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MOUNTAIN VIEWS: TOUGH TIMES HERE AS BILLIONS GO MISSING DOWN BLACK HOLE IN IRAQ

By John Hanchette

OLEAN -- Let's consider two recent figures and why they reflect our current abominable position as a nation.

$12 billion: Amount of U.S. currency, in cash, delivered to Iraq in 2003 and 2004 at the start of the current war to keep the Iraqi economy from collapsing.

$9 billion: The amount that was stolen, simply disappeared, or, three years later, cannot be accounted for.

Much of the money -- airlifted in huge C-130 military transports -- consisted of small bills: denominations of $1, $5 and $10. This, according to legendary investigative reporters Donald Barlett and James Steele, writing in "Vanity Fair" magazine, was arranged on the theory that these could be quickly circulated through the Iraqi economy "to prevent a monetary and financial collapse," as the Treasury Department explained.

These were the heady days when the White House and Pentagon, of course, had no inkling of the force of the insurgency that was coming or number of American deaths and injuries, and thought the worst threat might be grumbling by the otherwise grateful Iraqi population about lack of walking-around money.

The cash itself was delivered to Iraq in 21 separate flights in plastic-covered "bricks" of bills on tarped wooden pallets. The last reliable figures kept by the Federal Reserve Bank show the bank notes weighed a mind-boggling 363 tons. The money went to the CPA -- the Coalition Provisional Authority -- the interim government set up by President George W. Bush and the Pentagon to run the invaded and supposedly conquered nation for a few months until the happy freed Iraqis could start running it themselves.

The ironic acronym CPA -- as the authors point out -- had nothing to do with the "Certified Public Accountant" definition usually assessed those letters by trusting Americans. The stupefyingly inept provisional office itself received, in its 14 months of existence, another $1.6 billion to run everyday Iraq, over and above the $12 billion in cash mentioned above. (Dubya and the Pentagon have always tried to portray the CPA as approved by Congress, or at one point, by the United Nations. That is incorrect. It was approved by neither, and is solely an executive creation of the White House and Defense Department.) There was no real oversight, no checks and balances, no real accounting procedures, no real supervision, no real line of authority, no chain of command. Sometimes administrators and staffers would play pretend football with the wrapped bricks of cash. Much of the money went to pay corrupt contractors, both American and Iraqi. The payments were often delivered in paper grocery bags filled with cash, or in loose bills thrown from the back of pickup trucks. It should have been called the MFE -- Mammoth Fraud Everywhere. Some of the stories are already well-known by that minuscule portion of the American public paying close attention.

Of the 8,206 "security guards" supposedly protecting the CPA compound, 7,604 were ghost employees. Only 602 could be verified as existing. Halliburton, the huge company once run by Dick Cheney before he became vice president (and which gifted him with $43 million on his retirement), received $1.5 billion in no-bid contracts from the CPA.

Halliburton, under one contract, subsequently charged the CPA and American taxpayer for 42,000 daily meals. It was only preparing and delivering a third of that number. Just an example -- some day I'll write much more about the Halliburton angle.

Suffice it to say, when you have that much cash floating around, the people supposedly keeping track of it -- an impossibility -- are bound to stop giving a crap. Retired American admiral David Oliver, the CPA's budget manager, was once asked by a British reporter what had happened to all of it. "I have no idea," he responded. "I can't tell you whether or not the money went to the right things or didn't. ... What difference does it make?"

Did the CPA ever make an effort to keep track of this literal mountain of money?

Only a pretend one -- a sham that ended up a subject of congressional hearings. The CPA awarded a $1.4 million contract for "accountant and audit services" to an obscure firm called NorthStar Consultants, the principals of which are a couple named Thomas A. and Konsuelo Howell, who ran the business out of a two-story stucco house in La Jolla, Calif.

Also headquartered there, according to the "Vanity Fair" article, were other Howell operations -- International Financial Consulting and Kota Industries, Inc., whose main business appears to be kitchen remodeling, furniture, flooring, and home refurnishings and repair.

When Barlett and Steele asked the Pentagon why a small home-remodeling company run out of a living quarters was given a contract to audit the dispersal of $12 billion, the Pentagon replied in typical fashion by providing a heavily redacted contract with any useful information totally blacked out.

L. Paul Bremer III, the bumbling envoy sent to run the CPA, told subsequent congressional inquisitors the Pentagon handled the hiring of NorthStar, and that he'd never even heard of NorthStar until after he'd left Iraq and come home, and even now only knew it as an accounting firm -- which it wasn't.

NorthStar had no accountants, certified or otherwise. When the two reporters finally contacted Howell, he refused to discuss the contract in any detail.

But the Pentagon -- so inefficient these days it can't even manually black out information it's trying to hide -- had left Barlett and Steele one important clue: the mailing address of the NorthStar mystery firm. It was in the Bahamas -- home of offshore money scandals, swindles and scams.

Non-Bahamians, wrote the investigative reporters, "often use post-office boxes in the Bahamas and other tax havens for three purposes: to conceal assets, to avoid taxes, and to launder money. ... Post-office boxes in tax havens around the world have been flooded with contractor business based in Iraq."

No one seems to know, wrote the two, if anyone at the CPA or at the Pentagon even questioned why one of its important contractors used an offshore post-office box. The NorthStar mailing address was P.O. Box N-3813 in Nassau.

When the "Vanity Fair" authors dug further, they discovered the very same box had served as the address of record for Bahamian businessman Patrick Thomson and his notorious Lions Gate Management firm, both of them figuring prominently in the collapse of Evergreen Security -- "a Ponzi scheme masquerading as a mutual fund" and "one of the more spectacular offshore frauds in recent years." Evergreen siphoned $200 million from unaware investors in the United States and abroad.

When the two investigative reporters interviewed Thomson by phone, he admitted he had incorporated NorthStar for Howell in the Bahamas as an IBC -- an "international business company" that is merely paper. An IBC, notorious among law enforcers and prosecutors, are usually empty business vessels that can be used for almost anything, with no real CEOs or boards of directors or annual reports or financial statements or owner listings. They can be headquartered anywhere on the planet, and don't even have to allow inspection of their books, if they have any books.

"They are shells," write Barlett and Steele, "operating in total secrecy."

Boy, this Bush administration is doing a good, careful job of looking after American taxpayer dollars, huh? Thomson declined to discuss the matter further with "Vanity Fair."

So far, California Democrat Henry Waxman is about the only member of Congress showing much outrage over this obvious planned heist and others in Iraq. But he is stymied by a notable indifference to the gross theft our money -- yours and mine -- on the part of fellow members from both major political parties. Frankly, they seem in on the conspiracy of silence to keep Americans from talking about this outrageous stuff.

Only one CPA major player has gone to jail so far, Robert J. Stein, who was the comptroller for the provisional authority, and he was sentenced earlier this year to nine years in the federal slam mostly because he was sloppy and overt about his greed. (Stein controlled more than $82 million in contracts for Iraqi development, and was successfully accused of stealing $2.6 million outright from the CPA and Iraqi funds, with money laundering, bid-rigging and wire fraud, and with accepting $1,082,279 in bribes -- plus "watches, alcohol, cigars and prostitutes" over two years from favored contractors.

Stein, it turns out, was hired by the CPA despite having served an eight-month federal sentence just seven years before for "access device fraud" that netted him at least $45,000 from financial institutions. Nice due diligence Bush administration executives showed there.

Now for the frosting on the cake. In one of his last official acts, Paul Bremer issued an executive order carefully prepared by the Pentagon that declared all members of the CPA "shall be immune from any form of arrest or detention other than by persons acting on behalf of their Sending States" and that "contractors shall be immune from Iraqi legal process with respect to acts performed by them pursuant to the terms and conditions of a contract or any sub-contract thereto."

The Bush administration has bitched ad nauseam over the corruption and theft Saddam Hussein displayed without having to answer to the Iraqi people -- even using it as one excuse for invasion.

Yet this giant Get Out of Jail Free Card that Dubya's people arranged does the same thing. The Iraqis, even if they cared, will have no say in their new democracy over illegal conduct by American contractors.

The authors note that the Bush administration has now spent double the money in trying to rebuilt Iraq that the United States took to rebuild Japan after World War II. And that takes into account inflation, two nuclear bombings that incinerated two major cities, bringing Tokyo almost to grade with fire bombs, and the fact that Japan is an industrialized nation three times the size of Iraq.

The Bush administration has clammed up, of course. No one at the Pentagon or the White House or in Washington or Baghdad will even answer public affairs requests about the missing $9 billion, or NorthStar, or Howell, according to the "Vanity Fair" authors, who make the accurate observation:

"The simple truth about the missing money is the same one that applies to so much else about the American occupation of Iraq. The U.S. government never did care about accounting for those Iraqi billions and it doesn't care now. It cares only about ensuring that an accounting does not occur."

Amen to that. This was corruption -- totally premeditated, carefully planned, hideously broad, all-purveying corruption, by officials military and otherwise on the taxpayer payroll, and by private greedball businessmen. And don't hand me this fog-of-war excuse that Bremer and his sidekicks were always trying to sell. It was so well thought-out that Pentagon conspirators made sure the purveyors and recipients of its illegal largess could never be legally prosecuted. This corruption is rampant and epidemic in this administration, on a scale never seen before. And it should be the first count in George W. Bush's impeachment.

Contact your congressional representative on this, dear reader. Tell 'em to get busy or you'll figure they're part of the deal.


John Hanchette, a professor of journalism at St. Bonaventure University, is a former editor of the Niagara Gazette and a Pulitzer Prize-winning national correspondent. He was a founding editor of USA Today and was recently named by Gannett as one of the Top 10 reporters of the past 25 years. He can be contacted via e-mail at Hanchette6@aol.com.

Niagara Falls Reporter www.niagarafallsreporter.com Dec. 4 2007