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How "Jerry Lewis" Bremer Stole Iraq's Oil 

by Christopher Bollyn
1 July 2004

Secretary of Defense Rumsfeld, the newly appointed Proconsul "Jerry Lewis" Bremer, and President Bush at the White House after announcing the appointment of Jerry Lewis as Proconsul during the early phase of the Anglo-American occupation of Iraq. (May 6, 2003)
While the U.S. officials who plundered Iraq's development fund will probably go unpunished, the way in which billions of dollars of Iraqi oil revenues were stolen speaks volumes about the true motivation for the war -- and the people behind it.

The former U.S. proconsul of Iraq, L. Paul Bremer, had lunch at the White House with President George W. Bush on June 30, the day the administration had long said would mark the return of Iraqi sovereignty.

Rather than holding a grand ceremony to celebrate the formal end of the occupation, Bremer had hastily transferred political authority to the U.S.-installed interim Iraqi government two days earlier behind closed doors and quickly fled the country.

The new Iraqi government is headed by Prime Minister Iyad Allawi, reportedly chosen by the CIA because he is seen as "tough". Allawi is "our kind of bully", a State Department spokesman told The Economist.

"Mr. Bremer was whisked away in an American transport plane, no doubt happy to get away with his life," Alan Woods, a British observer wrote, "The official representative of American imperialism sneaked out like a thief in the night."

As proconsul in occupied Iraq, Bremer had directed the Coalition Provisional Authority (CPA) and had exercised ultimate control over more than $20.5 billion in the Development Fund for Iraq (DFI). This U.N.-created fund grew daily as the CPA exported untold amounts of Iraqi oil, the flow of which Bremer also controlled.

The DFI also included repatriated funds and more than $8 billion in Iraqi oil revenues from the UN's Oil for Food program.

The evidence strongly suggests that Bremer and others at the highest levels of the U.S. government engaged in a well-planned conspiracy to defraud Iraq of billions of dollars from the UN-created DFI.

The U.N. mandated independent audit of the fund will not be ready until mid-July, if then.

"This means that for the entire year it has been in power in Iraq, it has been impossible to tell with any accuracy what the CPA has done with some $20 billion of Iraq's own money," Christian Aid, a British charity, reported this month.

Resolution 1483, which created the Development Fund for Iraq in May 2003, stipulated that the money in the DFI be "used in a transparent manner to meet the humanitarian needs of the Iraqi people" and called for it to be audited by independent public accountants approved by the International Advisory and Monitoring Board (IAMB).

Because the IAMB did not even meet for more than 6 months after the fund was created and because it took until April of 2004 to appoint an auditor, Christian Aid says the CPA was "in flagrant breach of the UN resolution."

The IAMB, however, clearly lacks any real enforcement power and seems to be as ethereal as its website, which is the only way to contact the IAMB. It still has not responded to its email asking for information.

Therefore, the alleged "flagrant breach" and missing billions notwithstanding, it is unlikely that anyone will ever be charged for robbing Iraq of billions of dollars. As Bert Keuppens from the IAMB told Christian Aid, "There is no stick to the audit, except publicity."

The CPA itself nominated KPMG Audit & Risk Advisory Services to audit the CPA use of the DFI money, according to an IAMB statement of April 5, 2004. Most likely, KPMG was chosen because its former consulting business, KPMG Consulting, Inc. (now doing business under the name BearingPoint, Inc.) has a one-year $79 million contract with the U.S. government to create a market economy in Iraq. BearingPoint is based in McLean, Virginia.

Gavin Houlgate, spokesman for KPMG in London, told AFP that its "interim report" would be presented in mid-July. Because the audit was on-going there was nothing more he could say.

John Schneidawind, spokesman for BearingPoint, told AFP that the company received its Iraq contract from USAID. The contract calls for BearingPoint to reform Iraq's economy into a market economy with foreign investment "where possible."

Asked about the connection between BearingPoint and the KPMG auditors, Schneidawind said, "Know in your heart and mind we have nothing to do with them."

The comment from Keuppens, a representative from the International Monetary Fund (IMF), reveals why senior officials from the British and U.S. governments would participate some openly in such a conspiracy: because they knew they would get away with it.

Unlike the closely audited funds provided by the U.S. Congress, Bremer, and the others involved, knew there was nobody who could demand accounting for the Iraqi oil money or challenge the decisions of the occupying power.

Even if KPMG were to finish its audit in July, there is simply no way of knowing how much oil the CPA exported -- or how much was stolen or smuggled out of Iraq -- during the past 14 months.

Past statements from the IAMB monthly meetings reveal growing concern over the lack of "metering" of Iraqi oil while the CPA was in control. In March, before an auditor had even been appointed, the IAMB expressed concern over "the absence of metering for crude oil extraction and sales."

Prof. Mahdi Hadi Al-Kafaji, observer from the [Iraqi] Governing Council again stressed "the need to establish proper internal control systems especially with regards to the extraction and export of oil," during the IAMB meeting in May.

The CPA reported at the IAMB meeting held at IMF Headquarters in Washington in late May that the metering project for the Iraqi oil network would take between 12 to 18 months to install.

But nothing was done and as recently as June 22, the IAMB stated that it "regrets" that the CPA had delayed action on three important matters: awarding a contract to meter Iraqi oil exports, auditing the State Oil Marketing Organization (SOMO), and reporting on audits undertaken on sole-sourced (no bid) contracts funded by the DFI.

These delays on the part of the CPA suggest that the occupying authority wanted to hide the true volume of Iraqi oil exports and how it was disbursing the money from the development fund.

The CPA's own accounting of the $20.6 billion Development Fund for Iraq reveals a number of major unexplained discrepancies in its weekly tallies of disbursements.

For example, among the June 19 tally of "Disbursements by Agency since inception" is listed a payment of some $367 million to the U.S. Army Corps of Engineers (USACE).

On the following week's tally, however, this row has completely disappeared, along with the $367 million. The June 26 tally shows CPA disbursements worth $11.89 billion, an increase of nearly $500 million from the previous week, but the entire payment of $367 million to the USACE has simply vanished.

Expenditures from the fund were regulated by the Program Review Board (PRB), a group of Bremer appointees, although he had final say over all disbursements. The PRB was established to ensure the funds were "managed on behalf and expended in a manner which meets the interests of the Iraqi people," consistent with UN Security Resolution 1483.

Because the current chairman of the PRB is a high-ranking Treasury Dept. official, George B. Wolfe, Counselor to the Secretary, American Free Press inquired at the Treasury Dept. about the discrepancies.

After more than a month of inquiries about the DFI, Treasury spokesman Tony Fratto, finally replied and wrote to American Free Press on June 28:

George Wolfe is not a Treasury official. George Wolfe works for the Coalition Provisional Authority. He resigned from the Treasury Department upon taking his current position with the CPA. He is neither on leave, nor on detail. He is a former Treasury official.

Fratto, who should know Wolfe's status with the Treasury, had provided false information. Wolfe, as an active employee of the U.S. Treasury Dept., has played a major architectural role in designing the new Iraqi economy.

While serving as Deputy General Consul at the U.S. Treasury in 2003, Wolfe worked as Deputy Director and Director of Economic Policy in Iraq. Wolfe spent six months last year working on Iraq's new currency, organizing Iraq's banks, and writing new laws for foreign direct investment.

Later, in March 2004, Treasury Secretary John W. Snow appointed Wolfe "Counselor to the Secretary." His next assignment was to return to Baghdad, where he was responsible for the budget and related finance matters concerning the economic reconstruction of Iraq.


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