Corruption: At least USD 13 Billion Iraq Aid wasted or stolen

image 100 Thousand Dollar Notes small The Washington Post today (link below) has a very interesting report on fraud, corruption and waste surrounding the U.S. Iraq reconstruction program.

Salam Adhoob, the former chief investigator of the Iraq’s Commission on Public Integrity (the equivalent to the U.S. FBI) estimated in a hearing of the Senate Democratic Policy Committee yesterday, that out of the about USD 50 Billion U.S. taxpayer money that has so far been disbursed to the Iraq reconstruction program, at least USD 13 Billion have been wasted or stolen through various fraud schemes.

The former chief investigator and head of a 200 strong auditors team was one of three Iraqis testifying before the committee yesterday – all providing evidence of widespread corruption and waste up to the point, as one of them said, that Iraqi government officials are financing al-Qaeda terrorists through some of these schemes.

An additional USD 9 Billion were estimated (with some overlap) by another Iraqi agency bringing the total estimate of corruption, fraud and waste of U.S. taxpayer money within the reconstruction program to about USD 20 Billion or 40%. We estimate – based on normally reliable corruption indexes – that real-world figures would be more likely in the range of 60% or USD 30 Billion. At the same time Iraq’s own programs have recently reported a surplus of more than USD 70 Billion.

The levels of “criminal energy” surrounding this program can be seen by looking into the personal situation of those trying to create accountability or fighting the fraud. All of the three Iraqis testifying yesterday fear for their life or have already received death threats, and of Adhoob’s former team 32 investigators have been murdered.

The approaches and schemes are similar to those seen in widespread corruption surrounding other government driven funding programs in development aid, health or reconstruction around the world. Italian investigators have also mentioned such schemes as being used within the defrauding of European Union taxpayer funds by organized crime in Italy. Some of those methods are:

  • suppression of critical / disclosing reports by high level officials
  • unneeded or unused projects charged at highest rate
  • false allegations, smear campaigns and discrediting of critics, investigators or whistleblowers
  • death threats and the assassination of critics, investigators or whistleblowers
  • middleman / sub-contracting / consultancy fraud
  • collaboration, accessory or participation of government officials within the fraud
  • “ghost projects” only existing on paper and auditing hindered, delayed or oppressed
  • false / unusable / low quality goods & services charged for at highest market price (or above) of the right goods & services

While some of those methods could and certainly will be explained with mismanagement, in general all of them have direct links to corruption and illegal abuse of funds. The intention of those participating in and collecting the funds together with the overall criminal intent / energy seen further demonstrate these facts.

As with most of these programs, true accountability, transparency and auditable documentation together with systematic management allow to get a grip on these criminal activities. But today – even in cases where fraud and abuse is so obvious – those put in charge see no reason to change their approaches or are willing to follow up and prosecute those criminals.

With reports on taxpayer money abuse and waste heaping up to never seen dimensions – estimates for the U.S. are around USD 1 Trillion and for the UK about GBP 100 Billion per year – one has to ask when finally someone will put an end to this. At the same time the infrastructure – our streets, schools, health systems, networks and electricity grids are slowly assimilating those in developing countries due to decades of neglected investments into the building blocks of our societies and countries.

More information:
The article at the Washington Post

On development / reconstruction in Iraq from another source: “…anybody with skills, knowledge of the situation or experience of the region was suddenly seen as a liability…

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