U.S. Said to Pay Iraq Contractors in Cash

Ryan Lackey ryan at venona.com
Mon Feb 14 12:44:10 PST 2005

Everyone does this openly over here.  Anything less than $500k or so
isn't even worth thinking about, since as a kidnap victim, you're sold
for about that much.

I really don't see why it's worthy of an article.

I've been buying cash from other contractors, as well as providing
cash on a short-term loan or wire basis, and these activities are
common as well.

It would be a good environment to deploy various electronic payment
systems, but nothing is really up to snuff for the kind of things
people do here -- large sums, and making purchases from existing
online vendors.

Quoting R. A. Hettinga <rah at shipwright.com>:
> <http://news.yahoo.com/news?tmpl=story&cid=542&u=/ap/iraq_loose_cash&printer=1>
> Yahoo!
> U.S. Said to Pay Iraq Contractors in Cash
>  1 hour, 4 minutes ago
> By LARRY MARGASAK, Associated Press Writer
> WASHINGTON -  U.S. officials in postwar Iraq (news - web sites) paid a
> contractor by stuffing $2 million worth of crisp bills into his gunnysack
> and routinely made cash payments around Baghdad from a pickup truck, a
> former official with the U.S. occupation government says.
>  Because the country lacked a functioning banking system, contractors and
> Iraqi ministry officials were paid with bills taken from a basement vault
> in one of Saddam Hussein (news - web sites)'s palaces that served as
> headquarters for the Coalition Provisional Authority, former CPA official
> Frank Willis said.
>  Officials from the CPA, which ruled Iraq from June 2003 to June 2004,
> would count the money when it left the vault, but nobody kept track of the
> cash after that, Willis said.
>  "In sum: inexperienced officials, fear of decision-making, lack of
> communications, minimal security, no banks, and lots of money to spread
> around. This chaos I have referred to as a 'Wild West,'" Willis said in
> testimony he prepared to give Monday before a panel of Democratic senators
> who want to spotlight the waste of U.S. funds in Iraq.
>  A senior official in the 1980s at the State and Transportation departments
> under then-President Ronald Reagan (news - web sites), Willis provided The
> Associated Press with a copy of his testimony and answered questions in an
> interview.
>  James Mitchell, spokesman for the special inspector general for Iraq
> reconstruction, told the AP that cash payments in Iraq were a problem when
> the occupation authority ran the country and they continue during the
> massive U.S.-funded reconstruction.
>  "There are no capabilities to electronically transfer funds," Mitchell
> said. "This complicates the financial management of reconstruction projects
> and complicates our ability to follow the money."
>  The Pentagon (news - web sites), which had oversight of the CPA, did not
> immediately comment in response to requests Friday and over the weekend.
> But the administrator of the former U.S. occupation agency, L. Paul Bremer
> III, in response to a recent federal audit criticizing the CPA, strongly
> defended the agency's financial practices.
>  Bremer said auditors mistakenly assumed that "Western-style budgeting and
> accounting procedures could be immediately and fully implemented in the
> midst of a war."
>  When the authority took over the country in 2003, Bremer said, there was
> no functioning Iraqi government and services were primitive or nonexistent.
> He said the U.S. strategy was "to transfer to the Iraqis as much
> responsibility as possible as quickly as possible, including responsibility
> for the Iraqi budget."
>  Iraq's economy was "dead in the water" and the priority "was to get the
> economy going," Bremer said.
>  Also in response to that audit, Pentagon spokesman Bryan Whitman had said,
> "We simply disagree with the audit's conclusion that the CPA provided less
> than adequate controls."
>  Willis served as a senior adviser on aviation and communications matters
> for the CPA during the last half of 2003 and said he was responsible for
> the operation of Baghdad's airport.
>  Describing the transfer of $2 million to one contractor's gunnysack,
> Willis said: "It was time for payment. We told them to come in and bring a
> bag." He said the money went to Custer Battles of Middletown, R.I., for
> providing airport security in Baghdad for civilian passengers.
>  Willis said a coalition driver would go around the Iraqi capital and
> disburse money from the a pickup truck formerly belonging to the grounded
> Iraqi Airways airline. The reason is because officials "wanted to meld into
> the environment," he said.
>  Willis' allegations follow by two weeks an inspector general's report that
> concluded the occupying authority transferred nearly $9 billion to Iraqi
> government ministries without any financial controls.
>  The money was designated for financing humanitarian needs, economic
> reconstruction, repair of facilities, disarmament and civil administration,
> but the authority had no way to verify that it went for those purposes, the
> audit said.
>  Sen. Byron Dorgan (news, bio, voting record), head of the Democratic group
> that is holding Monday's hearing, said he arranged for Willis' testimony
> because majority Republicans have declined to investigate the suspected
> misuse of funds in Iraq.
>  "This isn't penny ante. Millions, perhaps billions of dollars have been
> wasted and pilfered," Dorgan, D-N.D., said in an interview ahead of the
> Senate Democratic Policy Committee's session.
>  Willis concluded that "decisions were made that shouldn't have been,
> contracts were made that were mistakes, and were poorly, if at all,
> supervised, money was spent that could have been saved, if we simply had
> the right numbers of people. ... I believe the 500 or so at CPA
> headquarters should have been 5,000."

Ryan Lackey [RL960-RIPE AS24812]   ryan at venona.com   +1 800 723 0127
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