Billions Swiped from Iraq
Occupation Authorities Stash Oil Funds as Iraqi Health Care Dies
perish for want of medicines and equipment in Iraq’s under-funded hospitals
while U.S. Treasury officials have billions of dollars of Iraqi oil revenues
stashed away in secondary “slush funds” and U.S. Treasury bills.
President George W. Bush has repeatedly said that
Iraqi oil revenues are to be used solely for the benefit of the Iraqi people.
At a White House press conference on April 13, Bush said: “Well, the oil
revenues are—they’re bigger than we thought they would be at this point in
time. . . . And that money is—it will benefit the Iraqi people. It’s their oil,
and they’ll use it to reconstruct the country.”
In May, as oil prices soared and Iraqi oil
production reached 2.4 million barrels per day, nearly $70 million per day
flowed into the coffers of the Development Fund for Iraq (DFI). The DFI funds,
administered until June 30 by L. Paul Bremer III and the U.S.-led Coalition
Provisional Authority (CPA), are managed in accounts at the Federal Reserve
Bank of New York.
With the approach of the June 30 handover,
however, reports suggest that Iraq’s oil revenues have been mismanaged and that
untold millions have been siphoned off into unregulated “slush funds.”
According to CPA accounting, a total cash inflow
of more than $20.24 billion filled the DFI since it was created on May 28,
2003. Although nearly all of the “development” funds came from Iraqi oil
exports, the Central Bank of Iraq had only $216 million in its DFI account on
A simple spread sheet of 35 rows lists how more
than $11.3 billion of the fund had been disbursed by the CPA. The sheet reveals
that the “Commanders Emergency Response Program” received $391 million of Iraqi
money, the U.S. Army Corps of Engineers got another $367 million, and the CPA
Front Office got $2.8 million etc. Details, dates and specifics are not
There has been no monitoring or independent
auditing of the fund until April 2004. Until that time disagreements between
the CPA and the International Advisory and Monitoring Board (IAMB), an
oversight body set up by the UN Security Council, prevented any outside audit
of the DFI.
In April, the accounting firm KPMG began a UN-man
dated audit of the fund, which it hopes to complete by June 30. In their first
interim report, KPMG auditors said they had “encountered resistance from CPA
staff” and that the DFI is “open to fraudulent acts.”
A member of the former Iraqi Governing Council
told The Financial Times, “If the auditors don’t finish by June 30, they
never will, because the CPA staff are going home.”
When the U.S.-appointed temporary Iraqi government
takes over on July 1, however, it will be bound by a June 8 UN Security Council
resolution to honor the obligations and contracts passed down by the CPA’s
spending arm, the Program Review Board (PRB).
After what is described as “a last-minute spending
spree” by the CPA, it now appears that the Iraqi interim government will have
very little money left to use.
The largest Iraqi recipients of DFI money have
been the Ministry of Finance ($7.47 billion) and the Ministry of Oil ($2
billion). There is, however, no recorded disbursement of funds to the Ministry
This apparently troubled Yusaf Samiullah, the
British government’s representative on the PRB, who, according to the minutes
of the board’s May 15 meeting, asked: If given the opportunity to revise the
2004 budget, would the disbursements “include other areas such as health and
Of the $2 billion of Iraqi money passed out during
the May 15 PRB meeting, much of it was allocated to projects that are already
over-funded with money provided by Congress for reconstruction of Iraq. For
example, $500 million was marked for Iraqi security forces, although Congress
allocated $3.2 billion for the same purpose in 2004. Similar amounts were set aside
for the already funded electricity and oil sectors.
In May, when American Free Press asked the
Federal Reserve Bank of New York about the Iraqi oil revenues a spokesman for
the bank said the money is handled by the U.S. Treasury.
The Department of the Treasury, however, appears
reluctant to discuss the status of the Iraqi funds managed by its former deputy
The U.S.-dominated PRB, which has a 12-member
voting board, is chaired by Treasury Department official, George B. Wolfe.
Wolfe stepped down as the deputy counselor to Secretary John W. Snow and was
appointed to the Treasury job in Iraq.
Proponents of the war often suggested that Iraqi
oil revenues would minimize U.S. costs for the occupation and rebuilding of
Iraq. “The cost of the war will be small. We can afford the war, and we’ll put
it behind us,” Snow told the House Ways and Means Committee on March 9, 2003.
However, billions of dollars from the Iraqi oil
revenues have been diverted to “a host of poorly planned projects,” according
to Iraq Revenue Watch, a program of George Soros’s Open Society Institute. “The
lack of planning and the huge funds on tap for cash give-aways and other highly
discretionary programs have paved the way for corruption and waste,” the
organization wrote in June.
DYING FOR FUNDS
While $7.3 billion from the DFI money is invested
in U.S. Treasury Bills and another $1.3 in Overnight Deposits at the Federal
Reserve Bank of New York, the citizens of that occupied nation are dying for
want of basic medical supplies. The U.S. occupation and windfall profits from
the oil sales have done nothing to improve the miserable conditions at Iraqi
The Associated Press reported on June 4: “At
Baghdad’s General Teaching Hospital for Children, children die each week from
diarrhea because of poor sanitation, shortages of medical equipment and poorly
trained staff. . . . Even though improved medical care is a stated priority of
U.S. occupation authorities, medicine is still costly and in short supply.”
The hospital’s sewage system has largely collapsed
and is working at 10 to 20 percent of capacity. The hospital also lacks air
Most hospital deaths—between 15 and 20 a month—are
from secondary infection, mainly because of the unsanitary hospital conditions.
On June 19, a three-month old Iraqi boy, known as
“Baby Ali,” died of septicemia, a bacterial blood infection that could have
been treated if advanced medical care had been available, said Dr. Haidar Hadi
of Baghdad’s General Teaching Hospital for Children.
© American Free Press 2004