Iraq's Missing Billions

What happened to the billions of dollars of Iraqi reconstruction money entrusted to the American Coalition?

What happened to the billions of dollars of Iraqi reconstruction money entrusted to the American Coalition? In just fourteen months, the CPA burned its way through nearly $20 billion. But no-one can account for where it all went. Iraq’s infrastructure is worse than ever before. Operating theatres are flooded with sewage. New-born babies are dying for lack of basic equipment. In this shocking ‘Dispatches’ investigation, Iraqi doctor Ali Fadhil goes in search of the missing money. He uncovers a horrific story of fraud, incompetence and corruption.
In a hospital room in Diwaniyah, a new-born baby is struggling to breathe. She urgently needs oxygen but the hospital has no suitable equipment. Instead, staff have made a crude arrangement of suction pipes and are holding a tube to her nose. “This treatment is worse than primitive. It’s not even medicine”, despairs a doctor as the little girl dies.

This hospital was meant to have benefited from a $4 million refit. But the standard of work is terrible. Raw sewage leaks into the kitchens and operating theatres. New light fittings have melted. Ants crawl around on the floor. Little wonder people here feel betrayed. “This terrible hospital will make my child worse”, complains one parent.

“As trustees, we did a very poor job,” admits Frank Willis, a senior member of the CPA and one of Bremer’s top officials. “We should have spent the money on the Iraqi people, rather than putting it in the pockets of foreign business.” Contracts were negotiated fast and furiously. There was no oversight of projects and security was appalling. “We played football with bricks of hundred dollar bills.”

As word spread of the kind of money that could be made in Iraq, foreign contractors flocked. “These were people who had no interest in fostering democracy. They had no interest even in carrying out their instructions. What they were interested in was simply making a profit”, states lawyer Alan Grayson.

Companies like Custer Battles billed for work they hadn’t done and charged the CPA a 1000% mark up for their expenses. They spray painted abandoned Iraqi vehicles and hired them to the government at an exorbitant rate. But despite undeniable evidence of fraud, the government took no steps to recover the money. Custer was even allowed to keep their contracts. “The government wants to foster the view that things are going well in Iraq. Coming down hard on war profiteering is inconsistent with that goal”, explains Grayson.

While dodgy contractors were making millions, the Iraqi people were left paying the price. According to the United States’ own figures, Iraq’s essential services are worse than before the war. It’s producing less electricity, oil or clean water. “Nobody cares or listens to us”, complains one man.

The coalition was due to hand over whatever money was left to the incoming government. But instead of trying to leave them as much as possible, the CPA went on an extraordinary spending spree. “There was a push to spend the money that was remaining”, states fraud investigator Ginger. One official was given seven million dollars and told to spend it in seven days. Contractors complained that they were being pressured to spend the money fast.

In the end, only three and a half billion was handed over to the new government. Iraq’s own money is spent and America says once the additional money pledged is gone, there will be no more. In the words of Frank Willis: “Our opportunity is gone. We blew it.”

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