Iraqi defense officials have embezzled $1.27 billion

World Tribune:

Iraq has depleted its defense procurement budget due to widespread corruption, torpedoing plans to end the military's dependence on the United States.

An official Iraqi audit said $1.27 billion allocated by the Defense Ministry for military procurement in 2005 was embezzled by officials and suppliers. In a report completed in May, the Board of Supreme Audit blamed the theft on U.S.-appointed senior Defense Ministry officials, including a former defense minister.

The board examined 89 government contracts signed from June 2004 through February 2005, Middle East Newsline reported.

"Huge amounts of money have disappeared," Iraqi Finance Minister Ali Allawi said. "In return we got nothing but scraps of metal. It is possibly one of the largest thefts in history."

"There have been many violations of the bidding process that have led to huge losses of public funds," Hadi Al Amiri, chairman of parliament's Integrity Committee, said. "Many bids were improperly conducted and awarded by ministers without any input from committees established to assess the bids."

Citing the audit, Al Amiri told parliament on Sept. 18 that incompetent officials were given responsibility for supervising defense projects and procuring weapons and other equipment. He said that despite the audit little has changed in the procurement process.

"Our funds are under the control of ignorant people," Al Amiri said.

The Defense Ministry used foreign intermediaries, including U.S. representatives, to conclude fictitious deals worth hundreds of millions of dollars, the audit said. Parliamentarians who received the report said the defense contracts were drafted by the suppliers themselves without any government supervision.

Officials and parliamentarians said nine Defense Ministry officials were dismissed since the audit was submitted in May. In addition, an arrest warrant was issued for Defense Ministry procurement director Ziad Cattan.

The audit said the Defense Ministry spent hundreds of millions of dollars in government funds on obsolete platforms and equipment from such countries as Egypt, Pakistan and Poland. They said one of the worst examples of graft was the $230 million spent in Poland on Soviet-origin M-8 and Mi-17 helicopters manufactured in the mid-1970s and later deemed as incapable of combat missions.

Officials said Defense Minister Saadoun Dulaimi has refused to accept the delivery of the aging platforms from Poland. They added that the loss of the ministry's $1.3 billion procurement budget would harm efforts to build an indigenous Iraqi military and security capability in 2006.

"If we really spent that money in the right way, maybe it would have given us more capabilities to face terrorists," Dulaimi said.

About $500 million of the embezzled funds were spent through three front companies that received kickbacks, the report said. The audit said Cattan, who also holds Polish nationality, agreed to pay for most of the arms purchases in cash.

The audit said most of the embezzlement took place during the tenure of then-Defense Minister Hazim Shaalan. Shaalan has since moved to Jordan and denied the charges. But officials said Shaalan would soon be served with an arrest warrant.

The board also cited the procurement of combat armored vehicles that could not stop bullets fired from AK-47 assault rifles. Other vehicles purchased from Egypt were said to have leaked oil.

The report also accused Defense Ministry officials of accepting cheap copies of weapons rather than the modern equipment ordered. They included the switching of U.S.-origin MP5 machine guns for copies made in Egypt.

"If you compare the amount that was allegedly stolen of about $1 billion compared with the budget of the ministry of defense, it is nearly 100 percent of the ministry's [procurement] budget that has gone [missing]," Allawi said told the London-based Independent on Monday.

Iraqi Corruption on the U.S. Watch

Ex-Iraqi minister 'facing arrest'

The Neocons' Man in Iraq

Cousin Marriage Conundrum

High Costs And Dismal Prospects In Iraq: How To Derive Benefit?

A Memorial Day Meditation On Mesopotamia, Mexico And The Border Problem

More Accusations About Chalabi Deceptions

Enough Already With The Neocon Voodoo Experiments In Iraq