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…“

From Glenn Marshall’s (artist) description:
“Metamorphosis is programmed entirely in Processing, it’s the follow up to my Music is Math video. I developed my ‘zeno’ animation system a bit more to allow for nebulous additive blending as well as a few other things. The music is by Boards of Canada again - the track ‘Corsair’ from the Geogaddi album. ”

Click on the image below for the link (multimedia)

More information:
Glenn Marshall’s web log

Great minds discuss ideas; Average minds discuss events; Small minds discuss people.

Anna Eleanor Roosevelt, 1884 - 1962, First Lady of the United States

So far San Francisco based photographer Chad Richard is one of the very few who create time-lapsed HDR movies. He uses the new Nikon D700 that allows to take up to 8fps full frame images and post-processes / blend the frames into HDR images with Photomatix. Out of the about 1000 resulting HDR images he creates a 15-20 second long time-lapsed video with QuickTime.

Chad Richard has a detailed tutorial of the process on his blog (link below).

Click on the images below for the links (multimedia)

More information:
Chad Richard’s HDR movie tutorial

A very interesting approach to street art seen in Lithuania. The artist Morfai is using a farmer statue - an image popular in many former communist countries - more precisely the shadow silhouette of the statue and adds to the wall on which the shadow is projected.

Click on the image below for the link (multimedia)

More information:
Morfai’s web site

“This video was created for the Earth Day. A ode to the work of Jacques Languirand. The video will take part of the Globo Logos event that will take place in different festivals all around the world. ”

Click on the image below for the link (multimedia)

More information:
Julien Vallée’s web site
Globo Logos web site

An outstanding music video playing with a visual technique called the “Droste Effect” which is well known from M.C. Escher’s graphical work.

Click on the image below for the link (multimedia)

“…This music video directed by OneInThree for ‘Wild Beasts’ second single of their debut album ‘Limbo Panto’ is a mesmerising & hypnotic tour de force. It pioneers an amazing mind bending visual technique called the ‘Droste Effect’ which is based on an uncompleted lithograph that Escher made in 1956. The maths behind the lithograph was so complicated that Escher was unable to finish the centre of the picture and so left it blank. OneInThree developed the technique from Josh Sommers code so that it could be applied to moving images…”

“This project was created to inspire teachers to use technology in engaging ways to help students develop higher level thinking skills. Equally important, it serves to motivate district level leaders to provide teachers with the tools and training to do so. ”

Click on the image below for the link (multimedia)

Due to recent events last week when the US government has put up all government property and the (work of the) next two generations of American citizens as collateral to bail out a few thousand “bad apples” within the financial world, we thought the quote from MajGen. Smedley Butler below might also be a good fit for that.

Those guys in the financial world who now try to make others believe that they did not know the dangers and that they did not know that they were trading worthless paper for money just like before the great depression, have always put their greed, their profiteering and racking in other peoples money above everything and anybody else.

We are not talking about the simple employees who are bound by the directives given by their superiors, we are talking about the large investors, hedge funds, the directors and other key stakeholder that have set the framework for these actions.

Society must now hold these people responsible and not let them again define how this will go on in the future.

But they are sitting on hundreds of million of bonuses for their great work while their victims lost their houses, their lifetime savings, their pensions or families. Think about it when you next time see an old man of 80 cleaning up in a diner or supermarket.

One of Smedley Butler’s most widely quoted statement:
“…I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers.

In short, I was a racketeer, a gangster for capitalism.

I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested.

Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents….”

More information:
Wikipedia on Smedley Butler

I guess everybody in the banking world around the globe has heard about the Lehman bankruptcy latest this Monday morning, everybody besides Germany’s largest government owned bank - KfW.

In an attempt to win the Darwin award for banks or by taking the name of the bank to literally (KfW - translated: Bank for Reconstruction), they transferred 300 Million Euros to already bankrupt Lehman during Monday. At the same time their government colleagues were closing the German Lehman subsidiary.

Officials were quick to describe the matter as a “mistake“, but the loss of another 300 Million comes at a time when politicians are still trying to pour oil on troubled water after KfW has just flogged its troubled subsidiary IKB to US private equity firm Lone Star at cost of at least EUR 10 Billion of taxpayer’s money.

From the KfW web site:
Providing Support through Banking Expertise
KfW Bankengruppe gives impulses for the economy, society and ecology in Germany, Europe and the world over. It supports change and promotes promising ideas.

The payment was part of a SWAP deal between Lehman and KfW and it is currently not clear if the amount was collateralized or otherwise secured. It looks like the politicians that are part of management board of the bank, particularly the German economics minister who is head of this illustrious circle, are currently desperately searching and in need of a few scapegoats to blame the repeating disasters on.

Our advise: Finally get some professionals in to do the work - or as the Americans say: Help from professionals or professional help.

But for those in charge that are, seemingly without any accountability, blowing billions of taxpayer’s money it might - in their houses of mirrors - look like as if such kind of losses have become “business-as-usual”. And these losses are just the tip of the iceberg of disasters created in the last years.

More information:
KfW Group web site

Update 19-Sep-2008 20:00 (UTC):
In the meantime officials have declared direct losses of KfW linked to the Lehman bankruptcy to be about EUR 536 million. Two directors of the bank and the head of the risk / controlling department were fired yesterday for the money transfer to Lehman on the day of bankruptcy. To top the whole thing - Lehman originally did not accept the transferred amount - it had to be sent again.

None of the management board members has so far seen any need for consequences with regards to themselves. They claim that the management board was provided with very little information to actually fulfill their oversight function.