis, a senior adviser to the Iraqi transportation ministry, the
presence of so much cash circulating so freely gave the Green Zone a "Wild West" feel.
A moderate Republican who worked for Reagan and voted for George W. Bush, Willis spent
many years in executive roles in the State Department and the Department of
Transportation before leaving government service in 1985. He was a top executive of a
health institute in Oklahoma when, in 2003, an old friend from Washington called and
asked if he would come to Iraq to help the C.P.A. get the various transportation
systems running again.
"You've got to be crazy," Willis told him at first. He says he was talked into
going for 30 days, but once in Baghdad became caught up in the work and stayed for six
grueling months. Willis says he wasn't there a month before he felt the way things
were being done was "terribly wrong." One afternoon he returned to his office to find
piles and piles of shrink-wrapped $100 bills stacked on a table. "This just got
wheelbarrowed in," one of his American colleagues explained. "What do you think of two
million bucks?" The money had been "checked out" of Saddam's old vault in the
basement, two floors below, in order to pay a U.S. contractor hired by the C.P.A. to
provide security.
The neat bundles of cash looked almost like play money, and the temptation to
handle them was irresistible. "We were all in the room passing those things around and
having fun," Willis remembers. He and his colleagues played a game of football,
tossing the bricks back and forth. "You could spin them but not throw a spiral,"
Willis says with a laugh. When he called the American contractor to come get his
money, Willis advised him, "You better bring a gunnysack."
"Integrity Is a Core Principle"
The American contractor needing the gunnysack was a company called Custer
Battles. The name was derived not from Little Big Horn but from the names of the
company's owners, Scott K. Custer and Michael J. Battles. Both were former army
rangers in their mid-30s, and Battles also had once been a C.I.A. operative. The pair
showed up on the streets of Baghdad with the blessing of the White House at invasion's
end, looking for a way to do business. At the time, the only American civilians who
could gain access to the city were those approved by President Bush's staff.
The Battles half of the team brought the White House access, secured when Michael
Battles became the G.O.P.-backed candidate in the 2002 Rhode Island congressional
primary for the privilege of losing to the Democratic incumbent, Patrick Kennedy.
Battles not only lost the primary but was fined by the Federal Election Commission for
misrepresenting campaign contributions. Nevertheless, he forged important political
connections. His contributors included Haley Barbour, the longtime Washington power
broker and former chairman of the Republican National Committee, who is now governor
of Mississippi, and Frederic V. Malek, a former special assistant to President Nixon,
who survived the Watergate scandal and went on to become an insider in the Reagan
administration and both Bush administrations.
The C.P.A. awarded Custer and Battles one of its first no-bid contracts - $16.5
million to protect civilian aircraft flights, of which at the time there were few,
into Baghdad International Airport. The company faced immediate obstacles: Custer and
Battles didn't have any money, they didn't have a viable business, and they didn't
have any employees. Bremer's C.P.A. had overlooked these shortcomings and forked over
$2 million anyway, in cash, to get them started, simply ignoring long-standing
requirements that the government certify that a contractor has the capacity to fulfill
a contract. That first $2 million cash infusion was followed shortly by a second. Over
the next year Custer Battles would secure more than $100 million in Iraq contracts.
The company even set up an internal Office of Corporate Integrity. "Integrity is a
core principle of Custer Battles' corporate values," Scott Custer stated in a press
release.
http://www.truthout.org/docs_2006/091507A.shtml
---------------------------------------------------------------------------------
There's a new page describing the social aspects of American Fascism at
http://politicsusaweb.com/RootsOfFascism.html
---------------------------------------------------------------------------------
Still the most concise explanation of how we are who we are:
"Let me give you a word of the philosophy of reform. The whole history of the progress
of human liberty shows that all concessions yet made to her August claims, have been
born of earnest struggle. The conflict has been exciting, agitating, all-absorbing,
and for the time being, putting all other tumults to silence. It must do this or it
does nothing. If there is no struggle there is no progress. Those who profess to favor
freedom and yet depreciate agitation, are men who want crops without plowing up the
ground, they want rain without thunder and lightening. They want the ocean without the
awful roar of its many waters."
"This struggle may be a moral one, or it may be a physical one, and it may be
both moral and physical, but it must be a struggle. Power concedes nothing without a
demand. It never did and it never will. Find out just what any people will quietly
submit to and you have found out the exact measure of injustice and wrong which will
be imposed upon them, and these will continue till they are resisted with either words
or blows, or with both. The limits of tyrants are prescribed by the endurance of those
whom they oppress."
---Frederick Douglass
Source: Douglass, Frederick. [1857] (1985). "The Significance of
Emancipation in the West Indies." Speech, Canandaigua, New York, August 3,
1857; collected in pamphlet by author.
http://www.buildingequality.us/Quotes/Frederick_Douglass.htm
__________________________________________________________________
This post contains copyrighted material the use of which has not always been
specifically authorized by the copyright owner. I am making such material available in
my efforts to advance understanding of environmental, political, human rights,
economic, democracy, scientific, and social justice issues, etc. I believe this
constitutes a 'fair use' of any such copyrighted material as provided for in section
107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the
material in this post is distributed without profit to those who have expressed a
prior interest in receiving the included information for research and educational
purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
If you wish to use copyrighted material from this post for purposes of your own that
go beyond 'fair use', you must obtain permission from the copyright owner.
new style of power should be called; neo-fascist, to denote the linking of corporatism
with government power? Or would neo-feudalism serve better to denote the monarchical
nature of the central state that is linked to wealthy moneyed interests who have the
moral sanctions of the official religion? How about thuggery?
The Spoils of War: Billions Over Baghdad
By Donald L. Barlett and James B. Steele Vanity Fair
October 2007 Edition
Between April 2003 and June 2004, $12 billion in US currency - much of it
belonging to the Iraqi people - was shipped from the Federal Reserve to Baghdad, where
it was dispensed by the Coalition Provisional Authority. Some of the cash went to pay
for projects and keep ministries afloat, but, incredibly, at least $9 billion has gone
missing, unaccounted for, in a frenzy of mismanagement and greed. Following a trail
that leads from a safe in one of Saddam's palaces to a house near San Diego, to a P.O.
box in the Bahamas, the authors discover just how little anyone cared about how the
money was handled.
Hidden in plain sight, 10 miles west of Manhattan, amid a suburban community of
middle-class homes and small businesses, stands a fortress-like building shielded by
big trees and lush plantings behind an iron fence. The steel-gray structure, in East
Rutherford, New Jersey, is all but invisible to the thousands of commuters who whiz by
every day on Route 17. Even if they noticed it, they would scarcely guess that it is
the largest repository of American currency in the world.
Officially, 100 Orchard Street is referred to by the acronym eroc, for the East
Rutherford Operations Center of the Federal Reserve Bank of New York. The brains of
the New York Fed may lie in Manhattan, but eroc is the beating heart of its operations
- a secretive, heavily guarded compound where the bank processes checks, makes wire
transfers, and receives and ships out its most precious commodity: new and used paper
money.
Pallets of American currency arriving in Baghdad.
On Tuesday, June 22, 2004, a tractor-trailer truck turned off Route 17 onto
Orchard Street, stopped at a guard station for clearance, and then entered the eroc
compound. What happened next would have been the stuff of routine - procedures
followed countless times. Inside an immense three-story cavern known as the currency
vault, the truck's next cargo was made ready for shipment. With storage space to rival
a Wal-Mart's, the currency vault can reportedly hold upwards of $60 billion in cash.
Human beings don't perform many functions inside the vault, and few are allowed in; a
robotic system, immune to human temptation, handles everything. On that Tuesday in
June the machines were especially busy. Though accustomed to receiving and shipping
large quantities of cash, the vault had never before processed a single order of this
magnitude: $2.4 billion in $100 bills.
Under the watchful eye of bank employees in a glass-enclosed control room, and
under the even steadier gaze of a video surveillance system, pallets of shrink-wrapped
bills were lifted out of currency bays by unmanned "storage and retrieval vehicles"
and loaded onto conveyors that transported the 24 million bills, sorted into "bricks,"
to the waiting trailer. No human being would have touched this cargo, which is how the
Fed wants it: the bank aims to "minimize the handling of currency by eroc employees
and create an audit trail of all currency movement from initial receipt through final
disposition."
Forty pallets of cash, weighing 30 tons, were loaded that day. The
tractor-trailer turned back onto Route 17 and after three miles merged onto a
southbound lane of the New Jersey Turnpike, looking like any other big rig on a busy
highway. Hours later the truck arrived at Andrews Air Force Base, near Washington,
D.C. There the seals on the truck were broken, and the cash was off-loaded and counted
by Treasury Department personnel. The money was transferred to a C-130 transport
plane. The next day, it arrived in Baghdad.
That transfer of cash to Iraq was the largest one-day shipment of currency in the
history of the New York Fed. It was not, however, the first such shipment of cash to
Iraq. Beginning soon after the invasion and continuing for more than a year, $12
billion in U.S. currency was airlifted to Baghdad, ostensibly as a stopgap measure to
help run the Iraqi government and pay for basic services until a new Iraqi currency
could be put into people's hands. In effect, the entire nation of Iraq needed
walking-around money, and Washington mobilized to provide it. . . . . .
Coalition of the Billing
The first shipment of cash to Iraq took place on April 11, 2003 - it consisted of
$20 million in $1, $5, and $10 bills. It was arranged in small bills on the theory
that these could quickly be circulated into the Iraqi economy "to prevent a monetary
and financial collapse," as one former Treasury official put it. Those were the days
when American officials worried that the gravest threat facing Iraq might be low-grade
civilian unrest in Baghdad. They didn't have a clue as to the power of the insurgency
that was to come. The initial $20 million came exclusively from Iraqi assets that had
been frozen in U.S. banks as long ago as the Gulf War, in 1990. Subsequent airlifts of
cash also included billions from Iraqi oil revenues controlled by the United Nations.
After the creation of the Development Fund for Iraq (D.F.I.) - a kind of holding pit
of money to be spent for "purposes benefiting the people of Iraq" - the U.N. turned
over control of Iraq's oil billions to the United States.
When the U.S. military delivered the cash to Baghdad, the money passed into the
hands of an entirely new set of players - the staff of the American-led Coalition
Provisional Authority. To many Americans, the initials C.P.A. would soon be as
familiar as those of long-established government agencies such as D.O.D. or hud. But
the C.P.A. was anything but a conventional agency. And, as events would show, its
initials would have nothing in common with "certified public accountant." The C.P.A.
had been hastily created to serve as the interim government of Iraq, but its legality
and paternity were murky from the start. The Authority was in effect established by
edict outside the traditional framework of American government. Not subject to the
usual restrictions and oversight of most agencies, the C.P.A. during the 14 months of
its existence would become a sump for American and Iraqi money as it disappeared into
the hands of Iraqi ministries and American contractors. The Coalition of the Willing,
as one commentator observed, had turned into the Coalition of the Billing.
The first mention of the C.P.A. came on April 16, 2003, in a so-called freedom
message to the Iraqi people by General Tommy R. Franks, commander of the coalition
forces. A week after mobs ransacked Iraq's National Museum of its treasures,
unchallenged by American troops, General Franks arrived in Baghdad for a six-hour
whirlwind tour. He met with his commanders in one of Saddam Hussein's palaces, held a
video conference with President Bush, and then quickly flew off. "Our stay in Iraq
will be temporary," General Franks wrote, "no longer than it takes to eliminate the
threat posed by Saddam Hussein's weapons of mass destruction, and to establish
stability and help Iraqis form a functioning government that respects the rule of
law." With that in mind, General Franks wrote that he created the Coalition
Provisional Authority "to exercise powers of government temporarily, and as necessary,
especially to provide security, to allow the delivery of humanitarian aid and to
eliminate weapons of mass destruction." Three weeks later, on May 8, 2003, the U.S.
and British ambassadors to the United Nations sent a letter to the U.N. Security
Council, effectively delivering the C.P.A. to the United Nations as a fait accompli.
The day before, President Bush had appointed L. Paul Bremer III, a retired
diplomat, as presidential envoy to Iraq and the president's "personal representative,"
with the understanding that he would become the C.P.A. administrator. Bremer had held
State Department posts in Afghanistan, Norway, and the Netherlands; had served as an
assistant to Henry Kissinger and Alexander Haig; and had closed out his diplomatic
career in 1989 as ambassador-at-large for counterterrorism. More recently, he had been
the chairman and chief executive officer of a crisis-management business called Marsh
Crisis Consulting. Despite his State Department background, Bremer had been selected
by the Pentagon, which had elbowed aside all contenders for authority in post-invasion
Iraq. The C.P.A. itself was a creature of the Pentagon, and it would be Pentagon
personnel who did the C.P.A.'s hiring.
Over the next year, a compliant Congress gave $1.6 billion to Bremer to
administer the C.P.A. This was over and above the $12 billion in cash that the C.P.A.
had been given to disburse from Iraqi oil revenues and unfrozen Iraqi funds. Few in
Congress actually had any idea about the true nature of the C.P.A. as an institution.
Lawmakers had never discussed the establishment of the C.P.A., much less authorized it
- odd, given that the agency would be receiving taxpayer dollars. Confused members of
Congress believed that the C.P.A. was a U.S. government agency, which it was not, or
that at the very least it had been authorized by the United Nations, which it had not.
One congressional funding measure makes reference to the C.P.A. as "an entity of the
United States Government" - highly inaccurate. The same congressional measure states
that the C.P.A. was "established pursuant to United Nations Security Council
resolutions" - just as inaccurate. The bizarre truth, as a U.S. District Court judge
would point out in an opinion, is that "no formal document ... plainly establishes the
C.P.A. or provides for its formation."
Accountable really to no one, its finances "off the books" for U.S. government
purposes, the C.P.A. provided an unprecedented opportunity for fraud, waste, and
corruption involving American government officials, American contractors, renegade
Iraqis, and many others. In its short life more than $23 billion would pass through
its hands. And that didn't include potentially billions more in oil shipments the
C.P.A. neglected to meter. At stake was an ocean of cash that would evaporate whenever
the C.P.A. did. All parties understood that there was a sell-by date, and that it was
everyone for himself. An Iraqi hospital administrator told The Guardian of England
that, when he arrived to sign a contract, the army officer representing the C.P.A. had
crossed out the original price and doubled it. "The American officer explained that
the increase (more than $1 million) was his retirement package." Alan Grayson, a
Washington, D.C., lawyer for whistle-blowers who have worked for American contractors
in Iraq, says simply that during that first year under the C.P.A. the country was
turned into "a free-fraud zone."
Bremer has expressed general satisfaction with the C.P.A.'s work while at the
same time acknowledging that mistakes were made. "I believe the C.P.A. discharged its
responsibilities to manage these Iraqi funds on behalf of the Iraqi people," he told a
congressional committee. "With the benefit of hindsight, I would have made some
decisions differently. But on the whole, I think we made great progress under some of
the most difficult conditions imaginable, including putting Iraq on the path to
democracy."
The Bottomless Vault
To be fair, the C.P.A. really did need money desperately, and it really did need
to start spreading it among the traumatized Iraqi population. It also needed to
jump-start Iraq's basic services. As the C.P.A. demanded ever greater amounts of cash,
the pallets of $1, $5, and $10 bills were soon replaced by bundles of $100 bills.
During the C.P.A.'s little more than a year of life, the New York Federal Reserve Bank
made 21 shipments of currency to Iraq totaling $11,981,531,000. All told, the Fed
would ship 281 million individual banknotes, in bricks weighing a total of 363 tons.
After arriving in Baghdad, some of the cash was shipped to outlying regions, but
most of it stayed in the capital, where it was delivered to Iraqi banks, to
installations such as Camp Victory, the mammoth U.S. Army facility adjacent to the
Baghdad airport, and to Saddam's former presidential palace, in the Green Zone, which
had become the home of Bremer's C.P.A. and the makeshift Iraqi government. At the
palace the cash disappeared into a vault in the basement. Few people ever saw the
vault, but the word was that during one short period it held as much as $3 billion.
Whatever the figure, it was a major repository of the banknotes from America during
the brief time the cash was under the care of the C.P.A. The money flowed in and out
rapidly. When someone needed cash, a unit called the Program Review Board, composed of
senior C.P.A. officials, reviewed the request and decided whether to recommend a
disbursement. A military officer would then present that authorization to personnel at
the vault.
Even those who picked up large sums usually did not actually see the vault. Once
a disbursement had been made, the cash was brought to an adjoining room for pickup.
This "secure room," as one military officer called it, looked a lot like a vault
itself: a thick metal door at the entrance, with the room beyond starkly furnished
with only a table and chairs. The table would be piled high with cash. An authorized
officer would sign papers for the money, then begin carting it upstairs - sometimes in
sacks or metal boxes - to the Iraqi ministry or C.P.A. office that had requested it.
Upon turning over the cash, the officer would be required to obtain a receipt -
nothing more.
C.P.A. officials tried to keep a rough running tab on the amount disbursed to
individual Iraqi agencies such as the Ministry of Finance ($7.7 billion). But there
was little detail, nothing specific, on how the money was actually used. The system
basically operated on "trust and faith," as one former C.P.A. official put it. Once
the cash passed into the hands of the Iraqis or any other party, no one knew where it
went. The C.P.A. turned over $1.5 billion in cash to Iraqi banks, for instance, but
later auditors could account for less than $500 million. The United Nations retained a
team of auditors to look over American shoulders. They didn't see much, because they
were largely cut off from access while the C.P.A. held power. As a report by the
U.N.'s accounting consultant, KPMG, noted dryly, "We encountered difficulties in
performing our duties and meeting with key C.P.A. personnel."
"There was corruption everywhere," said one former military officer who worked
with the C.P.A. in Baghdad in the months after the invasion. Some of the Iraqis who
were put in charge of ministries after Saddam's fall had never run a government agency
before. Their inexperience aside, he said, they lived in constant fear of losing their
jobs or their lives. All many cared about, he added, was taking care of themselves.
"You could see that a lot of them were trying their best to get a quick retirement
fund before they were ousted or killed," he added. "You just get what you can while
you're in that position of power. Instead of trying to build the nation, you build
yourself."
Did any withdrawals from the vault pay for secret activities by government
personnel? It is an obvious possibility. Much of the cash was clearly destined for
American contractors or Iraqi subcontractors. Sometimes the Iraqis came to the palace
to collect their cash; other times, when they were reluctant to show up at the
American compound, U.S. military personnel had to deliver it themselves. One of the
riskier jobs for some U.S. military men was to fill up a car with bags of cash and
drive the money to contractors in Baghdad neighborhoods, handing it over like a postal
worker delivering mail.
"Fraud" was simply another word for "business as usual." Of 8,206 "guards"
drawing paychecks courtesy of the C.P.A., only 602 warm bodies could in fact be found;
the other 7,604 were ghost employees. Halliburton, the government contractor once
headed by Vice President Dick Cheney, charged the C.P.A. for 42,000 daily meals for
soldiers while in fact serving only 14,000 of them. Cash was handed out from the backs
of pickup trucks. On one occasion a C.P.A. official received $6.75 million in cash
with the expectation he would shell it out in one week. Another time, the C.P.A.
decided to spend $500 million on "security." No specifics, just a half-billion dollars
for security, with this cryptic explanation: "Composition TBD" - that is, "to be
determined."
The pervasiveness of this Why-should-I-care? attitude was driven home in an
exchange with retired admiral David Oliver, the C.P.A.'s director of management and
budget. Oliver was asked by a BBC reporter what had happened to all the cash airlifted
to Baghdad:
Oliver: "I have no idea - I can't tell you whether or not the money went to the
right things or didn't - nor do I actually think it's important."
Q: "Not important?"
Oliver: "No. The coalition - and I think it was between 300 and 600 people,
civilians - and you want to bring in 3,000 auditors to make sure money's being spent?"
Q: "Yes, but the fact is that billions of dollars have disappeared without a trace."
Oliver: "Of their money. Billions of dollars of their money, yeah, I understand.
I'm saying what difference does it make?"
The difference it made was that some American contractors correctly believed they
could walk off with as much money as they could carry. The circumstances that surround
the handling of comparatively small sums help explain the billions that ultimately
vanished. In the south-central region of Iraq a contracting officer stored $2 million
in a safe in his bathroom. One agent kept $678,000 in an unsecured footlocker. Another
agent turned over some $23 million to his team of "paying agents" to deliver to
contractors, but documentation could be found for only $6.3 million of it. One project
officer received $350,000 to fund human-rights projects, but in the end could account
for less than $200,000 of it. Two C.P.A. agents left Iraq without accounting for two
payments of $715,000 and $777,000. The money has never been found.
To Frank Willis, a senior adviser to the Iraqi transportation ministry, the
presence of so much cash circulating so freely gave the Green Zone a "Wild West" feel.
A moderate Republican who worked for Reagan and voted for George W. Bush, Willis spent
many years in executive roles in the State Department and the Department of
Transportation before leaving government service in 1985. He was a top executive of a
health institute in Oklahoma when, in 2003, an old friend from Washington called and
asked if he would come to Iraq to help the C.P.A. get the various transportation
systems running again.
"You've got to be crazy," Willis told him at first. He says he was talked into
going for 30 days, but once in Baghdad became caught up in the work and stayed for six
grueling months. Willis says he wasn't there a month before he felt the way things
were being done was "terribly wrong." One afternoon he returned to his office to find
piles and piles of shrink-wrapped $100 bills stacked on a table. "This just got
wheelbarrowed in," one of his American colleagues explained. "What do you think of two
million bucks?" The money had been "checked out" of Saddam's old vault in the
basement, two floors below, in order to pay a U.S. contractor hired by the C.P.A. to
provide security.
The neat bundles of cash looked almost like play money, and the temptation to
handle them was irresistible. "We were all in the room passing those things around and
having fun," Willis remembers. He and his colleagues played a game of football,
tossing the bricks back and forth. "You could spin them but not throw a spiral,"
Willis says with a laugh. When he called the American contractor to come get his
money, Willis advised him, "You better bring a gunnysack."
"Integrity Is a Core Principle"
The American contractor needing the gunnysack was a company called Custer
Battles. The name was derived not from Little Big Horn but from the names of the
company's owners, Scott K. Custer and Michael J. Battles. Both were former army
rangers in their mid-30s, and Battles also had once been a C.I.A. operative. The pair
showed up on the streets of Baghdad with the blessing of the White House at invasion's
end, looking for a way to do business. At the time, the only American civilians who
could gain access to the city were those approved by President Bush's staff.
The Battles half of the team brought the White House access, secured when Michael
Battles became the G.O.P.-backed candidate in the 2002 Rhode Island congressional
primary for the privilege of losing to the Democratic incumbent, Patrick Kennedy.
Battles not only lost the primary but was fined by the Federal Election Commission for
misrepresenting campaign contributions. Nevertheless, he forged important political
connections. His contributors included Haley Barbour, the longtime Washington power
broker and former chairman of the Republican National Committee, who is now governor
of Mississippi, and Frederic V. Malek, a former special assistant to President Nixon,
who survived the Watergate scandal and went on to become an insider in the Reagan
administration and both Bush administrations.
The C.P.A. awarded Custer and Battles one of its first no-bid contracts - $16.5
million to protect civilian aircraft flights, of which at the time there were few,
into Baghdad International Airport. The company faced immediate obstacles: Custer and
Battles didn't have any money, they didn't have a viable business, and they didn't
have any employees. Bremer's C.P.A. had overlooked these shortcomings and forked over
$2 million anyway, in cash, to get them started, simply ignoring long-standing
requirements that the government certify that a contractor has the capacity to fulfill
a contract. That first $2 million cash infusion was followed shortly by a second. Over
the next year Custer Battles would secure more than $100 million in Iraq contracts.
The company even set up an internal Office of Corporate Integrity. "Integrity is a
core principle of Custer Battles' corporate values," Scott Custer stated in a press
release.
http://www.truthout.org/docs_2006/091507A.shtml
---------------------------------------------------------------------------------
There's a new page describing the social aspects of American Fascism at
http://politicsusaweb.com/RootsOfFascism.html
---------------------------------------------------------------------------------
Still the most concise explanation of how we are who we are:
"Let me give you a word of the philosophy of reform. The whole history of the progress
of human liberty shows that all concessions yet made to her August claims, have been
born of earnest struggle. The conflict has been exciting, agitating, all-absorbing,
and for the time being, putting all other tumults to silence. It must do this or it
does nothing. If there is no struggle there is no progress. Those who profess to favor
freedom and yet depreciate agitation, are men who want crops without plowing up the
ground, they want rain without thunder and lightening. They want the ocean without the
awful roar of its many waters."
"This struggle may be a moral one, or it may be a physical one, and it may be
both moral and physical, but it must be a struggle. Power concedes nothing without a
demand. It never did and it never will. Find out just what any people will quietly
submit to and you have found out the exact measure of injustice and wrong which will
be imposed upon them, and these will continue till they are resisted with either words
or blows, or with both. The limits of tyrants are prescribed by the endurance of those
whom they oppress."
---Frederick Douglass
Source: Douglass, Frederick. [1857] (1985). "The Significance of
Emancipation in the West Indies." Speech, Canandaigua, New York, August 3,
1857; collected in pamphlet by author.
http://www.buildingequality.us/Quotes/Frederick_Douglass.htm
__________________________________________________________________
This post contains copyrighted material the use of which has not always been
specifically authorized by the copyright owner. I am making such material available in
my efforts to advance understanding of environmental, political, human rights,
economic, democracy, scientific, and social justice issues, etc. I believe this
constitutes a 'fair use' of any such copyrighted material as provided for in section
107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the
material in this post is distributed without profit to those who have expressed a
prior interest in receiving the included information for research and educational
purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
If you wish to use copyrighted material from this post for purposes of your own that
go beyond 'fair use', you must obtain permission from the copyright owner.