Thursday, July 8, 2004

The new Iraqi government is investigating whether illegal payoffs were made to secure cell phone contracts for a financial associate of Saddam Hussein, said the former U.S. administrator in Iraq.

L. Paul Bremer, who until last week headed the Coalition Provisional Authority (CPA), said the issue of illegal cell phone contracting was referred to Iraq’s Board of Supreme Audit, a government agency set up to deal with the widespread problem of corruption in Iraq. It also was referred to an Iraqi inspector general’s office, he said.

Other U.S. officials said the cell phone contracting improprieties also are being investigated by Iraq’s new National Communications and Media Commission (ICMC), which was modeled after the Federal Communications Commission.

The independent institution is in charge of licensing and regulating telecommunications, broadcasting, information services and other media in Iraq and can revoke the cell phone licenses.

“I said that if anybody in the Pentagon has evidence to show [contracting improprieties], they should bring it forward. [The Iraqis] can bring a criminal case against whoever they allege did it,” Mr. Bremer said in a meeting with reporters and editors of The Washington Times. “It’s basically under investigation.”

Mr. Bremer ordered the cell phone contract investigation after receiving a memorandum last month from John A. Shaw, the deputy undersecretary of defense for international technology security, who said the contracts should be revoked because of fraud.

Mr. Bremer said corruption remains a major problem in Iraq and that the CPA set up several Iraqi government institutions designed to address it.

“I don’t underestimate the corruption in the Iraqi system,” Mr. Bremer said. “It’s a serious problem and in a way it’s tragic because Iraq had a reputation in the ‘40s and ‘50s and at least until the late ‘60s as one of the least corrupt countries in the region. And it’s just become institutionalized.”

Mr. Bremer said the extent of the corruption is not known, but “I certainly heard from Iraqis that there was corruption.”

He also said the U.N. oil-for-food program was corrupt “throughout.” Contracts for that program, which was designed to provide humanitarian goods to Saddam’s regime, included 10 percent to 19 percent “kickers” that were payoffs, he said.

As for corruption within the CPA, Mr. Bremer said charges of improper activities were “immediately turned over to the inspector general, established in law.”

“He’s got some investigations going on and I don’t know what will happen there if he finds people guilty,” he said. “They will presumably face whatever justice they face.”

Mr. Shaw states in a June 14 memorandum to the former administrator that an investigation by his office had uncovered “fraud on the Ministry of Communications by Orascom, Atheer and AsiaCell,” three companies that in December won cell phone licenses for three regions of Iraq.

The companies are suspected of rigging the bids in favor of Nadhmi Auchi, an Iraqi-born Briton who was convicted by a French court for illegal payments to a French oil company.

A report by Mr. Shaw’s office, first disclosed by The Washington Times, states that Auchi used bribes to secure cell phone contracts worth $500 million. Auchi has denied any wrongdoing and has said he is connected to only one of the three cell phone companies in Iraq.

The report states that payments were made to two Iraqi officials, two British contractors and two American officials as part of the fix.

Pentagon investigators have said bribes of up to $11.5 million were paid to Iraqis and other foreign nationals to win the contracts for the three companies with links to Auchi.

Mr. Shaw states in the memo that “Nadhmi Auchi’s name arose as a central figure in the course of our investigation of the telecom tender, and is the reason that the three firms are in violation” of contract provisions that prohibit making deals with companies or people linked in the past to Saddam’s regime.

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