Follow the money

George W Bush undertook to bring prosperity to the Iraqi people. Yet while oil revenue is soaring, p

One morning at the end of January this year, emergency workers in Baghdad converged on al-Rasheed Street, where a major fire had engulfed Iraq's Central Bank. No one had been killed in the still-smouldering ten-storey building, but the bank's records had gone up in smoke. Financial documents concerning billions of dollars had been turned to ash. As a comparison, it would be as if the records of the Bank of England had been accidentally incinerated.

The fire was no accident. "It's still being investigated, but it was arson," said Stuart Bowen, the American special inspector general for Iraq reconstruction, who examines how the United States spends its billions in Iraq. He has a thorough understanding of the failures of Iraq's reconstruction efforts.

Bowen, who spoke by phone from Baghdad, would not speculate as to the motive for the Central Bank fire, but other sources familiar with the case believe the torch job was intended to remove records of misconduct, theft or malfeasance. Photographs of the destruction show the twisted wreckage of a huge computer server.

Burning evidence is a time-honoured, if crude, way of covering tracks, but it is seldom so audacious in scope. The scale of corruption is equally audacious; it reaches staggering levels throughout the Iraqi government.

Consider: the leading former anti-corruption judge and his top investigator both fled the country in fear for their lives last August and are seeking political asylum in the US. The judge testified to the US Congress that "corruption in Iraqi today is rampant across the government, costing tens of billions of dollars".

The US secretary of state, Condoleezza Rice, has also called corruption in Iraq "pervasive".

"Follow the money!" advised the legendary source known as Deep Throat in All the President's Men, the book about the Watergate scandal in the White House. Wise advice in general for an investigative journalist, or anyone else, trying to understand motive and patterns. The trouble is, it is virtually impossible to follow the billions of dollars pouring into Iraq.

It has been five years since Paul Wolfowitz, then US deputy defence secretary, famously predicted to Congress that Iraq "could finance its own reconstruction, and relatively soon". Wolfowitz and his neocon colleagues had relied on the Iraqi politician Ahmad Chalabi for their information, and his predictions of oil wealth were alluring. Wolfowitz told the US Congress that "the oil revenues of Iraq could bring between $50bn and $100bn over the course of the next two or three years".

It was a wild overestimation. The real expectation for Iraq at that time was that it would sell about $12bn in oil for 2004 and an estimated $15bn in 2005. Nonetheless, in the long run, Wolfowitz may be proved right.

Bowen believes the Iraqi budget could exceed $50bn for 2008. Chiefly, he credits soaring oil prices. Costly oil, devastating to western econo mies, is giving Iraq's shaky government a windfall. "At $102 a barrel," Bowen says, "an extraordinary amount of revenue is going to be flowing into the government of Iraq's coffers."

But once it gets there, how will that $50bn be spent, and who will control it? Bowen, who has investigated American corruption in dealing with Iraqi counterparts, warns that "there are two pathways. One is to put the resources to beneficial use and that would require fighting corruption seriously."

The alternative, Bowen said, is grim. "Corruption could become worse because the opportunity to steal obviously expands with the growth in revenues." More money might simply mean more theft.

There is plenty of cause for concern in the various postwar government departments. In the defence ministry, procurement fraud allegedly topped $1bn in 2004. Investigators claim there have been large-scale diversions of medicines in the health ministry. In the oil ministry, high-level officials have been charged with stealing fuel.

Bribery and embezzlement

There is also concern about the ministry of finance, through which most of the $50bn oil revenue will ultimately be disbursed. Here, according to a draft US report on corruption in Iraq last year, "bribery and embezzlement are the most numerous bases for investigations".

The kidnapping of a British IT consultant, seized from the finance ministry last May, has also raised suspicions that some people may have been attempting to destroy evidence of corruption. A group of British contractors had just arrived on-site. A security team of well-trained veterans escorted Peter Moore, a computer expert contracted to a US company called BearingPoint, into the building. At this point, a platoon-strength posse of Iraqis, "dressed in police uniforms", according to press accounts, roared up in vehicles. They headed straight for their objective - the computer expert and his guards. Outgunned and apparently unclear whom they were dealing with, the British team put up no fight. The computer expert and his four-man detail were snatched away. It looked like an "arrest" but in reality it was a kidnapping.

For some time, US and UK forces launched noisy sweeps through Sadr City and other Shia districts. A source close to the case says the reason the kidnappers were "dressed in police uniforms" was that they were indeed police. It was a branch within the police loyal to the Sadr militia, explains the source.

Now, following the release of a hostage video at the end of last month, it is known that the men are being held by a group calling itself the Shia Islamic Resistance of Iraq. In the video, a man identified as Moore pleads for help. His captors are demanding the release of nine prisoners held by the British, and the Prime Minister, Gordon Brown, has become personally involved, appealing for the release of the British hostages.

However, both Iraqi and American investigators believe the kidnapping, like the Central Bank arson, was not initially an act of terrorism in the usual sense of the word but, more precisely, organised or business crime. The motive was to stop the consultant from installing a computer system which would introduce more accountability into the ministry's accounting systems.

It is hardly unusual in the 21st century to computerise records that deal with billions of dollars, and the project in hand was intended to centralise and automate Iraq's spending. The aim was to ensure accountability and financial transparency. Over the years, however, the Iraqis have objected to automation. As one American working with them explained, some feared that the system "would impose too much transparency".

Before the kidnapping, the project was near completion and due to go online. After the men were snatched, that all stopped. The "Iraq Financial Management Information System" was abandoned. The finance ministry still handles its paperwork the old-fashioned way.

Five years after the invasion, the Iraqi government has designated 2008 the "Year of Reconstruction and Anti-Corruption". By this summer, a windfall of oil money will be pouring into Baghdad. Whether the structures are in place for the beleaguered citizens of Iraq to enjoy the benefit is far less certain.

Aram Roston is the author of "The Man Who Pushed America to War: the Extraordinary Life, Adventures and Obsessions of Ahmad Chalabi", newly published by Nation Books (£15.99)

Clarification

On 13 March 2008 we published an article, "Follow the money", which made allegations about accounting procedures at the Trade Bank of Iraq. We now accept that there is no evidence to suggest that there has been any wrongdoing by the Trade Bank of Iraq or its chairman and we are happy to make that clear.

Killing figures

0 number of Commons votes on Iraq since invasion in 2003

1 number of Commons debates on the war between July 2004 and January 2008

£1bn annual cost of Iraq War to British taxpayer

$5bn cost of ten days' fighting in Iraq

50 percentage of trained Iraqi doctors who have left their country since war began

175 British soldiers killed in Iraq

3,980 US troops killed

7,987 Iraqi Security Force personnel killed

81,874 - 89,353 documented civilian deaths to 10 March

25,000 number of children forced out of their homes every month during 2007

This article first appeared in the 17 March 2008 issue of the New Statesman, Iraq: the war that changed us

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The humbling of Theresa May

The Prime Minister has lost all authority. The Tories will remove her as soon as they feel the time is right.

Being politicians of unsentimental, ruthless realism, the Conservatives did not linger in the grief stage of their collective disaster after the general election. Disbelief, too, was commendably brief.

Currently, their priority is to impose some sort of order on themselves. This is the necessary prelude to the wholesale change that most see as the next phase in their attempt at recovery, which they all know is essential to their career prospects – and believe is vital to a country whose alternative prime minister is Jeremy Corbyn.

For that reason, talk of Theresa May enduring as Prime Minister until the end of the Brexit negotiations in two years’ time is the preserve of just a few wishful thinkers. Some sort of calm is being established but the party is far from settled or united; there is a widespread conviction that it cannot be so under the present leader.

Elements of the great change have been executed, as Nick Timothy and Fiona Hill, May’s former advisers, will testify.

However, this is only beginning, as shown by the debate in the media about how long May can survive in Downing Street. There is dissatisfaction about elements of her recent reshuffle, but it is quieted because few believe that some of the more contentious appointments or reappointments will last more than a matter of months. Her colleagues are also alarmed by the meal she has made of doing what was supposed to be a straightforward deal with the DUP.

The climate in the party at the moment is one in which everything – jobs, policies and, of course, the leadership – will soon be up for grabs. Debate over “hard” and “soft” Brexits is illusory: anyone who wants to be Conservative leader will need to respect the view of the party in the country, which is that Britain must leave the single market and the customs union to regain control of trade policy and borders. That is one reason why the prospects of David Davis, the Brexit Secretary, are being talked up.

Some of May’s MPs, for all their hard-mindedness about the future, speak of feeling “poleaxed” since the general election. Even before the result changed everything, there was dismay about the bad national campaign; but that, it was felt, could be discussed in a leisurely post-mortem.

Now, instead, it has undermined faith in May’s leadership and credibility. “The social care disaster was key to our defeat,” an MP told me. “It wasn’t just that the policy damaged our core vote, it was the amateurishness of the U-turn.” A more seasoned colleague noted that “it was the first election I’ve fought where we succeeded in pissing off every section of our core vote”.

The limited ministerial reshuffle was inevitable given May’s lack of authority, and summed up her untenability beyond the short term. Most of her few important changes were deeply ill judged: notably the sacking of the skills and apprenticeships minister Robert Halfon, the MP for Harlow in Essex, and a rare Tory with a direct line to the working class; and the Brexit minister David Jones, whose job had hardly begun and whose boss, Davis, was not consulted.

George Bridges, another Brexit minister, who resigned, apparently did so because he felt May had undermined the government’s position in the negotiations so badly, by failing to win the election comprehensively, that he could not face going on.

Much has been made of how Philip Hammond, the Chancellor, was marginalised and briefed against, yet reappointed. Patrick McLoughlin, the party chairman, suffered similarly. Conservative Central Office was largely shut out from the catastrophic campaign, though no one got round to briefing against McLoughlin, who kept his head down – unheard-of conduct by a party chairman in an election.

As a political force, Central Office is for now more or less impotent. It has lost the knack of arguing the case for Conservatism. MPs are increasingly worried that their party is so introspective that it just can’t deal with the way Corbyn is spinning his defeat. “An ugly mood is growing,” one said, “because militant leftism is going unchallenged.” That cannot change until May has gone and the party machine is revived and re-inspired.

***

Nobody in the party wants a general election: but most want a leadership election, and minds are concentrated on how to achieve the latter without precipitating the former. One angry and disillusioned ex-minister told me that “if there were an obvious candidate she’d be shitting herself. But most of us have realised Boris is a wanker, DD isn’t a great communicator and is a bit up himself, Hammond has no charisma, and Amber [Rudd] has a majority of 346.”

On Monday a group of senior ex-ministers met at Westminster to discuss next steps. It was agreed that, with the Brexit talks under way, the most important thing in the interests of restoring order was securing the vote on the Queen’s Speech. Then, May having done her duty and steadied the proverbial ship, the party would manage her dignified and calm evacuation from Downing Street.

Those who agree on this do not always agree on the timing. However, few can make the leap of imagination required to see her addressing the party conference in October, unless to say “Thank you and goodnight” and to initiate a leadership contest. Many would like her out long before then. The only reason they don’t want it this side of securing the Queen’s Speech is that the result, as one put it, would be “chaos”, with a leadership contest resembling “a circular firing squad”.

That metaphor is popular among Tories these days. Others use it to describe the ­apportioning of blame after the election. As well as Timothy and Hill, Lynton Crosby has sustained severe wounds that may prevent the Tories from automatically requesting his services again.

Following the Brexit referendum and Zac Goldsmith’s nasty campaign for the London mayoralty, Crosby has acquired the habit of losing. And then there was Ben Gummer, blamed not only for the social care debacle, but also for upsetting fishermen with a vaguely couched fisheries policy. These failings are becoming ancient history – and the future, not the past, is now the urgent matter – yet some Conservatives still seethe about them despite trying to move on.

“I haven’t heard anyone say she should stay – except Damian Green,” a former minister observed, referring to the new First Secretary of State. Green was at Oxford with May and seems to have earned his job because he is one of her rare friends in high politics. He is regarded as sharing her general lack of conviction.

Older activists recall how the party, in 1974, clung loyally to Ted Heath after he lost one election, and even after he lost a second. Now, deference is over. Most Tory activists, appalled by the handling of the campaign, want change. They would, however, like a contest: annoyed at not having been consulted last time, they intend not to be left silent again.

That view is largely reflected at Westminster, though a few MPs believe a coronation wouldn’t be a problem, “as we don’t want a public examination of the entrails for weeks on end when we need to be shown to be running the country effectively”. Most MPs disagree with that, seeing where a coronation got them last time.

With the summer recess coming up, at least the public’s attention would not be on Westminster if the contest took place mostly during that time: hence the feeling that, once the Queen’s Speech is dealt with, May should announce her intention to leave, in order to have a successor in place before the conference season. It is then up to the party to design a timetable that compresses the hustings between the final two candidates into as short a time as compatible with the democratic process, to get the new leader in place swiftly.

Some letters requesting a contest are said to have reached Graham Brady, the chairman of the 1922 Committee of backbenchers. One MP told me with great authority that there were eight; another, with equal certainty, said 12. Forty-eight are needed to trigger the procedure. However, engineering such a contest is not how most Tories would like to proceed. “She has had an international humiliation,” a former cabinet minister said, “and it is transparently ghastly for her. Then came the [Grenfell Tower] fire. There is no sense our rubbing it in. I suspect she knows she has to go. We admire her for staying around and clearing up the mess in a way Cameron didn’t. But she is a stopgap.”

MPs believe, with some justification, that the last thing most voters want is another general election, so caution is paramount. None doubts that the best outcome for all concerned would be for May to leave without being pushed.

Her tin-eared response to the Grenfell disaster shocked colleagues with its amateurishness and disconnection. “I’m sure she’s very upset by Grenfell,” someone who has known her since Oxford said. “But she is incapable of showing empathy. She has no bridge to the rest of the world other than Philip.” Another, referring to the controversial remark that torpedoed Andrea Leadsom’s leadership ambitions last year, said: “You would get shot for saying it, but not having had children hasn’t helped her when it comes to relating to people. Leadsom was right.”

***

May was quicker off the mark on Monday, issuing a statement condemning the appalling attack at Finsbury Park Mosque swiftly after it occurred, and going there shortly afterwards to meet community leaders. No one could fault her assurance that Muslims must enjoy the same protection under the law as everyone else, or the speed and sincerity with which it was made. She is learning what leadership entails, but too late.

Her administration has become unlucky. This happened to John Major, but, as in his case, the bad luck is partly down to bad decisions; and the bad luck that comes out of the blue simply piles in on top of everything else. Grenfell Tower, lethal and heartbreaking for its victims and their families, was merely more bad luck for the Prime Minister because of her slow-witted response and failure – presumably because shorn of her closest advisers – to do the right thing, and to do it quickly.

But then it turned out that her new chief of staff, Gavin Barwell, had in his previous incarnation as a housing minister received a report on improving fire safety in tower blocks and done nothing about it. That is either more bad luck, or it shows May has dismal judgement in the quality of people she appoints to her close circle. Form suggests the latter.

The idea aired last weekend, that May had “ten days to prove herself”, was a minority view. For most of her colleagues it is too late. It was typical of Boris Johnson’s dwindling band of cheerleaders that they should broadcast a story supporting Davis as an “interim” leader: “interim” until Johnson’s credibility has recovered sufficiently for him to have another pop at the job he covets so much.

They also sought to create the impression that Davis is on manoeuvres, which he resolutely is not. Davis has been around long enough to know that if he wants to succeed May – and his friends believe he does – he cannot be seen to do anything to destabilise her further. It is a lesson lost on Johnson’s camp, whose tactics have damaged their man even more than he was already.

Andrew Mitchell, the former international development secretary and a close ally of Davis, told the Guardian: “. . . it is simply untrue that he is doing anything other
than focusing on his incredibly important brief and giving loyal support to the Prime Minister. Anyone suggesting otherwise is freelancing.” That summed up the contempt Davis’s camp has for Johnson, and it will last long beyond any leadership race.

There is a sense that, in the present febrile climate, whoever is the next leader must be highly experienced. Davis qualifies; so does Hammond, who before his present job was foreign secretary and defence secretary, and who has belatedly displayed a mind of his own since May was hobbled. Hugo Swire, a minister of state under Hammond in the Foreign Office, said of him: “He’s got bottom. He was very good to work for. He is an homme sérieux. I liked him very much and he would calm things down.”

But, as yet, there is no contest. Calls for calm have prevailed, not least thanks to Graham Brady’s steady stewardship of the 1922 Committee, and his success in convincing the more hot-headed of his colleagues to hold their fire. Yet MPs say the 1922 is not what it was 20 years ago: ministers have become used to taking it less seriously.

However, many MPs expect Brady, at a time of their choosing, to go to Downing Street and deliver the poison pill to Theresa May if she is slow to go. Some who know her fear she might take no notice. If she were to play it that way, her end would be unpleasant. As the old saying goes, there is the easy way, and there is the hard way. Remarkably few of her colleagues want to go the hard way but, like everything else in the Tory party at the moment, that could change.

Simon Heffer is a journalist, author and political commentator, who has worked for long stretches at the Daily Telegraph and the Daily Mail. He has written biographies of Thomas Carlyle, Ralph Vaughan Williams and Enoch Powell, and reviews and writes on politics for the New Statesman

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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