Wednesday, January 23, 2013

Corruption In Iraq, An Interview With Stuart Bowen, Special Inspector General for Iraq Reconstruction

Stuart Bowen started out working on Iraq as the Special Inspector General for the Coalition Provisional Authority (CPA) in 2004. When that organization ceased operating in the middle of that year, he became the Special Inspector General for Iraq Reconstruction (SIGIR). SIGIR releases quarterly reports to Congress along with audits and assessments on the rebuilding of the country. One issue SIGIR has focused upon from the beginning is corruption. Based upon his conversations with high-ranking Iraqi officials Mr. Bowen believes that the state of graft and bribery are worse than ever. Below is an interview with the Inspector General on this very important topic.

Stuart Bowen, the Special Inspector General for Iraq Reconstruction, sees corruption more entrenched in Iraq now than ever (Wired)

1. The last quarterly report by the Special Inspector General for Iraq Reconstruction (SIGIR) said that Iraq has gone through three phases of corruption. The first was called controlled corruption under Saddam. Can you explain how that worked?

As detailed in U.N. reviews of the Oil-for-Food program, businesses involved with Saddam Hussein’s regime were required to provide kickbacks for business opportunities.  Corruption was “controlled” because the regime, in effect, regulated it and thus approved of it.

2. The period immediately after the 2003 U.S. invasion was called uncontrolled corruption. What were the characteristics of that time?

In 2003, there existed in Iraq what has been termed a “wild west” milieu, wherein Iraqis, a few Coalition Provisional Authority officials, and some contractors demanded or received bribes to secure official action. At that time, Iraq was essentially a cash economy, which made accountability virtually impossible. Moreover, very few U.S. oversight personnel were deployed to Iraq in 2003 to rein in the chaotic environment.

The failure to follow best practices by the CPA, as detailed in our early audit reports, exacerbated the operation’s inherently unstable situation. U.S. officials believed that the devolving security situation required quick action, justifying sidestepping standard accountability procedures that could have ensured better accountability for funds and property.  Our audits discovered that this lack of controls led to a widespread loss of accountability over funds.

3. Finally the SIGIR report said that corruption has become part of governing the country. How are the ruling parties contributing to this?

Today, corruption in Iraq is widespread. While petty corruption is endemic to the country and the region, it is grand corruption that drains Iraq of its economic resources. Iraqi officials repeatedly told us that grand corruption is “worse than it has ever been.” We were told that there exists a review committee at the ministerial level with approval authority over major contracts, and that such approval is contingent upon members of that committee receiving financial benefits from these contracts.

4. The Board of Supreme Audit found that crooked officials are moving a lot of this stolen money out of the country by laundering it through the weekly foreign currency auctions held by the Central Bank of Iraq (CBI). How are they doing that?

As described to us by a senior Iraqi official, money laundering occurs when phony contracts are presented to the CBI, which then releases funds to pay them. It does nothing to verify the validity of such contracts. The money is then transferred out of the country. Any goods delivered generally do not justify the amounts released. We have been told that as much as $800 million per week might have been subject to this money laundering process. The October 2012 removal of the CBI governor, and the arrest of many of its senior officials appear to be actions taken in response to Iraqi recognition of the problem. 

5. Before he quit, the chief of the anti-corruption Integrity Commission Judge Rahim al-Ogaili said that he found hundreds of front companies run by the political parties. How are those firms used to steal public funds?

We were told by Judge Ogaili that these party-controlled front-companies regularly receive payments from the government without providing goods or services. Naturally, these government agencies do nothing to investigate these corrupt transactions. 

6. There have been a growing number of controversial corruption charges against bank and commission heads since 2011. First was the director of the Trade Bank of Iraq, then the leader of the Election Commission, and currently the Central Bank chief has an arrest warrant out for him. Not only that, but the former Integrity Commission head Judge Rahim al-Ogaili said he was going to be facing accusations as well before he retired. Do you think these are legitimate cases or have they been politicized by Prime Minister Nouri al-Maliki?

Prosecutions in current-day Iraq sometimes appear to take the form of persecutions. While not privy to the facts underlying the various charges you outline, I have worked with Judge Rahim for several years and never found reason to believe that he is anything other than reliable. Under Iraqi law, it is quite simple to file charges of corruption, and very difficult to combat them. The lack of meaningful habeas corpus protections can lead to lengthy detentions based on allegations alone. Moreover, Iraq criminalizes mere negligence by government officials as corruption.

7. Overall, how have Iraq’s anti-corruption agencies been doing?

Poorly, but not simply because of their own weak systems, although that is part of it.  Their legal status is generally unsettled. We are told that some, if not most, ministerial Inspector General offices could be eliminated; some already are effectively emasculated by the sway of individual ministers or the Council of Ministers. Moreover, the Commission of Integrity’s 2012 arrest rate is down about 2/3 compared to 2011. The Board of Supreme Audit, Iraq’s only long-existing oversight agency, appears to be the only effective accountability entity in the country.   

8. The U.S. has several on-going programs meant to help Iraqis fight graft. Do you think those programs have been adequately funded and staffed, and how have they done?

Our audits of these programs concluded that they were underfunded. See, e.g., SIGIR Audit Report 13-001, Sustaining the Progress Achieved by U.S. Rule of Law Programs in Iraq Remains Questionable (October 25, 2012). This weak support caused these programs to be of limited value.

9. Iraq is a country going through a very tough transition after decades of dictatorship, wars, invasion, and sanctions. Do you think the growth of corruption after 2003 is simply one more of these difficult issues that comes along with going through this process or could it have been stemmed?

Better planning in advance of the operation, better oversight at every step along the way, and better support to Iraq’s anti-corruption community would have bolstered the fight against corruption. The absence of all three of these elements contributed to today’s pervasive problems.  

SIGIR supports revamping the way the United States plans, executes, and accounts for stabilization and reconstruction operations (SROs). We have proposed creating an independent office, designated the United States Office for Contingency Operations (USOCO), which would report to both the Secretaries of State and Defense, and have responsibility for carrying out the SRO. USOCO would also have an independent inspector general to monitor its activities.

As part of its mission, USOCO would explicitly plan to address and ameliorate the problem of corruption inevitably present, at some level, during SROs. It would develop methods to strengthen existing institutions and would judiciously encourage the creation of new entities that might be necessary to improve the rule of law.

10. Looking towards the future, do you see Iraq eventually building strong institutions and moving towards more transparency?

No. Presently, only the Board of Supreme Audit is making any headway against corruption. The future of the Inspector General community and the Commission of Integrity remains obscure. Unless the Prime Minister’s Office and the Parliament commit to the statutory independence and durability of both of these U.S.-created systems, it is likely that they will continue to weaken.


Special Inspector General for Iraq Reconstruction, “Quarterly report to the United States Congress,” 10/30/12


Steve Donnelly, AICP said...

Good interview.

Documenting the fresh memories of these key players is an invaluable asset for history.


Joel Wing said...

I'm trying hard to do as many interviews as possible. I have to thank you as the first one that I did, which started this all off.