"It is possibly one of the largest thefts in history."
The money missing from all ministries under the interim Iraqi government appointed by the US in June 2004 may turn out to be close to $2bn.
According to The Independent:
"Government officials in Baghdad suggest that the skill with which the robbery was organised suggests that the Iraqis involved were only front men, and 'rogue elements' within the US military or intelligence services may have played a decisive role behind the scenes."
The Independent reports:
"The Iraqi Board of Supreme Audit says in a report to the Iraqi government that US-appointed Iraqi officials in the defence ministry allegedly presided over these dubious transactions.
"Senior Iraqi officials now say they cannot understand how, if this is so, the disappearance of almost all the military procurement budget could have passed unnoticed by the US military in Baghdad and civilian advisers working in the defence ministry."
Patrick Cockburn, in The Independent, 19 September 2005 asks: 'What has happened to Iraq's missing $1bn?'
The Independent describes the 'one billion dollars plundered from Iraq's defence ministry' as one of the largest thefts in history.
The Independent reveals
1. Iraq's army has been given 'museum-piece weapons'. It needs the US army to defend it.
Armoured cars purchased by Iraq turned out to be so poorly made that even a bullet from an elderly AK-47 machine-gun could penetrate their armour.
A shipment of the latest MP5 American machine-guns, at a cost of $3,500 (£1,900) each, consisted in reality of Egyptian copies worth only $200 a gun.
Other armoured cars leaked so much oil that they had to be abandoned.
A deal was struck to buy 7.62mm machine-gun bullets for 16 cents each, although they should have cost between 4 and 6 cents.
2. The money, intended to train and equip an Iraqi army, has been 'siphoned abroad in cash and has disappeared.'
3. Most of the money 'was supposedly spent buying arms from Poland and Pakistan.'
The contracts were peculiar in four ways.
A. According to Mr Allawi, they were awarded without bidding,
B. and were signed with a Baghdad-based company, and not directly with the foreign supplier.
C. The money was paid up front,
D. and, surprisingly for Iraq, it was paid at great speed out of the ministry's account with the Central Bank.
According to The Independent: "Many Iraqi soldiers and police have died because they were not properly equipped. In Baghdad they often ride in civilian pick-up trucks vulnerable to gunfire, rocket- propelled grenades or roadside bombs. For months even men defusing bombs had no protection against blast because they worked without bullet-proof vests. These were often promised but never turned up...
"The report of the Board of Supreme Audit on the defence ministry contracts was presented to the office of Ibrahim al-Jaafari, the Prime Minister, in May. But the extent of the losses has become apparent only gradually. The sum missing was first reported as $300m and then $500m, but in fact it is at least twice as large. 'If you compare the amount that was allegedly stolen of about $1bn compared with the budget of the ministry of defence, it is nearly 100 per cent of the ministry's [procurement] budget that has gone Awol,' said Mr Allawi.
"The money missing from all ministries under the interim Iraqi government appointed by the US in June 2004 may turn out to be close to $2bn. Of a military procurement budget of $1.3bn, some $200m may have been spent on usable equipment, though this is a charitable view, say officials. As a result the Iraqi army has had to rely on cast-offs from the US military, and even these have been slow in coming.
"Mr Allawi says a further $500m to $600m has allegedly disappeared from the electricity, transport, interior and other ministries. This helps to explain why the supply of electricity in Baghdad has been so poor since the fall of Saddam Hussein 29 months ago despite claims by the US and subsequent Iraqi governments that they are doing everything to improve power generation.
"The sum missing over an eight-month period in 2004 and 2005 is the equivalent of the $1.8bn that Saddam allegedly received in kick- backs under the UN's oil-for-food programme between 1997 and 2003. The UN was pilloried for not stopping this corruption. The US military is likely to be criticised over the latest scandal because it was far better placed than the UN to monitor corruption.
"The fraud took place between 28 June 2004 and 28 February this year under the government of Iyad Allawi, who was interim prime minister. His ministers were appointed by the US envoy Robert Blackwell and his UN counterpart, Lakhdar Brahimi.
"Among those whom the US promoted was a man who was previously a small businessman in London before the war, called Hazem Shaalan, who became Defence Minister.
"Mr Shalaan says that Paul Bremer, then US viceroy in Iraq, signed off the appointment of Ziyad Cattan as the defence ministry's procurement chief. Mr Cattan, of joint Polish-Iraqi nationality, spent 27 years in Europe, returning to Iraq two days before the war in 2003. He was hired by the US-led Coalition Provisional Authority and became a district councillor before moving to the defence ministry.
"For eight months the ministry spent money without restraint. Contracts worth more than $5m should have been reviewed by a cabinet committee, but Mr Shalaan asked for and received from the cabinet an exemption for the defence ministry. Missions abroad to acquire arms were generally led by Mr Cattan. Contracts for large sums were short scribbles on a single piece of paper. Auditors have had difficulty working out with whom Iraq has a contract in Pakistan.
"Authorities in Baghdad have issued an arrest warrant for Mr Cattan. Neither he nor Mr Shalaan, both believed to be in Jordan, could be reached for further comment. Mr Bremer says he has never heard of Mr Cattan."