The U.S. government Iraq relief and reconstruction program had serious internal control weaknesses that put billions of American taxpayer dollars at risk of fraud, waste, and abuse. The precise amount lost to fraud and waste may never be known, but SIGIR’s audits and investigations have demonstrated that the amount could be substantial. The end result of the dollars lost to fraud and waste is that those funds were not available to assist the Iraqi people and help rebuild their country.
True, and one can look at it another, albeit more selfish, way: that those funds were never available to rebuild the sorry state of infrastructure in this country, which according to one 2011 study, now ranks behind Barbados. But as the old rejoinder says, we broke Iraq so we had to buy it. We bought it alright–$51 billion worth, according to the report–but it seems someone else was taking the bags out of the store.
“Here’s where I can help,” charged Peter Van Buren, who served on a Provincial Reconstruction Team (PRT) on behalf of the State Department and wrote a whole book about the lost billions called We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People. He now publishes a blog of the same name.
“I do know the precise amount lost to fraud and waste: all of it. Every freaking penny. Every dollar spent on Iraq that was not spent on Scranton, Detroit, Cleveland or New Orleans.”
The Final Forensic Audit Report of Iraq Reconstruction Funds (.pdf), identified “internal control weaknesses such as inadequate reviews of contractors’ invoices, insufficient numbers of, or inadequately trained oversight staff, poor inventory controls, high staff turnover, poor recordkeeping, insufficient price competition by subcontractors, and weak oversight of cash disbursements.”
Such weak internal controls opened the door to all sorts of fraud and abuse, the report says, and as of June 2012, “SIGIR investigators, working with other agencies’ investigators, have developed information used to indict 87 individuals and convict 71 individuals for fraudulent activities including bribery, kick-backs, theft of government funds and property, inflated invoices, delivery of insufficient or inferior goods, and bid rigging.”
As least someone was getting something out of the invasion. But think of all the projects imagined but left unfinished: the optimistic (but oftentimes shortsighted or even wrongheaded) micro-economic development efforts, the Iraqi education and training programs, the infrastructure for basic services that earnest Americans helped build with Iraqi partners only to see the funding drain away or cut off completely. (For more on these and other heartbreakers, just check out Van Buren’s book.) This latest SIGIR report suggests the reconstruction effort was one big boondoggle for the war contracting business. And I bet if you took a poll of the American public that’s all they think it was at this point, too.
That’s why it will be more than perverse to see those same beltway bandits and the politicians who support them get up in front of congress this week to cry huge crocodile tears over the prospect of sequestration, the result of which (if it even happens) could bring defense spending back down to 2005 or 2007 spending levels, according to the number-crunchers I’ve spoken with.
According to The Hill, there will be lots of activity on Capitol Hill this week, with debate over the $608 billion Fiscal Year 2013 defense appropriations ($3 billion more than President Obama asked for), and a House Armed Services hearing on sequestration. The hearing will no doubt be well-covered by the press, and feature the Chicken Littles I wrote about last week, here and here. It will include Lockheed Martin’s Bob Stevens, EADS North America’s Sean O’Keefe, Pratt and Whitney’s David Hess and Williams-Pyro’s Della Williams.
Stevens, who made $25.8 million in compensation last year (the company itself got $42.9 billion in federal contracts and made $4 billion in profits in 2011), is also the CEO who gratuitously announced Lockheed would hand out pre-layoff slips to 123,000 of its workers if sequestration wasn’t reversed by Election Day.
Two weeks later, the committee will host top military brass to again, tell members how sequestration will “hollow out” the military as we know it.
These two hearings will no doubt produce some stellar sound bites for the crowd opposing further defense cuts and good copy for a few news cycles. Too bad the SIGIR reports hardly ever get as much play. Special IG Stuart Bowen has been doggedly determined for years, but he’s only a household name in those households where oversight and the post-invasion development of Iraq was ever of interest. In other words, not many households.
The same goes for the Government Accountability Office (GAO) reports that often tackle the same issues. If the Democrats in support of the defense cuts had any sense they’d make use of this incredibly revealing GAO report last year that indicates Iraq is just a microcosm of the terrible oversight and financial controls in the Pentagon as a whole. In fact, its conclusions sound all too much like SIGIR’s recent audit:
DOD financial management has been on GAO’s high-risk list since 1995 and, despite several reform initiatives, remains on the list today. Pervasive deficiencies in financial management processes, systems, and controls, and the resulting lack of data reliability, continue to impair management’s ability to assess the resources needed for DOD operations; track and control costs; ensure basic accountability; anticipate future costs; measure performance; maintain funds control; and reduce the risk of loss from fraud, waste, and abuse. DOD spends billions of dollars each year to maintain key business operations intended to support the warfighter, including systems and processes related to the management of contracts, finances, the supply chain, support infrastructure, and weapon systems acquisition. These operations are directly impacted by the problems in financial management. In addition, the long-standing financial management weaknesses have precluded DOD from being able to undergo the scrutiny of a financial statement audit.
So DoD is still unable to undergo the scrutiny of a financial audit, yet other agencies do, as a matter of course. And yet it will likely get the $608 billion it wants for FY2013, and even get pardoned from the most serious of sequestration scenarios if the beltway bandits and their surrogates in congress get their way. There will assuredly be more GAO and SIGIR-like reports to come, with the same lamentable conclusions. But one wonders if they are even worth cost, if no one is ever listening.