[Mb-civic] NYTimes.com Article: Accounting and Accountability

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Accounting and Accountability

July 23, 2004
 By PAUL KRUGMAN 



 

Accountability is important. The nation will be ill served
if officials who didn't do all they could to prevent a
terrorist attack, or led the nation into an unnecessary
war, manage to shift the blame to someone else. 

But those weren't the only big mistakes of the last few
years. Will anyone be held accountable for the mishandling
of postwar Iraq? 

Last month we learned that the United States, while it has
spent vast sums on the war in Iraq, has so far provided
almost no aid. Of $18.4 billion in reconstruction funds
approved by Congress, only $400 million has been disbursed.


Almost all of the money spent by the Coalition Provisional
Authority, which ran Iraq until late June, came from Iraqi
sources, mainly oil revenues. This revelation helps explain
one puzzle: the sluggish pace of reconstruction, which has
yet to restore many essential services to prewar levels. 

But it creates another puzzle: given that the authority was
spending Iraq's money, why wasn't it more careful in its
accounting? 

When a foreign power takes control of an oil-rich nation's
resources, it inevitably faces suspicion about its motives.
Fairly or not, the locals are all too ready to believe that
the invaders came to steal their oil. 

The way to deal with such suspicion is to let in as much
sunlight as possible by appointing financial officials with
strong reputations for independence, keeping meticulous
books, and welcoming and cooperating with international
audits. 

What actually happened was just the opposite. Every
important official with responsibility for Iraqi finances
was a Bush administration loyalist. The occupying authority
dragged its feet on an international audit, which didn't
even begin until April 2004. 

When KPMG auditors hired by an international advisory board
finally got to work, they found that no effort had been
made to keep an accurate record of oil sales, and that
accounting for the $20 billion Development Fund for Iraq
consisted of "spreadsheets and pivot tables maintained by a
single accountant." 

The auditors also faced a lack of cooperation. They were
denied access to Iraqi ministries, which were reputed to be
the locus of epic corruption on the part of Iraqis with
connections to the occupiers. They were also denied access
to reports concerning what they delicately describe as
"sole-source contracts." 

Translation: they were stonewalled when they tried to find
out what Halliburton did with $1.4 billion. 

By obstructing international auditors, by the way, the U.S.
wasn't just fueling suspicion about the misappropriation of
Iraqi oil money - it was also breaking its word. After
Saddam's fall, the U.N. gave the U.S. the right to disburse
Iraqi oil-for-food revenues, but only on the condition that
this be accompanied by international auditing and
oversight. 

A digression: yes, oil-for-food is the U.N.-administered
program from which Saddam undoubtedly siphoned off
billions. But we expect America to be held to a higher
standard. 

There are also allegations that Saddam's revenue diversion
was aided by corrupt U.N. officials. I think we should wait
and see what Paul Volcker, the genuinely independent head
of the U.N. inquiry - the sort of person the U.S.
occupation should have employed - has to say. Meanwhile,
it's worth noting that these accusations are entirely based
on documents that are purported to be in the possession of
none other than Ahmad Chalabi, who has himself been accused
of corruption. 

And there are a few curious side stories. On the day the
U.S. raided Mr. Chalabi's offices, a British associate of
Mr. Chalabi who had been promising to come out with a
devastating report told London's Daily Telegraph that a
remarkably effective hacker attack had destroyed all his
computer files, including the backup copies. 

After the United States's falling-out with Mr. Chalabi, the
oil-for-food investigation was taken out of the hands of
Mr. Chalabi's allies. But the new head of the investigation
was assassinated on July 1. 

Meanwhile, the war, fed by the failure of reconstruction,
goes on. The transfer doesn't seem to have made any
difference: more American soldiers were killed in the first
three weeks of July than in all of June, even though
Knight-Ridder reports that the U.S. military has stopped
patrolling in much of Anbar Province, the heart of the
insurgency. 

And while the U.S. has yet to disburse any significant
amount of aid, the Government Accountability Office says
that war costs for this fiscal year alone will run $12.3
billion above Pentagon projections. 

Will anyone be held accountable?


http://www.nytimes.com/2004/07/23/opinion/23krug.html?ex=1091603174&ei=1&en=52c4457528a4d0aa


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