Uncle Bucky got lucky

LA Times reports that contracts awarded by Dept Defense to Engineered Support Systems Inc. worth $158 million have been referred to the IG's office for investigation due to sole-sourcing and possible corruption. Unfortunately there is nothing remarkable about this, unless you count that George W. Bush's uncle William H.T. "Bucky" Bush is on the board of the company. Apparently he just made a cool half-mill on his stock due to the company's recent profit surge.

Well, what can I say? What the American taxpayers choose to do with their money is their own business, I suppose :-) What troubles me is that if they are this careless with their own money, how vigilant will they be when it comes to accounting for the DFI?

Congressional hearing

There was a Congressional hearing yesterday, inspired by the latest IG report, joined by Senators Harry Reid and Byron Dorgan, and Representative Henry Waxman (all Democrats). It included the latest on Custer Battles legal efforts:

Assistant US Attorney Richard Sponseller, according to Grayson [lawyer for the whistle-blowers], has suggested that any fraud committed against the CPA should not be equated with theft from the United States, since the CPA was an international organization. But when President George Bush signed the CPA's original funding mandate, it clearly referred to the organization as "an entity of the United States."

Custer Battles has reached the same conclusion about its own lack of culpability, but for different reasons. The company's lawyers told CorpWatch, a website that monitors the activity of war profiteers, that the claim against them should be dismissed because the money allegedly stolen was rightfully that of Iraqis, not Americans.

Interestingly they seem to have some link to the Administration, as alluded to in the above article:

A lawyer attended the hearings to represent two former associates of Custer Battles who declined at the last minute to testify in person for fear of retribution from both the mercenary firm and the Bush administration.

and in this one:

Another witness accused the government of hampering an investigation into alleged fraud US-based by Custer Battles, which had contracts worth as much as 100 million dollars in Iraq for airport security and other jobs.

I guess, considering the lack of transparency with which contracts were awarded, it should be unsurprising to most sensible people if some were awarded to companies with ties to the Administration, and if those companies consequently abused the system. It seems that they're not very nice guys either way.

Bookmark to follow up

The Guardian's compare-and-contrast between the CPA's and the UN's respective Iraqi oil scandals. I didn't get around to the reports this weekend, so I can't comment yet.

Volcker report

It's lengthy. I might be able to read it on Sunday. From my alarm clock, I gather that much of the issue is in how contracts were awarded. I see a pattern forming here.

In the meantime, I'll be reflecting upon the following truism while doing work: Power corrupts.

And for the slavering ideologues (you know who you are), I'll try to speak your language with the following scripture: Psalm 53:3. Here's a nice summary article of the whole debacle for you: All players gained from `Oil for food'. Maybe another truism: Be careful what you wish for, you might just get it. That would be a nice change.

Husain Shahristani on precedent and accountability

From Al-Jazeera, Shahristani highlights what a good precedent the CPA set for the Iraqi government:

"It is very well known in the country that the corruption is very widespread from the police to the judicial systems ... as a matter of fact Iraq has never known the level of corruption prevailing now," Shahristani said.

"A lot of public funds have gone missing under the Coalition Provisional Authority ... and even now," he said, of the disbanded US occupation authority.

Shahristani ... vowed the next government would review all suspect contracts made under the Allawi cabinet.

"One thing we are going to pursue is that all suspicious contracts should be properly examined and any funds that have been misused should be returned to the public ... and these things should be explained to the Iraqi people," he said.

I wonder who will review the suspect contracts made under the next government? Maybe the government after that.

Oil and foreign investment

From San Francisco Chronicle:

Iraqi officials are drafting a law that would encourage international companies to invest in the country's tattered oil industry, run by the state since 1972. The current finance minister, a candidate in the election, announced the legislation late last month, although he offered few details.

"So I think this is very promising to the American investors and to American enterprises, certainly to oil companies," Finance Minister Adil Abd al-Mahdi said at a National Press Club conference in December.

The companies' ties to Iraq are growing. In the past two months, the Oil Ministry has signed a flurry of agreements to study the potential of the underdeveloped oil fields and train Iraqi engineers in the latest technology and techniques.

BP will study the Rumailah oil field near Basra, an Iraqi-Turkish consortium will help develop the Khurmala Dome oil field, ExxonMobil Corp. is laying the groundwork to provide technical assistance. They reportedly also include Vitol, Anadarko Petroleum Corp. and Dome Oil of the United Arab Emirates, who have been awarded a reservoir study of the Suba-Luhais oil fields in southern Iraq.

Interestingly, Royal Dutch/Shell Group will study Kirkuk and natural gas for free to "build a relationship with the Iraqis", and ChevronTexaco has been flying Iraqi oil engineers to the United States for training since last year as a "goodwill gesture" (and definitely not with the expectation that any favour will be returned).

The effect of the election outcome on the fundamental structure of the sector should be minimal:

"The elected parliament will look into oil contracts and decide how to deal with international companies as far as investment," Allawi told reporters.

"Economic policy will move away from government intervention and allow private investment. The state will no longer monopolise everything, including the oil sector, except for the upstream, which will be under the jurisdiction of the elected Iraqi government."

Allawi, a contender to lead Iraq after the elections, has recommended to the Oil and Gas Council, which he heads, to use production sharing model to attract investment.

But Allawi might not hang to power after the January 30 polls ... The economic preferences of Sistani's list are unknown, although Finance Minister Adel Abdel Mehdi, a leading member of the bloc and a candidate to replace Allawi as prime minister, favours foreign investment and has been building ties with US officials keen to see Iraq's oil sector open up.

But from previous experience, the devil's in the details. Is it just me, or is there an infinitely larger number of ways for things to go wrong than right? This could take a while.

Bookmark to follow up

From Yahoo News:

The U.S. occupation authority in Iraq was unable to keep track of nearly $9 billion it transferred to government ministries, which lacked financial controls, security, communications and adequate staff, an inspector general has found.

The findings were released Sunday by Stuart Bowen Jr., special inspector general for Iraq reconstruction. Bowen issued several reports on the Coalition Provisional Authority (CPA), the U.S. occupation government that ruled Iraq from June 2003 to June 2004.

I've got a busy busy week at work, but I should be able to get at least some of this done on the weekend.

Bookmark, to do, for later

From an interview with Chomsky:

"I don't see any possibility of Britain and the US allowing a sovereign independent Iraq; that's almost inconceivable. It will have a Shia majority. Probably as a first step it will try to reconstitute relations with Iran. Its not that they are pro- Khamenei [Iran's Supreme Leader], they'll want to be independent. But it's a natural relationship and even under Saddam they were beginning to restore relations with Iran.

"It might instigate some degree of autonomy in the largely Shia regions of Saudi Arabia which happens to be where most of the oil is. You can project not too far in the future a possible Shia-dominated region including Iran, Iraq, oil-producing regions of Saudi Arabia which really would monopolise the main sources of the world's oil. Is the US going to permit that? It is out of the question. Furthermore, an independent Iraq would try to restore its position as a great, perhaps leading power in the Arab world. Which means it will try to rearm and confront the regional enemy, which is Israel. It may well develop WMD to counter Israel's. It is inconceivable that the US and the UK will permit this."