Iraq -- The Cash Cow

The United States has charged a former employee of Halliburton and a Kuwaiti subcontractor with defrauding the US government of millions of dollars in a contract scam in Iraq. Two men -- Jeff Alex Mazon, a former employee of Kellogg, Brown & Root (KBR), a subsidiary of Halliburton; and Ali Hijazi, the managing partner of a Kuwaiti business, LaNouvelle Trading and Contracting Company -- were indicted on charges of devising a scheme to defraud the US of more than $3.5 million.

The subcontract specified that KBR was to pay LaNouvelle more than $5.5 million, nearly $5.5 million more than the KBR estimate of the job - about $680,000. Hijazi allegedly presented Mazon with a $1 million dollar check in exchange for Mazon's favorable treatment of Nouvelle.

Now most of the companies involved in the Iraqi reconstruction are US-based and most of those are tied to Halliburton. Considering the unemployment in Iraq and the fact that they can re-build their country cheaper than we can, even if there was not corrupt overcharging. The only reason US contractors seem to be there is to loot the coffers.

The international watchdog group Transparency International (TI) said in its Global Corruption Report 2005 that profiteering threatens to undermine the reconstruction of Iraq. Peter Eigen, chairman of TI said, "When the size of a bribe takes precedence over value for money, the results are shoddy construction and poor infrastructure management. Corruption wastes money, bankrupts countries and costs lives."

Authors of the report have said, "Funds poured into rebuilding countries such as Iraq must be safeguarded against corruption. If urgent steps are not taken Iraq will become the biggest corruption scandal in history." Attempts by donors like the World Bank (Wolfowitz will make sure that's under control) and the International Monetary Fund (IMF) to hasten the pace of reconstruction can heighten the chances of waste and fraud.

The report referred to how the Coalition Provisional Authority (CPA) and the US Department of Defense initially had only 80 people examining the largest reconstruction program in history, half the number needed according to the Association of Inspectors General, and eventually outsourced oversight to private companies, giving rise to potential conflicts of interest.

And the small contractor isn't even able to bid the contracts. A phenomenon of "contract bundling" which joins together two or more separate procurement requirements into a super-sized contract, effectively disqualifying smaller companies because only the very largest contractors are able to compete.

I wonder if this will keep that deficit going, and going, and going like the energizer bunny. Suck us dry George.