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United States Federal Reserve shipped $12 billion in US currency to Iraq.

Original post made by Whistle Blower, another community, on Aug 31, 2009

Worried a bout out of comtrol government spending?

"Beginning in April 2003, one month after the invasion of Iraq, and continuing for little more than a year, the The US military delivered the bank notes to the Coalition Provisional Authority, to be dispensed for Iraqi reconstruction. At least $9 billion is unaccounted for due to a complete lack of oversight."

Vanity Fair, October 2007
Title: “Billions over Baghdad”
Authors: Donald Barlett and James Steele

Rolling Stone, August 23, 2007
Title: “The Great American Swindle”
Author: Matt Taibbi

Student Researchers: Brian Gellman, Dan Bluthardt, and Bill Gibbons

Faculty Evaluator: John Kramer, PhD

The initial $20 million came exclusively from Iraqi assets that had been frozen in US banks since the first Gulf War in 1990. Subsequent airlifts of cash included billions from Iraqi oil revenues formerly controlled by the United Nations. After the creation of the Development Fund for Iraq—a kind of holding pit of money to be spent for “purposes benefiting the people of Iraq”—the UN turned over control of Iraq’s billions of dollars from oil revenue to the United States.

When the US military delivered the cash to Baghdad, the money passed into the hands of an entirely new set of players—the Coalition Provisional Authority (CPA). The CPA had been hastily created by the Pentagon to serve as the interim government in Iraq. On May 9, 2003, President Bush appointed L. Paul Bremer III as CPA administrator. Over the next year, a compliant Congress gave $1.6 billion to Bremer to administer the CPA. This was over and above the $12 billion in cash that the CPA had been given to disburse from Iraqi oil revenues and unfrozen Iraqi assets.

Few in Congress had any idea about the true nature of the CPA as an institution. Lawmakers had never discussed the establishment of the CPA, much less authorized it—odd, given that the agency would be receiving taxpayer dollars. Confused members of Congress believed that the CPA was a US government agency, which it was not, or that at the very least it had been authorized by the United Nations, which it had not.

The Authority was in effect established by edict outside the traditional framework of American government. Because it was a rogue operation, no one was responsible for what happened to that money. Accountable to no one, its finances “off the books” for US government purposes, the CPA provided an unprecedented opportunity for fraud, waste, and corruption involving American government officials, American contractors, renegade Iraqis, and many others. In its short life more than $23 billion would pass through its hands. And that didn’t include potentially billions of dollars more in oil shipments the CPA neglected to meter.

Incidents of flagrant abuse were rampant. Of 8,206 “guards” drawing CPA paychecks, only 602 actually existed; the other 7,604 were ghost employees. Halliburton charged the CPA for 42,000 meals for soldiers while in fact serving only 14,000. Contractors played football with bricks of $100,000 shrink-wrapped $100 bills.

Yet the precedent for legal impunity was established when whistle-blowers brought to light the case of Custer Battles, considered to be one of the worst cases of fraud in US history. The Bush administration not only refused to prosecute, it actually tried to stop a lawsuit filed against the contractors by whistle-blowers hoping to recover stolen CPA money. The administration argued that Custer Battles could not be found guilty of defrauding the US government because the CPA was not part of the US government. When the lawsuit went forward despite the administration’s objections, Custer Battles mounted a defense arguing that they could not be guilty of theft since it was done with the government’s approval.

At the core of this government-sanctioned free-for-all was the award of a CPA contract to NorthStar for services of accounting and auditing. The odd thing about this accounting service was that there was no certified public accountant on staff. A businessman, Thomas Howell, ran NorthStar out of his home in La Jolla, California, along with three other unrelated businesses, including home remodeling and furnishing. The company did have the advantage of a post office box in the Bahamas as its legal address of record.

NorthStar is incorporated in the Bahamas as an international business company (IBC). Despite their impressive name, IBCs are little more than paper operations. As a rule, they don’t perform any business; they are empty vessels that can be used for anything. They have no chief executive officer or board of directors, and they don’t publish financial statements. And IBC’s books, if there are any, can be kept anywhere in the world, but no one can inspect them. IBCs aren’t required to file annual reports or disclose the identity of their owners. They are shells, operating in total secrecy.

The Pentagon put this company in charge of monitoring billions of dollars of Iraqi and US citizens’ money and of making sure it was spent honestly.

In one of his last official acts before leaving Baghdad, Bremer issued an order prepared by the Pentagon, declaring that all coalition-force members “shall be immune from any form of arrest or detention other than by persons acting on behalf of their Sending States.” Contractors also got the same get-out-of-jail-free card. According to Bremer’s order, “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 Iraqi people would have no say over illegal conduct by Americans in their new democracy.

Matt Taibbi says, “What the Bush administration has created in Iraq is a sort of paradise of perverted capitalism, where revenues are forcibly extracted from the customer by the state, and obscene profits are handed out not by the market but by an unaccountable government bureaucracy.”

He concludes, “What happened in Iraq went beyond inefficiency, beyond fraud even. This was about the business of government being corrupted by the profit motive to such an extraordinary degree that now we all have to wonder how we will ever be able to depend on the state to do its job in the future. If catastrophic failure is worth billions, where’s the incentive to deliver success?”


It’s possible to sum up in two words what has happened since Vanity Fair published “Billions over Baghdad” in October 2007: Not much. Despite the ongoing theft, misappropriation, bribery, gratuities, profiteering, and waste of billions of taxpayer dollars, only a few low-level military people and civilians have been prosecuted. To be sure, the Defense Department has announced with great fanfare that it has launched scores of criminal investigations. But the end results are meager.

What’s more, many in Washington believe that such investigations are unwarranted. In the heat of war, they say, it isn’t possible to abide by the niceties of generally accepted accounting principles. But that doesn’t explain why the Pentagon cuts checks for millions of dollars and mails them to anonymous post office boxes in tax havens. Nor does it explain the secrecy accorded its contractors. But it does help explain why the Pentagon is unable to reconcile more than $1 trillion in spending—that’s trillion, not billion.

The Bush Justice Department has made clear by its actions that it has no intention of vigorously looking for or prosecuting those who rip off taxpayers. Similarly, Congress has failed to wage the kind of relentless probe that helped catapult a young senator from Missouri into the vice presidency and eventually the White House during World War II. In the heat of that war, the Truman committee conducted hundreds of hearings and issued scores of reports. The number of comparable hearings and reports coming out of Congress today can be counted on the fingers of one hand. Maybe.

One possible explanation is that running for election today has become so expensive that companies that help finance campaigns receive an informal immunity for their contracting fraud. Another is that Congress and the White House, whether occupied by Republicans or Democrats, have long taken the position that some corporations and financial institutions are too big to allow them to fail. Think Bear Stearns, most recently.

Now Congress and the federal government in general have seemingly applied that same principle to government contractors, who are deemed too important to indict, their top officers too essential to send to jail.

Finally, don’t expect any extended probes by the news media. Newspapers and magazines are in such turmoil as a result of their changing economic fortunes that they are incapable of mounting any meaningful or sustained examination of government operations. They are much too busy worrying about falling profit margins. As a result, their journalistic commitments go no further than the next weekly poll.

Comments (7)

Like this comment
Posted by Janna
a resident of Dublin
on Sep 1, 2009 at 6:34 pm

Unfortunately, the Bush faithful don't want to hear how his administration ripped off the American people and flushed our surplus down the toilet. I've known about the $9 billion in cash that went poof and disappeared after it was shipped to Iraq for quite a while. Where are the questions about that? How many people would that have provided health care for? Where's the outrage about that?

Like this comment
Posted by Stay Cool
a resident of Another Pleasanton neighborhood
on Sep 1, 2009 at 7:02 pm

Exactly. I am wondering the same thing. The attitude is that it is all in the past, yet the current administration is being falsely accused of exactly the same behaviors (see "Obama Prince of Lies" post). It is utterly mind-boggling.

Like this comment
Posted by Jerry
a resident of Oak Hill
on Sep 2, 2009 at 12:48 am

If part/parts of the "Obama Prince of Lies" article is false, educate us with verifiable facts, not opinions...

Like this comment
Posted by Daniel Bradford
a resident of Foothill High School
on Sep 2, 2009 at 2:44 pm

This is all Obama's fault. I'm not sure how, but let's not allow facts to get in the way of the Two Minute Hate.

Here's something print and clip as an insert in your wallet.


See? Now you don't have to think for yourself.

Like this comment
Posted by Best Minds
a resident of San Ramon
on Sep 4, 2009 at 3:49 pm

The Game

Students of history. Don't start with the simple explanation when examining the history of power, look for the better explanation.

Here's an illustration.

During Bush's tenure, the data reveals a military spending level that far exceeded any nation on earth by many multiples. The totals, into the hundreds of billions produced a totally unsustainable global police force. We have more than 120 countries around the world where we have US military bases. PNAC's New American Century (2000) white paper outlined this very clearly BEFORE he came to office.

Now during Obama's short tenure now, the President of "change" is not bringing the boys home. The size of military spending continues to climb and we are pouring even more troops into Afghanistan.

Does anyone understand that government reports have documented that Afghanistan has one of the largest gas reserves in the world, and Iraq has one of the largest oil reserve? Is it possible that neither Democrat or Republican bashing is really getting to the root of where the real power is in developing long term global political and financial policy?

Food for thought.

Like this comment
Posted by mark
a resident of another community
on Sep 4, 2009 at 9:02 pm

You said it Best Minds, the Dems and the Repubs are on the same team, owned by the International Banksters. In reality, we have one party, and we are not part of it. We are all "Enemies of the State", that is very clear. The plan is to destroy the middle class and that is what we are witnessing daily. The War Budget, the mortgage bubble scheme, the stimulus and bailout fraud, cap and trade, all elements of the plan to bankrupt USA and Americans. USA is already bankrupt, the money to pay back the real debt does not exist. Federal Reserve Notes are in essence worthless pieces of paper, backed by nothing. The owners of the Federal Reserve own all the gold that this country ever had. The federal Reserve is neither Federal nor does it have a Reserve. Makes money out of thin air and loans it to the government, and charges interest. Inflation is a hidden tax, the prices are not going up, the value of the dollar is going down, due to the "Fed" printing money like there is no tomorrow. Zimbawee, here we come. They are destroying the dollar by printing money 24/7, and so goes the USA. All of our income tax is used to pay against the interest we owe the "Fed", with none of it payed against the principle.

A quote by Thomas Jefferson: "If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them (around the banks),
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered."

BINGO That is exactly what we are living.

The illegal Federal Reserve Bank is the third Central Bank the USA has ever had. The country disposed of the first two but only temporarily. Here is another Jefferson quote:

“I sincerely believe that banking institutions are more dangerous to our liberties than standing armies. The issuing powers should be taken from the banks and restored to the people to whom it properly belongs.”

Like this comment
Posted by mark
a resident of another community
on Sep 4, 2009 at 9:17 pm

Of course "Stay Cool" chimed in to add confusion with his brand of disinformation/LIES!

He says "Exactly. I am wondering the same thing. The attitude is that it is all in the past, yet the current administration is being falsely accused of exactly the same behaviors (see "Obama Prince of Lies" post). It is utterly mind-boggling."

What is it Stay Cool? The past or the present? You are trying to make it "utterly mind-boggling." (Should read "Obama King of Lies" "Stay Cool Prince of Lies")

Hang the Traitors, thats the law of the land. WAKE-UP AMERICANS Our future looks bleak, our kids future does not exist unless WE DO SOMETHING!!!

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