Iraq: Is Private Company Corruption The Problem?

[segovius]

Or is the greed of the US administration in seeing Iraq merely as a trough for the snouts of their cronies more the issue?

Certainly there is not even the pretense of 'freedom' or 'democracy' now and Iraq is basically the geo-political equivalent of a concubine sold into slavery and kept alive only in order to be raped by all and sundry. Well, those in the 'special club' anyway.

Hot on the heels of the Blackwater chaos it has emerged now that another private company - alleged purpose to help and train Iraqis - has been looting and plundering and most likely committing massive fraud on an institutional scale.

A $1.2bn (£590m) contract for training Iraqi police was so badly managed that auditors do not know how the money was spent, the US state department says.

The programme was run by a private US company, DynCorp. It insists there has been no intentional fraud.

Auditors have stopped trying to audit the programme because all the documents are in disarray and the government is trying to retrieve some of the money.

Instead of training Iraqi Police - something that one would think would be of great benefit to a;; concerned and a massive help in pacifying the region - DynoCorp chose to spend its allotted funds in novel ways including (but not limited to) the following:


$1.8m on an X-ray scanner that was never used
$4m purchase of 20 VIP trailers
Unspecified millions on an Olympic-size swimming pool (with money intended to fund an Iraqi police compound)


A majority of the allocated funds seem to have disappeared without trace - certainly the purposes they were earmarked for have not come to fruition - and Government sources say that it may never be possible to trace them. How convenient.

Auditors have stopped trying to audit the programme because all the documents are in disarray and the government is trying to retrieve some of the money.

Thoughts?

BBC Article (http://news.bbc.co.uk/2/hi/americas/7057629.stm)

[SDW2001]

Or is the greed of the US administration in seeing Iraq merely as a trough for the snouts of their cronies more the issue?

Certainly there is not even the pretense of 'freedom' or 'democracy' now and Iraq is basically the geo-political equivalent of a concubine sold into slavery and kept alive only in order to be raped by all and sundry. Well, those in the 'special club' anyway.

Hot on the heels of the Blackwater chaos it has emerged now that another private company - alleged purpose to help and train Iraqis - has been looting and plundering and most likely committing massive fraud on an institutional scale.



Instead of training Iraqi Police - something that one would think would be of great benefit to a;; concerned and a massive help in pacifying the region - DynoCorp chose to spend its allotted funds in novel ways including (but not limited to) the following:


$1.8m on an X-ray scanner that was never used
$4m purchase of 20 VIP trailers
Unspecified millions on an Olympic-size swimming pool (with money intended to fund an Iraqi police compound)


A majority of the allocated funds seem to have disappeared without trace - certainly the purposes they were earmarked for have not come to fruition - and Government sources say that it may never be possible to trace them. How convenient.



Thoughts?

BBC Article (http://news.bbc.co.uk/2/hi/americas/7057629.stm)

The answer to your question is "yes, but not entirely." Unfortunately this kind of thing is going to happen sometimes when that kind of money is involved. In other words, it's one of the problems in Iraq, one that must be solved. It certainly seems like the DoS is aware of it, as an audit will be presented shortly.

But no, I don't think it indicts the entire private sector in Iraq. That would be overreacting.

[segovius]

The answer to your question is "yes, but not entirely." Unfortunately this kind of thing is going to happen sometimes when that kind of money is involved. In other words, it's one of the problems in Iraq, one that must be solved. It certainly seems like the DoS is aware of it, as an audit will be presented shortly.

But no, I don't think it indicts the entire private sector in Iraq. That would be overreacting.

Let me ask you a question - because I really don't know the answer, not for any other reason...

Is all this outsourcing because the US couldn't do those jobs for whatever reason or is it just blatantly for profit?

Either way seems to be a big problem to me. Or maybe there is another reason.

In the UK, which is where I am from so what I know about, the army would have done all these jobs. If they could not do them because they were stretched or had no funds or whatever then people would have lobbied for more funds or more recruitment or whatever. But outsourcing the actual defense of the country would (I hope) not happen.

It seems that this is a new thing, this outsourcing. From what I hear the ordinary US soldiers despise the contracted operatives too and will not co-operate with them. Not that the military and the Private Companies work together in any way anyway.

That can't be good for morale.

Maybe it is just papering over the cracks but imo it is always better to look a problem in the face - at least it stands a chance of getting fixed.

I think it is a big problem - without the activities of these Firms the US would have much higher stock with the Iraq people than it does. They have done by far the most damage imo.

[SDW2001]

Let me ask you a question - because I really don't know the answer, not for any other reason...

Is all this outsourcing because the US couldn't do those jobs for whatever reason or is it just blatantly for profit?

Either way seems to be a big problem to me. Or maybe there is another reason.

In the UK, which is where I am from so what I know about, the army would have done all these jobs. If they could not do them because they were stretched or had no funds or whatever then people would have lobbied for more funds or more recruitment or whatever. But outsourcing the actual defense of the country would (I hope) not happen.

It seems that this is a new thing, this outsourcing. From what I hear the ordinary US soldiers despise the contracted operatives too and will not co-operate with them. Not that the military and the Private Companies work together in any way anyway.

That can't be good for morale.

Maybe it is just papering over the cracks but imo it is always better to look a problem in the face - at least it stands a chance of getting fixed.

I think it is a big problem - without the activities of these Firms the US would have much higher stock with the Iraq people than it does. They have done by far the most damage imo.

My understanding is that it's necessary manpower-wise. It seems to be a fairly new phenomenon. Then again, we haven't occupied a country like this since what...World War II?

[segovius]

My understanding is that it's necessary manpower-wise. It seems to be a fairly new phenomenon. Then again, we haven't occupied a country like this since what...World War II?

I tend to suspect it is a question of good old-fashioned plundering myself....

[@_@ Artman]

I tend to suspect it is a question of good old-fashioned plundering myself....

I don't know for sure, but check Frontline's "Private Warriors (http://www.pbs.org/wgbh/pages/frontline/shows/warriors/)" and you should see that the UK themselves had private contractors for security too...yep... (http://www.pbs.org/wgbh/pages/frontline/shows/warriors/etc/script.html)

MARTIN SMITH: What's a little surprising is that the Army Corps doesn't rely on soldiers for protection. They've outsourced the job. The security company the Army Corps hired is not even American. The company, Erinys, was founded by ex-members of British special forces and hires an assortment of ex-soldiers and retired policemen from South Africa, America, England and Russia. The name Erinys refers to the Greek goddesses who pursue and punish evil.

Erinys International Ltd. (http://www.sourcewatch.org/index.php?title=Erinys_International_Ltd.) info from Source Watch...

Erinys International Ltd. was established by ex-Apartheid era official Sean Cleary and Jonathan Garratt in 2002. Sean Cleary resigned as a director and Chairman in October 2003. Alastair Morrison replaced Cleary on the Board, until he himself left in March 2004.

Despite the great connections in Iraq, the multi-million dollar contract, and the expanding labor pool to draw from, Erinys continues to pay their ethnic guards a fraction of what their South African supervisors make. Top pay for local guards amounts to $4 a day, the same amount needed to buy a kilo of meat

Trade unions are non-existent. The trade union office was raided by U.S. forces in December, 2003, and have been occupied since.

Meanwhile the contracts have brought an influx of highly paid international staff, from a wide range of countries and backgrounds. Some are from South Africa and have service origins in a range of army and police units. Two employees of SASI, a US subcontractor to Erinys Iraq (since terminated by Erinys for its poor employment vetting procedures among other issues), that had been in a serious explosion turned up to have long records in South Africa. Francois Strydom, who was killed, was a member of Koevoet, a known brutal counter-insurgency arm of the South African military that fought in Namibia during its fight for independence. Deon Gouws, who was injured, had been an officer in the Vlakplaas, a South African secret-police unit. He received amnesty application after admitting to forty to sixty bombings of political activists' homes in 1986.

[AsLan^]

If DynCorp was able to waste all that money then it's the governments fault.

There are government run project management offices that have oversight on all contracts. They are the ones who are supposed to be watching to make sure the governments money is being spent properly.

Not only that, but nothing gets bought without the governments approval. If a company wants to go spend its own money without approval and then bill the government for it, they run the very real risk that the PM office will just not pay.

[SDW2001]

If DynCorp was able to waste all that money then it's the governments fault.

There are government run project management offices that have oversight on all contracts. They are the ones who are supposed to be watching to make sure the governments money is being spent properly.

Not only that, but nothing gets bought without the governments approval. If a company wants to go spend its own money without approval and then bill the government for it, they run the very real risk that the PM office will just not pay.

I don't actually think that's true. They can't be getting approval for every little thing. That's why they have a contract. They are audited after the fact.

[AsLan^]

I don't actually think that's true. They can't be getting approval for every little thing. That's why they have a contract. They are audited after the fact.

In a contract where the contractor is given autonomy over purchasing, they run a huge risk if they purchase anything outside the scope of the contract.

The government doesn't have to pay if they decide what was purchased is outside the scope. If DynCorp commissioned an Olympic size pool for example, then someone on the government side either okayed the purchase ahead of time or decided it was within the scope of the contract when it came time to pay the bill.

[sammi jo]

I don't actually think that's true. They can't be getting approval for every little thing. That's why they have a contract. They are audited after the fact.

Of course. Perhaps companies like Arthur Andersen (http://www.commondreams.org/views02/0712-02.htm) prepare the books for the taxmen? (There's a nice 5 year old lefty link for you) :p

[@_@ Artman]

Blackwater evaded federal income taxes by treating its armed guards as independent contractors and not employees. (http://oversight.house.gov/story.asp?ID=1562)

You know, one doesn't have a choice to be an independent contractors if one is otherwise acting as an employee. It's a well known business issue that many smaller companies run afoul.

Here is some information on the legal distinction:

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

http://www.irs.gov/govt/fslg/article/0,,id=110344,00.html

http://jobsearchtech.about.com/od/laborlaws/l/aa121800.htm

I repeat, an employer does not have a choice as to whether someone who is behaving as an employee can be classified as an independent contract, they simply can't.

Business as usual, Mission Accomplished, etc....:mad:

[SDW2001]

In a contract where the contractor is given autonomy over purchasing, they run a huge risk if they purchase anything outside the scope of the contract.

The government doesn't have to pay if they decide what was purchased is outside the scope. If DynCorp commissioned an Olympic size pool for example, then someone on the government side either okayed the purchase ahead of time or decided it was within the scope of the contract when it came time to pay the bill.

No, then you don't understand how things like this work. A contract is awarded, and payments are made either on a schedule, or after the job is completed. That's how it works for nearly all public service contracts. There is NO WAY the corporation is having every purchase approved. That would be a like a school board awarding a contract to a contractor for sidewalk repairs, and requiring the contractor to get his cement purchase approved. Please. In fact, it's the total opposite in most cases. A contract is signed at a fixed price, and change orders are submitted by the contractor as costs go up and down. It's no different for the feds.

Now, they might be submitting an itemized bill after the fact and then getting paid for it. But that's still after the fact.

[AsLan^]

No, then you don't understand how things like this work. A contract is awarded, and payments are made either on a schedule, or after the job is completed. That's how it works for nearly all public service contracts. There is NO WAY the corporation is having every purchase approved. That would be a like a school board awarding a contract to a contractor for sidewalk repairs, and requiring the contractor to get his cement purchase approved. Please. In fact, it's the total opposite in most cases. A contract is signed at a fixed price, and change orders are submitted by the contractor as costs go up and down. It's no different for the feds.

Now, they might be submitting an itemized bill after the fact and then getting paid for it. But that's still after the fact.

I'm not disputng that payments occcur after the fact. But, if the company bills the government for work that is outside the scope of the contract then the government can refuse to pay the bill.

You seem to thing the military just throws money around without any kind of oversight and it's just not true.

What you're saying and using your analogy is that the contractor can be contracted to provide sidewalk repairs but decide to build a parking lot instead and the government foots the bill.

The government doesn't have to approve the cost of the cement, but they do have to approve the cost of the sidewalk ahead of time. That's how contracts are even awarded in the first place!

[AsLan^]

I think I just realized where you are getting confused.

Fixed price contracts like you are referring to are popular for small projects, but for larger projects we use a kind of contract called "Time and Materials".

Basically, the bid consists of all the companies showing the government their proposed plans and costs for how they intend to implement their requirements. The government then chooses the best one and goes with it.

On a time and materials contract you can only bill the government for hours you spent working on the conract and materials you had to purchase to implement the requirements. There is definately room in there for profit and the government understands this but it is worked into the plan before you present it to the government.

Often, the plan runs over budget and more money needs to be allocated, but the reverse can be true too and the government ends up saving money. This also allows them to be more flexible if the situation changes and the government needs to cancel the contract for whatever reason.

[@_@ Artman]

You seem to thing the military just throws money around without any kind of oversight and it's just not true.

I agree with everything else except this. There are pallets of cash (12bn) that have disappeared in Iraq. (http://www.guardian.co.uk/Iraq/Story/0,,2008189,00.html)

http://image.guardian.co.uk/sys-images/Guardian/Pix/pictures/2007/02/07/dollarsariveiraq372ready.jpg

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.

Hmmm...

http://www.cavalierdaily.com/.Archives/2003/10/21/filmkings.gif

[AsLan^]

I agree with everything else except this. There are pallets of cash (12bn) that have disappeared in Iraq. (http://www.guardian.co.uk/Iraq/Story/0,,2008189,00.html)



That's ridiculously disturbing :wow:

However, it does highlight the point that the lions share of responsibility is on the governments head rather than the contractors. If they chose to work without oversight and accountability in Iraq then it's still a government issue.

I don't like DynCorp and probably wouldn't work for them. The human rights abuses of their employees in Bosnia would always be in my mind.

But, that doesn't mean they are at fault on these contracts. If they were then the government would have a basis to begin legal proceedings in order to recover the money. But I'm relatively certain they've got their bases covered.

[SDW2001]

I think I just realized where you are getting confused.

Fixed price contracts like you are referring to are popular for small projects, but for larger projects we use a kind of contract called "Time and Materials".

Basically, the bid consists of all the companies showing the government their proposed plans and costs for how they intend to implement their requirements. The government then chooses the best one and goes with it.

On a time and materials contract you can only bill the government for hours you spent working on the conract and materials you had to purchase to implement the requirements. There is definately room in there for profit and the government understands this but it is worked into the plan before you present it to the government.

Often, the plan runs over budget and more money needs to be allocated, but the reverse can be true too and the government ends up saving money. This also allows them to be more flexible if the situation changes and the government needs to cancel the contract for whatever reason.


I'm not confused, you're changing your position. You claimed that everything had to be approved in advance, and I said otherwise. Now you say it's approved after it's done.

Time and Materials can be inflated to pay for other projects. I'm sure if fraud was involved, they were pretty good at making that swimming pool look like something else.

As for oversight, this is the federal government we're talking about. It gets bilked out of billions every year. I don't see why you'd assume these contractors are on a tight leash, especially with the military. A few years ago there was a story where the government was paying for helicopters it never received. It happens all the time. The gum'nint ain't that smart, hoss.

[AsLan^]

I'm not confused, you're changing your position. You claimed that everything had to be approved in advance, and I said otherwise. Now you say it's approved after it's done.

Basically, the bid consists of all the companies showing the government their proposed plans and costs for how they intend to implement their requirements. The government then chooses the best one and goes with it.

On a time and materials contract you can only bill the government for hours you spent working on the conract and materials you had to purchase to implement the requirements. There is definately room in there for profit and the government understands this but it is worked into the plan before you present it to the government.

Often, the plan runs over budget and more money needs to be allocated, but the reverse can be true too and the government ends up saving money. This also allows them to be more flexible if the situation changes and the government needs to cancel the contract for whatever reason.

I'm not changing my position. The government needs to see the plan and costs or they won't choose that bid.

If something changes from the original plan after the project has started, then the government needs to be involved with approving those changes or they don't have to pay for them.

Same thing for requirements. If the company fails to deliver or meet requirements on time then there are penalties written into the contract. If the company delivers within cost and on time then everyone is happy. The company will get repeat business from the government and the government will save money.

Time and Materials can be inflated to pay for other projects. I'm sure if fraud was involved, they were pretty good at making that swimming pool look like something else.

As for oversight, this is the federal government we're talking about. It gets bilked out of billions every year. I don't see why you'd assume these contractors are on a tight leash, especially with the military. A few years ago there was a story where the government was paying for helicopters it never received. It happens all the time. The gum'nint ain't that smart, hoss.

If the contracted company actually defrauds the government then the government has a legal basis for recovering those monies.

[SDW2001]

I'm not changing my position. The government needs to see the plan and costs or they won't choose that bid.

If something changes from the original plan after the project has started, then the government needs to be involved with approving those changes or they don't have to pay for them.

Same thing for requirements. If the company fails to deliver or meet requirements on time then there are penalties written into the contract. If the company delivers within cost and on time then everyone is happy. The company will get repeat business from the government and the government will save money.



If the contracted company actually defrauds the government then the government has a legal basis for recovering those monies.

Yes, the plan is approved. But what does that mean? Not a lot. And I really think you overestimate our government's capability to spend money wisely!

[tonton]

Preparations for the Olympics in Beijing were apparently far better managed than Iraqi redevelopment/reconstruction.

[@_@ Artman]

Yes, the plan is approved. But what does that mean? Not a lot. And I really think you overestimate our government's capability to spend money wisely!

...and lose it. :smokey: