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You are here: MacNN Forums > Community > MacNN Lounge > Political/War Lounge > US$12 billion in $100 notes goes missing in Iraq

US$12 billion in $100 notes goes missing in Iraq
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Feb 7, 2007, 11:14 PM
 
This is really quite remarkable, and seems only to be reported in the British press:


How the US sent $12bn in cash to Iraq. And watched it vanish


Special flights brought in tonnes of banknotes which disappeared into the war zone

David Pallister
Thursday February 8, 2007
The Guardian


The US flew nearly $12bn in shrink-wrapped $100 bills into Iraq, then distributed the cash with no proper control over who was receiving it and how it was being spent.
The staggering scale of the biggest transfer of cash in the history of the Federal Reserve has been graphically laid bare by a US congressional committee.

In the year after the invasion of Iraq in 2003 nearly 281 million notes, weighing 363 tonnes, were sent from New York to Baghdad for disbursement to Iraqi ministries and US contractors. Using C-130 planes, the deliveries took place once or twice a month with the biggest of $2,401,600,000 on June 22 2004, six days before the handover.

Details of the shipments have emerged in a memorandum prepared for the meeting of the House committee on oversight and government reform which is examining Iraqi reconstruction. Its chairman, Henry Waxman, a fierce critic of the war, said the way the cash had been handled was mind-boggling. "The numbers are so large that it doesn't seem possible that they're true. Who in their right mind would send 363 tonnes of cash into a war zone?"

The memorandum details the casual manner in which the US-led Coalition Provisional Authority disbursed the money, which came from Iraqi oil sales, surplus funds from the UN oil-for-food programme and seized Iraqi assets.

"One CPA official described an environment awash in $100 bills," the memorandum says. "One contractor received a $2m payment in a duffel bag stuffed with shrink-wrapped bundles of currency. Auditors discovered that the key to a vault was kept in an unsecured backpack.

"They also found that $774,300 in cash had been stolen from one division's vault. Cash payments were made from the back of a pickup truck, and cash was stored in unguarded sacks in Iraqi ministry offices. One official was given $6.75m in cash, and was ordered to spend it in one week before the interim Iraqi government took control of Iraqi funds."

The minutes from a May 2004 CPA meeting reveal "a single disbursement of $500m in security funding labelled merely 'TBD', meaning 'to be determined'."

The memorandum concludes: "Many of the funds appear to have been lost to corruption and waste ... thousands of 'ghost employees' were receiving pay cheques from Iraqi ministries under the CPA's control. Some of the funds could have enriched both criminals and insurgents fighting the United States."

According to Stuart Bowen, the special inspector general for Iraq reconstruction, the $8.8bn funds to Iraqi ministries were disbursed "without assurance the monies were properly used or accounted for". But, according to the memorandum, "he now believes that the lack of accountability and transparency extended to the entire $20bn expended by the CPA".

To oversee the expenditure the CPA was supposed to appoint an independent certified public accounting firm. "Instead the CPA hired an obscure consulting firm called North Star Consultants Inc. The firm was so small that it reportedly operates out of a private home in San Diego." Mr Bowen found that the company "did not perform a review of internal controls as required by the contract".

However, evidence before the committee suggests that senior American officials were unconcerned about the situation because the billions were not US taxpayers' money. Paul Bremer, the head of the CPA, reminded the committee that "the subject of today's hearing is the CPA's use and accounting for funds belonging to the Iraqi people held in the so-called Development Fund for Iraq. These are not appropriated American funds. They are Iraqi funds. I believe the CPA discharged its responsibilities to manage these Iraqi funds on behalf of the Iraqi people."

Bremer's financial adviser, retired Admiral David Oliver, is even more direct. The memorandum quotes an interview with the BBC World Service. Asked what had happened to the $8.8bn he replied: "I have no idea. I can't tell you whether or not the money went to the right things or didn't - nor do I actually think it's important."

Q: "But the fact is billions of dollars have disappeared without trace."

Oliver: "Of their money. Billions of dollars of their money, yeah I understand. I'm saying what difference does it make?"

Mr Bremer, whose disbanding of the Iraqi armed forces and de-Ba'athification programme have been blamed as contributing to the present chaos, told the committee: "I acknowledge that I made mistakes and that with the benefit of hindsight, I would have made some decisions differently. Our top priority was to get the economy moving again. The first step was to get money into the hands of the Iraqi people as quickly as possible."

Millions of civil service families had not received salaries or pensions for months and there was no effective banking system. "It was not a perfect solution," he said. "Delay might well have exacerbated the nascent insurgency and thereby increased the danger to Americans."
     
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Feb 7, 2007, 11:19 PM
 
Originally Posted by wgscott View Post
This is really quite remarkable, and seems only to be reported in the British press:
CNN:

• The Federal Reserve sent over $4 billion in cash to Iraq in 2003 and 2004
• Cash, weighing 363 tons, loaded on to pallets and flown on military aircraft
• Funds came from Iraqi oil exports, Saddam Hussein regime's frozen assets
• U.S. administrator denies funds were diverted to the insurgency
     
wgscott  (op)
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Feb 7, 2007, 11:25 PM
 
Thanks. I missed it (still can't find it in NYT).

Anyway, this is quite shocking, even by the current standards.

That's a lot of loose change.
     
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Feb 8, 2007, 11:50 AM
 
This was on the News Hour the other day, too. All the Republicans were saying, this is old news and we need to look forward not backward. (To be fair, give me 300 tons of $100 bills and I'd be saying the same thing.) Chances are Al Qaeda got the money just like it got all those explosives stockpiles we didn't bother to secure (and just like they would have gotten any WMD had there been any).
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It will depart at 20 minutes to 5.
     
tie
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Feb 8, 2007, 03:41 PM
 
http://www.nytimes.com/2007/02/08/wa...=1&oref=slogin

Three Army Reserve officers and two American civilians have been charged with taking or arranging for more than $1 million in cash, sports cars, jewelry and other items to be used as bribes in rigging bids on Iraqi reconstruction contracts, United States officials said Wednesday.

They said the five have been indicted by a federal grand jury in New Jersey in a scheme that involved the theft of millions of dollars of Iraq reconstruction money and the awarding of contracts to Philip Bloom, who doled out the bribes.

The officials said the agency in charge of Iraqi reconstruction lost more than $3.6 million because of the corruption scheme that began in December 2003 and lasted two years.

Mr. Bloom, who has already pleaded guilty, received more than $8.6 million in rigged contracts, the officials said.

They said more than $500,000 was smuggled into the United States. “They stole the money in Iraq and then smuggled vast sums into the United States to support lavish lifestyles,” said Mark W. Everson, the Internal Revenue Service commissioner.
The 4 o'clock train will be a bus.
It will depart at 20 minutes to 5.
     
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Feb 8, 2007, 04:07 PM
 
Wow...

Not sure how this happens.
     
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Feb 8, 2007, 04:10 PM
 
Perhaps if our government cared about the money it confiscates from its people, $12B would mean something. Unfortunately, it apparently does not - not even if that money went to fund terrorism.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
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Feb 8, 2007, 04:11 PM
 
Can you say tip of the iceburg?
     
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Feb 8, 2007, 04:15 PM
 
Nothing really shocks me anymore....
     
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Feb 8, 2007, 06:32 PM
 
A freind of mine in Iraq tells me that there are US military folk who basically hand out cash to the locals. Sometimes its for a lost loved one, other times for a lost home or property, and sometimes just a sweet gesture.
     
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Feb 8, 2007, 06:54 PM
 
How else are you supposed to get $12 billion of Iraq's money back into the US?

Is this how the war pays for itself?

Kinda makes the Oil for Food "scandal" look insignificant, don't it?
     
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Feb 8, 2007, 06:57 PM
 
Now all we need to find out is that large amounts of this money are being siphoned off to buy heroin off the Afghan warlords, which is then sold to finance the war.

Where is Oliver North when the world needs him?

Oh, that's right - it doesn't.
     
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Feb 9, 2007, 07:22 PM
 
How can you distribute $12 billion in cash?

That's 120 million hundred-dollar bills. Even if you gave out one of them every second, every eight-hour working day...it will still take more than three years to get rid of it all.

No wonder the Fed doesn't report on M3 (the supply of US $) anymore.

Ben Bernanke did say he'd be willing to drop hundred dollar bills from a helicopter, hence earning himself the nickname: Helicopter Ben. He just never said which country the Fed would do it in.


"Political language is designed to make lies sound truthful and murder respectable, and to give the appearance of solidity to pure wind." George Orwell
     
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Feb 10, 2007, 07:22 AM
 
So, we "lost" $12 Billion of Iraqi money we had in our possession? And most of it probably wound up back in the hands of US contractors working in Iraq? Good for us. That'll teach those Iraqi insurgents not to hate freedom. If they don't love freedom as much as us Americans they don't deserve to have American dollars.
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Feb 11, 2007, 08:35 AM
 
That's it! I am moving in Iraq now!

Where do I sign up??
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Feb 11, 2007, 08:59 AM
 
Here is the link to the report, for those who are curious...

;o)
"Criticism is a misconception: we must read not to understand others but to understand ourselves.”

Emile M. Cioran
     
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Feb 12, 2007, 12:13 PM
 
And why are we just now learning about this? Oh yeah because this is old news according to the Republicians. The founding fathers are rolling in their graves. It's amazing how one presidency can destroy so much progress all in the name of oil and money.
The Religious Right is neither.
     
tie
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Feb 12, 2007, 12:45 PM
 
Don't just blame the president. The Republicans in Congress didn't care about Iraq, so never investigated anything. Therefore, even though we made tons of mistakes, we learned few lessons. Unfortunately, there is a bit of a backlog of mistakes that need to be cleared up.
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