Iraq: Millions Misspent in Contracts

Publisher Name: 
New York Times

Last month the Iraqi Governing Council questioned why
the American occupation authority had issued a $20
million contract to buy new revolvers and Kalashnikov
rifles for the Iraqi police when the United States
military was confiscating tens of thousands of weapons
every month from Saddam Hussein's abandoned arsenals.

Wednesday the Iraqi council, in a testy exchange
with the occupation administrator, L. Paul Bremer III,
challenged an American decision to spend $1.2 billion
to train 35,000 Iraqi police officers in Jordan when
such training could be done in Iraq for a fraction of
the cost. Germany and France have offered to provide
such training free.

These decisions are being questioned by Iraqi
officials as Congress is also seeking to examine how
the American occupation authority and the military are
spending billions of dollars here. Iraqi officials and
businessmen charge that millions of dollars in
contracts are being awarded without competitive
bidding, some of them to former cronies of Mr.
Hussein's government.

"There is no transparency," said Mahmoud Othman, a
Kurdish member of the Governing Council, "and
something has to be done about it.

"There is mismanagement right and left, and I think we
have to sit with Congress face to face to discuss
this. A lot of American money is being wasted, I
think. We are victims and the American taxpayers are

A number of businessmen say they believe it is
necessary to pay kickbacks to win contracts. A
spokesman for one of the largest American corporations
awarding subcontracts here, Bechtel, said his company
had neither paid any kickbacks nor had been approached
by Iraqis seeking to pay kickbacks. He said Bechtel
made all of its contract information available on its
Web site and at offices in Baghdad and Basra. A check
of the Web site on Friday found no information, only a
notice that the site was "under construction."

The lack of transparency and competition, Governing
Council members said in interviews, may be encouraging
corruption. They said they believed that many
contracts had been inflated beyond the reasonable cost
for the work, creating opportunities for kickbacks
between prime contractors and subcontractors.

One council member, Naseer K. Chadirji, said: "As the
Governing Council we are in a very weak legal
position. We don't have the right to investigate these

He added, "I don't have the evidence, but I think
there is corruption. This is a common grievance that
people tell me."

An Iraqi executive, who made millions of dollars as an
insider under the Hussein government and would not
allow his name to be used, said a relative outside
Iraq had asserted that a Bechtel executive was looking
to become a silent partner in an Iraqi company that
would be favored with subcontracts from Bechtel.

A senior Bechtel official in Iraq, Clifford George
Mumm, said that his company "would fire immediately
anyone who tried to do such a thing" and that he did
not believe that any Bechtel executive would engage in
the kind of behavior described.

Mr. Mumm said there had been no kickbacks on the 105
subcontracts Bechtel had signed with Iraqi firms.

Asked about Iraqi assertions that Bechtel and other
major American companies were awarding contracts to
Iraqis who had grown rich under Mr. Hussein, Mr. Mumm
said all of the Iraqi businesses that received Bechtel
subcontracts were vetted by the occupation authority
under Mr. Bremer.

The largest and most prominent Iraqi subcontractor
that has emerged belongs to the Bunnia family, which
grew immensely wealthy under the former government and
was known for lavishing gifts, especially luxury cars,
on members of the Hussein family.

"It is hard to understand the rationale for giving
them contracts," said an American businessman.

Bunnia family members, in interviews over the last
several months, have denied that they supported the
old government and have said their business skills are
needed to rebuild the country.

Looking at a list of companies that received
subcontracts from Becthel, Mr. Othman, the Governing
Council member, said he recognized at least a
half-dozen that had profited from close relations with
Mr. Hussein or members of his family.

Samir Sumaidy, a member of the Governing Council who
owns a construction firm doing business in China, said
Friday that the Iraqi interim government received no
information from Mr. Bremer's authority on how it was
spending Iraqi and American funds.

An American businessman, who would not allow his name
to be used, said the occupation authority was doling
out contracts worth hundreds of thousands of dollars
by simply telephoning favored companies and
announcing, "I have a contract for you," as he
characterized a telephone call he received this week.

Mr. Othman said, "I hope Congress knows what is going
on, but if they don't know and we don't know, then God
help everybody."

Council members said the contract to train Iraqi
police officers in Jordan offended them because Jordan
would draw a large payment from the dwindling Iraqi
treasury and because many Iraqis resented Jordan's
close ties to old government.

"The Iraqis are not very happy to see such large sums
of money put in the hands of Jordan," said Mr.
Chadirji, a lawyer and Governing Council member.

At a news briefing on Friday, Charles Heatly, a
spokesman for the occupation authority, said 35,000
police offers were to be trained in Jordan because the
necessary facilities did not exist in Iraq, an
assertion that several Governing Council members

The Jordan plan was formally announced on Friday in a
press release. Mr. Heatly said he thought that most
council members had understood and agreed with Mr.
Bremer's presentation on police training in their
meeting on Wednesday.

But five council members said in interviews that the
interim Iraqi government opposed the plan. "If we had
voted, a majority would have rejected it," Mr.
Chadirji said. "He told us what he did; he did not ask

The purchase of about 20,000 Kalashnikov automatic
weapons, 50,000 revolvers and 10 million rounds of
ammunition from Jordan has also been widely criticized
by Iraqi Governing Council members.

The contract was issued by the Interior Ministry
during the summer when it was being supervised by the
former New York City police commissioner, Bernard B.
Kerik. Mr. Kerik did not respond to requests for an

"It is totally unnecessary to buy them from outside
the country," said Mr. Chadirji, who noted that he had
purchased a number of Kalashnikovs to arm his personal
bodyguards and that the price in the local market was
as low as $50 for each weapon.

Mr. Heatly said logistical problems associated with
buying so many Kalashnikovs in small lots from the
Iraqi market would be excessive.

There would be no cost if the occupation authority
obtained them from the United States military, which
is now the custodian of countless thousands of Iraqi
weapons, many of them said to be in mint condition.

Mr. Heatly did not have figures for the number of
Kalashnikovs in allied hands, but he said there were
not enough of them to satisfy the requirements of the

AMP Section Name:War & Disaster Profiteering