- The Washington Times - Wednesday, February 7, 2007

Rep. Henry A. Waxman yesterday excoriated the Bush administration for not tracking $12 billion of Iraq reconstruction funds, beginning the first of what he promised would be two years of hearings into “fraud, waste and abuse in federal spending.”

“My concern is that without strong standards, we have no way of knowing whether the cash shipped into the Green Zone ended up in enemy hands,” said Mr. Waxman, California Democrat and chairman of the Oversight and Government Reform Committee.

L. Paul Bremer III, former administrator of the Coalition Provisional Authority (CPA), which governed Iraq immediately after the overthrow of dictator Saddam Hussein, testified that there was no evidence the money went to insurgents or al Qaeda in Iraq.

After the hearing, Mr. Bremer said opponents of the administration’s Iraq policy always have been long on criticism and short on new ideas.

“Nobody today and nobody in the past three years come up with an alternative,” he told The Washington Times. “Nobody has ever said we could have on an air-tight accounting system. We came in the middle of a war in a devastated economy.”

Still, Mr. Bremer said the hearing helped clear up misinformation about the money. The money was Iraqi oil money, not taxpayer dollars, Mr. Bremer told lawmakers, and the funds were used to run the Iraqi government, not to build infrastructure.

During the hearing, Mr. Waxman recounted how from May 2003 to June 2004 the Federal Reserve Bank in New York sent nearly $12 billion in cash aboard C-130 cargo planes to Baghdad.

The currency 281 million individual bills weighing a total of 363 tons came from Iraq oil proceeds and was sent to finance nation-building by the CPA.

“The numbers are so large that it doesn’t seem possible that they’re true,” Mr. Waxman said. “Who in their right mind would send 363 tons of cash into a war zone? But that is exactly what our government did.”

Mr. Bremer defended the cash payouts, saying Iraq lacked phone service, electricity and banks after the fall of Saddam’s regime in April 2003.

“We had to find a way to get the Iraqi people money quickly so they could start rebuilding their country,” Mr. Bremer said. “It was not a perfect solution, Mr. Chairman, but there are no perfect solutions in Iraq.”

Rep. Thomas M. Davis III of Virginia, the committee’s ranking Republican, faulted the chairman for describing the accounting failures as waste or fraud.

“The majority continues to equate a lack of exquisite accounting in Iraq with massive waste,” he said. “Limited visibility over payments to Iraqi ministries, by itself, simply does not establish the majority’s alleged $8 billion flood of fraud.”

Mr. Bremer conceded the administration’s “poor planning” for reconstruction after Iraq fell and said a “business-as-usual approach to contracting and personnel didn’t work.”

However, he assured the committee that his caretaker government took steps to “combat corruption” within the Iraqi government that he said was a legacy of Saddam’s dictatorship.

Mr. Waxman noted reports that millions of dollars went to “ghost employees” in the Iraqi ministries, which Mr. Bremer said was another holdover from the Saddam regime.

The crux of the hearing was a January 2005 audit report that found “the CPA did not establish or implement sufficient managerial, financial and contractual controls to ensure that funds were used in a transparent manner.”

The report by Stuart W. Bowen Jr., special inspector general for Iraq reconstruction, concluded that the CPA distributed $8.8 billion to the ministries “without assurances the monies were properly used or accounted for.”

Mr. Bowen acknowledged the difficulties the CPA faced.

“It was an extremely chaotic situation,” he said. “The government was nonexistent. To me, that screams out for more controls.”

Democrats pressed Mr. Bowen to speculate on where the money went.

“We don’t know where the money ended up. Do we?” asked Rep. Elijah E. Cummings, Maryland Democrat.

“How it was spent by the Iraqi ministries is something I can’t account,” Mr. Bowen said. “We have anecdotal evidence that it was used to pay payroll, and we know it was used for overhead.”

Mr. Cummings said, “You don’t know that it didn’t go to insurgents.”

Rep. Dan Burton, Indiana Republican, asked Mr. Bowen about whether the audit revealed fraud.

“We found no instances of fraud,” said Mr. Bowen, who also said accounting practices within the CPA were adequate, in contrast to practices within the Iraqi ministries.

Waxman

L. Paul Bremer III, the former administrator of the Coalition Provisional Authority, yesterday slammed critics of the Bush administration’s Iraq war policy saying that “nobody in the past three years come up with an alternative.”

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