How the US sent $12bn in cash to Iraq. And watched it vanish

After six years of the Republicans refusing to hold the administration to any form of Congressional oversight the first hearings on the Iraq war and it's financing have been held and they have proven to be eye popping.

The US flew nearly $12bn in shrink-wrapped $100 bills into Iraq, then distributed the cash with no proper control over who was receiving it and how it was being spent.

The staggering scale of the biggest transfer of cash in the history of the Federal Reserve has been graphically laid bare by a US congressional committee.

In the year after the invasion of Iraq in 2003 nearly 281 million notes, weighing 363 tonnes, were sent from New York to Baghdad for disbursement to Iraqi ministries and US contractors. Using C-130 planes, the deliveries took place once or twice a month with the biggest of $2,401,600,000 on June 22 2004, six days before the handover.

Details of the shipments have emerged in a memorandum prepared for the meeting of the House committee on oversight and government reform which is examining Iraqi reconstruction. Its chairman, Henry Waxman, a fierce critic of the war, said the way the cash had been handled was mind-boggling. "The numbers are so large that it doesn't seem possible that they're true. Who in their right mind would send 363 tonnes of cash into a war zone?"

Who indeed? But more importantly, what does it say about the Republicans that cash transfers of this size were taking place and they felt under no obligation to hold the administration to account for any of it. Not a single hearing, not a single investigation whilst the largest cash transfer in the history of the Federal Reserve took place.

This is the same spineless acquiescence that allowed them to stand aside whilst Bush dispensed with Habeas Corpus, that allowed them to aid the administration to legalise torture.

As Bush's popularity tanks, as the neo-cons desert the sinking ship that is his administration, Republicans will attempt to portray Bush as an aberration. As someone who wasn't one of them.

However, the fact is that Bush was only allowed to govern in this way because the Republican majority refused to ever make any attempt to hold him to account. The dispensing of cash in Iraq is in many ways a crude metaphor for the entire way that Bush has been allowed to govern. With what one can only describe as reckless abandon.

"One CPA official described an environment awash in $100 bills," the memorandum says. "One contractor received a $2m payment in a duffel bag stuffed with shrink-wrapped bundles of currency. Auditors discovered that the key to a vault was kept in an unsecured backpack.

"They also found that $774,300 in cash had been stolen from one division's vault. Cash payments were made from the back of a pickup truck, and cash was stored in unguarded sacks in Iraqi ministry offices. One official was given $6.75m in cash, and was ordered to spend it in one week before the interim Iraqi government took control of Iraqi funds."

The minutes from a May 2004 CPA meeting reveal "a single disbursement of $500m in security funding labelled merely 'TBD', meaning 'to be determined'."

The memorandum concludes: "Many of the funds appear to have been lost to corruption and waste ... thousands of 'ghost employees' were receiving pay cheques from Iraqi ministries under the CPA's control. Some of the funds could have enriched both criminals and insurgents fighting the United States."

This is the work of the President who had the gall to run a campaign on national security. He allowed this reckless squandering of funds which may or may not "have enriched both criminals and insurgents fighting the United States" and the special inspector general for Iraq reconstruction, Stuart Bowen, believes that "the lack of accountability and transparency extended to the entire $20bn expended by the CPA".

That's $20billion we're talking about. Spread around Iraq without any accountability or transparency. And this all happened whilst the Republicans controlled both Houses. And they didn't think to ask a single question about the administration's behaviour.

To oversee the expenditure the CPA was supposed to appoint an independent certified public accounting firm. "Instead the CPA hired an obscure consulting firm called North Star Consultants Inc. The firm was so small that it reportedly operates out of a private home in San Diego." Mr Bowen found that the company "did not perform a review of internal controls as required by the contract".

However, evidence before the committee suggests that senior American officials were unconcerned about the situation because the billions were not US taxpayers' money. Paul Bremer, the head of the CPA, reminded the committee that "the subject of today's hearing is the CPA's use and accounting for funds belonging to the Iraqi people held in the so-called Development Fund for Iraq. These are not appropriated American funds. They are Iraqi funds. I believe the CPA discharged its responsibilities to manage these Iraqi funds on behalf of the Iraqi people."

And this was not even their own money that they were dispensing in this haphazard fashion. This was the Iraqi people's money. Although that appears to be the very reason it was treated with such contempt. Bremer's financial adviser, retired Admiral David Oliver, is even more direct.

The memorandum quotes an interview with the BBC World Service. Asked what had happened to the $8.8bn he replied: "I have no idea. I can't tell you whether or not the money went to the right things or didn't - nor do I actually think it's important."

Q: "But the fact is billions of dollars have disappeared without trace."

Oliver: "Of their money. Billions of dollars of their money, yeah I understand. I'm saying what difference does it make?"

David North does not think it is important that $8.8billion is unaccounted for. Or for the fact that it may have gone to help the insurgency. This mindset is simply staggering.

But it is a mindset that was fuelled by the fact that Republicans back home were never going to hold any hearings or ask anyone to account for their actions.

The culpability for this is not simply Bremner's - nor the people that he employed. It is symptomatic of the entire neo-con culture, a corrupt obscenity that was allowed to flourish because the Republicans were willing to turn a blind eye as long as this cabal delivered them power. A power that they then refused to use to oversight these same people as they ransacked Iraqi funds, squandered billions of dollars of Iraqi money and failed to provide the Iraqis with even the amount of electricity that Saddam had managed to give them.

This type of reckless abandon typifies the Bush administration. It is the same mindset that sends 21,500 more troops into a war zone, when most sane individuals have long conceded that the war is lost. Bush now gambles with young men's lives with the same reckless disregard that he distributed Iraqi funds.

And he is only able to do so because the Republican Party continue to support him no matter how insane his behaviour becomes.

So no, this is not the fault of a few individuals, culpable as they may be. They have been aided and supported by the entire Republican party and the almost criminal way in which they turned a blind eye to what was being done in their name.

That should never be forgotten.

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tag: Iraq, Bush, Republicans, Oversight, Reconstruction, Waxman, Cummings, Accounting, Bremer