IRAQ: Poor Planning and Corruption Hobble Reconstruction of Iraq

In April, Najaf's main maternity hospital received rare good news: an $8 million refurbishment program financed by the United States would begin immediately. But five months and millions of dollars later, the hospital administrators say they have little but frustration to show for it.

"They keep saying there's renovation but, frankly, we don't see it," said Liqaa al-Yassin, director of the hospital, her exasperated face framed by a black hijab, or scarf. "Each day I sign in 80 workers, and sometimes I see them, sometimes I don't."

She walks a visitor through the hospital's hot, dim halls, the peeling linoleum on the floors stained by the thousands of lighted cigarettes crushed underfoot. Anxious women, draped in black head-to-foot chadors, or veils, sit in the sultry rooms fanning their sick children.

"My child has heart problems, she can't take this heat," pleaded one mother as Dr. Yassin walked past.

The United States has poured more than $200 million into reconstruction projects in this city, part of the $10 billion it has spent to rebuild Iraq. Najaf is widely cited by the military as one of the success stories in that effort, but American officers involved in the rebuilding say that reconstruction projects here, as elsewhere in the country, are hobbled by poor planning, corrupt contractors and a lack of continuity among the rotating coalition officers charged with overseeing the spending.

"This country is filled with projects that were never completed or were completed and have never been used," said a frustrated civil affairs officer who asked not to be identified because he had not been cleared to speak about the reconstruction.

Najaf would seem to be one of Iraq's most promising places to rebuild. As a Shiite holy place, it has few Sunnis and, as a result, none of the insurgent attacks and sabotage that plague other parts of the country. Just a year after fighting between American forces and Shiite militias left much of the city in smoking ruins, a new police force is patrolling the streets and security in the city has been handed over to Iraqis.

There are some successes. The Army Corps of Engineers has finished refurbishing several police and fire stations, one of which has shiny new fire engines donated by Japan. It is spending tens of thousands of dollars to refurbish crumbling schools and has replaced aging clay water pipes in the suburb of Kufa with more durable plastic ones. It is even spending half a million dollars to renovate the city's soccer stadium, putting in new lights and laying fresh sod.

But in a series of interviews, American military officers and Iraqi officials involved in the reconstruction described a pattern of failures and frustrations that Army officers who have worked in other parts of Iraq say are routine. Residents complain that the many of the city's critical needs remain unfulfilled and the Army concedes that many projects it has financed are far behind schedule. Officers with the American military say that corruption and poor oversight are largely to blame.

"We were told to stimulate the economy any way we can, and a lot of money was wasted in the process," said Capt. Kelly Mims, part of the Army liaison team that maintains an office in Najaf's local government building. "Now we're focused on spending the money more wisely."

He said the Army was forming a committee with provincial authorities to create a master list of all current and future projects so that the money goes where it is most needed.

Several agencies are charged with reconstruction in Iraq. In Najaf it is primarily the work of the Army Corps of Engineers and the United States Agency for International Development.

They award some projects to foreign contractors, many of them American companies that hold master contracts for reconstruction work. Other projects are awarded directly to Iraqi companies, but even the American companies subcontract much of the work to Iraqis. A handful of Army reservists and civilian employees hand out cash to Iraqi contractors and try to keep track of the projects they underwrite.

But American officers say there is almost no oversight after a contractor is given the job. The Army pays small Iraqi contractors in installments - 10 percent at the outset, 40 percent when the work is half done, 40 percent on completion and the final 10 percent after fixing problems identified in a final inspection. On larger projects, contractors are paid by the month, regardless of how much work is actually done.

Penalty clauses for missing deadlines are rare, and some contractors drag out their projects for months, officers say, then demand more money and threaten to walk away if it is not forthcoming.

Maj. William Smith, charged with overseeing most of the reconstruction work in the area, walks around the bright blue pipes and yellow tanks of an unfinished water treatment plant outside of town. A control panel with its array of monitoring lights sits baking in the sun beside broken bags of filtering sand. The plant was supposed to be finished in June, but the feed pipe from the river has not even been connected; it was buried unmarked and now has to be relocated.

"Sometimes, the only way to go is to pay off the contractor and put it out for new bids," the major said with a weary chuckle. He said the water treatment plant was one of four that he was considering repossessing, even though he has paid out more than $200,000 on each one.

Major Smith says that contractors can technically be blacklisted. But they simply change the names of their companies and submit bids for new projects, "and we don't really have a choice but to use them" if they submit the winning bid, he said. That is because the United States blacklists only companies, not individuals, he said.

Army engineers have to scrutinize tenders carefully because contractors sometimes leave out major pieces of equipment to lower their bids, he said. Once the contract is awarded and the omission is discovered, the Army is forced to pay more to complete the project.

All bids must be submitted in English and the companies are required to have an English-speaking representative on site whenever the Americans visit, but they rarely do, many officers said.

At a United States-financed health clinic going up on the outskirts of town, Major Smith resorts to pantomime as he tries to make himself understood to an eager foreman. In response, the foreman draws furiously in the sand, but all a bemused Major Smith can say is, "O.K., O.K." He promises to return with an interpreter in a few days, but even that message is lost.

Driving through the city, Major Smith points out a new, $5.5 million sewage treatment plant, built by Bechtel with funds from the Agency for International Development. The plant was completed in February but was not commissioned until August because no one in Najaf had been trained on how to operate it. The agency said that it was now operating at full capacity, serving 141,000 people. But a similar plant has sat unused in the nearby town of Diwaniya since its completion last December, also for lack of trained personnel. An agency spokesman said it was expected to begin operating in September.

Muhammad Yusef al-Yasiri, an engineer who sits on the project committee of Najaf's city council, grumbled that the Americans hired contractors and handed out projects without consulting the local institutions involved. "Even the hospitals have no idea what kind of work is being done," he said. As a result, he added, "the money isn't going to the right places."

He cited the Al Sadr Teaching Hospital, which was caught in last year's crossfire between coalition forces and fighters loyal to Moktada al-Sadr, son of the grand ayatollah for whom the hospital is named. Mr. Sadr's fighters used the hospital's high floors to fire on a coalition base nearby before being driven out.

After coalition troops pulled out in July last year, looters moved in, carting away almost anything of value. To refurbish the hospital, the Army hired the Parsons Corporation, a private engineering and construction company that has been awarded a master contract to build and renovate hospitals and health centers throughout the country. It was paid $2 million to lay new linoleum and hang new ceiling tiles in the hospital's ground floor, drain the flooded basement and fix the central air-conditioning.

But the work has not assuaged angry doctors whose first priority is to replace the equipment lost in the looting, which they say the United States should have prevented in the first place.

A resident doctor who gave his name as Ather led a visitor through the hospital, pointing out where the advanced equipment once stood. Looters damaged the magnetic resonance imaging machine and stole the control unit of the CT scanner. The large white doughnut of the scanner sits idle in a pristine room, untouched by the fighting. Only two of the hospital's four X-ray machines remain.

In the emergency room, a family sat on a blanket eating a lunch of bread, grilled meat and cucumbers. "This was Najaf's most advanced hospital," he said with distress. "A lot of money has been spent on the rehabilitation of this hospital, but not very much has changed."

Part of the problem is that much of the money is spent before any work is done. The International Monetary Fund reported recently that a third to half of the money paid to foreign contractors is spent on security and insurance. Importing equipment also eats up cash. Major Smith said the hospital's new boiler, for example, was being shipped from the United States.

At the maternity hospital across town, Dr. Yassin could hardly disguise her mounting frustration. She said the contractor, the Parsons Corporation, had repaired the hospital's reverse osmosis water purification equipment, but that little else had been accomplished in the five months since the renovation began.

Only one of the hospital's four elevators is working, and that is the one Parsons left in operation while the others were supposedly being repaired, she said, adding that no one is working on the elevators now. Major Smith said Parsons had completed the work but that it was so shoddy the Army would not certify the elevators for use. He said the company had since agreed to bring in elevator specialists to redo the job.

Parsons was also supposed to fix the hospital's incinerators, but it completed the work without hooking up gas lines to fuel them, Dr. Yassin said.

A Parsons spokesman in California said that all work on the hospital would be completed in November and blamed insurgent activity in the area for the delays. The hospital director, though, said that there had never been any fighting around the site, and that Najaf had been free of major violence for more than a year.

Dr. Yassin said that, in any event, she would prefer that the money be spent on new facilities and had asked the Ministry of Health to finance an expansion.

"Were doing our best, despite this process of rehabilitation," she said. "I hope that they will work faster in the future."

• 21 Reconstruction