The Common Ills: Foreign State Wasted and Stole US Tax Dollars

Tuesday, May 05, 2009

Foreign State Wasted and Stole US Tax Dollars

Millions in CERP Funds Not Controlled by US Military

In a shocking development, billions of US tax dollars have vanished in Iraq and the latest scandal involves $70 million that a foreign government was allowed to 'oversee.' This 'oversight' was in a direct violation of the program as it was repeatedly explained to the US Congress and the American people.

Appearing before the The Commission on Wartime Contracting February 2nd, the Department of Defense's Inspector General Thomas F. Gimble explained CERP (Commander's Emergency Response Program) funds, "CERP funds are appropriated through the DoD and allocted through each major command's sector of operations in Iraq and Afghanistan. Up to $500,000 can be allocated to individual CERP projects, and CERP beneficiaries often receive payments in cash. We have also identified occasions where soldiers with limited contracting experience were responsible for administering CERP funds. In some instances, there appeared to be scant, if any, oversight of the manner in which funds were expended. Complicating matters further is the fact that payment of bribes and gratuities to government officials is a common business practice in some Southwest Asia nations. Taken in combination, these factors result in an environment conducive to bribery and corruption."

Gimble identified the CERP funds as being under the control of the US command. This was the repeated pattern when officials appeared before the Congress. In reality, South Korea was allowed to administer CERP funds with no US oversight and their military now stands accused of running a scam which utilized more than $70,000,000 US tax payer dollars. In April, a Seoul military court found three officers of the country's military guilty of running a bribery and extortion scam utilizing the CERP funds.

The CERP funds have been repeatedly addressed by witnesses appearing before the US Congress and yet the Congress was repeatedly informed the process was the US tax payer pays the money and the US military officials use the funds for various Iraqi projects. Never once did anyone reveal that foreign states were being given US tax payer monies. The September 10, 2008 House Armed Services Committee hearing found Chair Ike Skelton pursuing the issue of the CERP funds with DoD's Under Secreatry of Defense for Policy Eric S. Edelman and explaining the process as Congress intended it.

Ike Skelton: The department's understanding of the allowed usage of CERP funds seems to have undergone a rather dramatic change since Congress first authorized it. The intent of the program was originally to meet urgent humanitarian needs in Iraq through small projects undertaken under the initative of brigade and battalion commanders. Am I correct?

Edelman: Yes, sir.

Ike Skelton: Thank you. The answer was "yes." Last year the Department of Defense has used millions of CERP dollars to build hotels for foreign visitors, spent $900,000 on a mural at the Baghdad International Airport and, as I understand this second piece of art, that CERP funds were used for. I'm not sure that the American tax payer would appreciate that knowing full well that Iraq has a lot of money in the bank from oil revenues and it is my understanding that Iraq has announced that they're going to build the world's largest ferris wheel. And if they have money to build the world's largest ferris wheel why are we funding murals and hotels with money that should be used by the local battallion commander. This falls in the purview of plans and policy ambassador.

Edelman: No, no, it's absolutely right and I'll shae the stage here -- I'll share the stage quite willing with uh, with Admiral Winnefeld with whom I've actually been involved in discussions with for some weeks about how we provide some additional guidance to the field and some additional requirements to make sure that CERP is appropriately spent.

Edelman then tries to stall and Skelton cuts him off with, "Remember you're talking to the American taxpayer." Edelman then replies that it is a fair question. He says CERP is important because it's flexible. It's important because they're just throwing around, if you ask me. They're playing big spender on our dime.

Skelton: The issue raises two serious questions of course. Number one is they have a lot of money of their own. And number two the choice of the type of projects that are being paid for. I would like to ask Mr. Secretary if our committee could receive a list of expenditures of $100,000 or more within the last year. Could you do that for us at your convience please?

Edelman: We'll work with our colleagues in the controller's office and - and . . . to try and get you --

Skelton: That would be very helpful.

October 30, 2008, the Office of the Special Inspector General for Iraq Reconstruction released a report on Iraqi spending. The 232 page report [PDF format warning] was posted online and received attention for being the product of, Inspector General Stuart W. Bowen Jr. words, "seven audit reports and three inspections". The report noted many things such as, "The recent Duncan Hunter National Defense Authorization Act (NDAA) for Fiscal Year 2009 imposed a ceiling of $2 million on the amount of CERP money that DoD could allocate to a single project. The new NDAA futher requires the Secretary of Defense to approve CERP projects costing over $1 million, certifying thereby that the project will meet Iraq's urgent humanitarian relief or reconstruction needs." South Korea was not mentioned in the entire 232 page despite the new revelations that, "The Americans gave the [South Korean] Zaytun unit wide latitude within its northern area of operation [in Iraq]. The unit largely controlled the disbursement of $74 million of American reconstruciton money through the Commanders' Emregency Response Program, or CERP."

In addition, while US outlets worked overtime to sneer at the notion that the Iraq War was about, or had anything to do with, oil, "Korean leaders explicitly told their people that the deployment [to Iraq] would help their country gain oil contracts."

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All information above related to South Korea is in James Glanz, Eric Schmitt and Choe Sang-hun's "3 Koreans Convicted Of Bribery In Iraq" in today's New York Times (A5 in the national edition). The Times did a poor job of covering the story, made it incredibly passive and repeatedly stripped the distortions and the waste from the story, hence the above. Their headline is mild, everything about the story is mild. It's an embarrassment. If you're going to cover that story, you cover it. You don't tip-toe around it. (And that's a criticism of the paper, not the reporters.)

Ellen Nakashima's "KBR Connected to Alleged Fraud, Pentagon Auditor Says" (Washington Post) covers corruption.

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