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IRAQ: Poor Oversight of Seized Iraqi Funds Blamed on Coalition Policy

just two weeks after an audit by the special inspector general for Iraqi reconstruction found inadequate oversight of unauthorized contracts and a loss of $9 billion in Iraqi funds, a witness told Democrats on Capitol Hill said key decisions by the Coalition Provisional Authority in Iraq enabled contractors to bilk billions in reconstruction funds.

by Elise CastelliThe Los Angeles Times
February 15th, 2005

WASHINGTON Several key decisions by leaders in the early days of the Coalition Provisional Authority in Iraq enabled contractors to bilk the authority out of billions in reconstruction funds, a witness told Democrats on Capitol Hill on Monday.

The Senate Democratic Policy Committee heard how understaffing and lack of security allowed contracts to go unsupervised and money to be transferred with little accounting along the way.

The hearing came just two weeks after an audit of the CPA by the special inspector general for Iraqi reconstruction found the agency had failed to provide proper oversight of ministry spending, issued unauthorized contracts and lost track of $9 billion in Iraqi funds.

Franklin Willis, a former senior aviation official for Iraq's Ministry of Transportation and Communication under the CPA, testified that many of the problems resulted from such CPA policies as the purging of Baath Party members from government and the disbanding of the Iraqi army, which contributed to the shortages of qualified workers in his department and others.

"The de-Baathification decision was simply too sweeping," said Willis, who was in Iraq from July to December 2003. "I think the sweeping elimination left us with third and fourth level of Iraqis in charge of running an operation and never having had that experience."

Willis said his ministry frequently operated for more than 15 hours a day with as few as 18 workers doing jobs set aside for 50, a problem mirrored in other parts of the authority.

"I'm 61 years old, and in that process I wore out, other people wore out," he said of a typical workday.

Several contracts, including one held by security firm Custer Battles, now under criminal investigation, were not properly overseen because of the understaffing, he said.

"One additional person would have saved us $4 million to $8 million on the Custer Battles contract," he said.

Willis also said the American overseers treated Iraqi money more casually than they did U.S. funds.

"We did have the mind-set that this was Iraqi money, the [Development Fund for Iraq] was Iraqi money, and though it may not be traced very well at least it's the Iraqis handling their own money and it is getting to Iraqis in one form or fashion," Willis said.

Sen. Byron L. Dorgan (D-N.D.), chairman of the committee, said the situation was "like passing an ice cube around by the time the person at the end of the line gets the ice cube, it's a radically different ice cube."

Willis also said the CPA did not allow supervisors like him to make decisions as simple as what floor of the airport to operate out of.

"The smallest decisions went forward to the front office where they waited for a decision, which at times required additional paperwork," he said. "Our system, as a British friend described to me, was constipated within three months."

L. Paul Bremer III, the former administrator of the authority, could not be reached for comment. But he has complained that critics assume "that Western-style budgeting and accounting procedures could be immediately and fully implemented in the midst of a war."

Army Lt. Col. Joseph Yoswa, a Pentagon spokesman, said Monday: "The CPA was operating under extraordinary conditions from its inception to mission completement. Throughout, the CPA strived earnestly for sound management, transparency and oversight."




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