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The reconstruction racket: to understand the murderous mess Iraq has become, it's necessary to examine the festival of corporate and internationalist corruption known as the "reconstruction.".

Perhaps the first question that should be asked is this: how could a company with the name "Custer Battles" win a contract to provide security in a war zone, much less be given a role in training Iraq's military and security forces?

Custer Battles takes its morale-sapping name from its co-founders, former Army officers Scott Custer and Michael Battles. The latter, a 2002 Republican congressional candidate in Rhode Island, was described by Custer as "very active in the Republican Party ... [someone who] speaks to individuals he knows in the White House almost daily." Shortly after the "liberation" of Iraq in 2003, the company--which was little more than a letterhead organization with no experience or demonstrated expertise in any security-related field--was handed a $16 million contract to provide security for the Baghdad International Airport.

A few weeks later, the Coalition Provisional Authority (CPA), which was established by the Bush administration and the United Nations to supervise the postwar occupation of Iraq, awarded a second contract to Custer Battles, this time to supervise a currency exchange, swapping Saddam-era dinars for newly minted bills devoid of the despot's portrait. That arrangement, reported the Los Angeles Times, paid Custer Battles' costs "for setting up centers where the exchanges would take place, plus a twenty-five percent markup for overhead and profit."

The company had done little to secure the airport, beyond hiring a few Nepalese Ghurka troops and Filipino contract workers. However, it had built a dense network of shell company subsidiaries in Lebanon and the Cayman Islands to generate phony invoices to the CPA for renting trucks, forklifts, and other equipment. In October 2003, Custer and Battles met with military staff to discuss the currency exchange. They accidentally left behind a spreadsheet disclosing that the company had overcharged the CPA by at least $6.5 million--a "markup" of 162 percent. Yet the Bush administration kept the company on contract for nearly a year, refusing to cut it off until it was forced to do so by an Air Force investigation that produced abundant and inescapable evidence of widespread fraud.

By the time Custer Battles was removed from the federal payroll, it had ceased to be a corrupt defense contractor and morphed into an undisguised criminal syndicate. In March 2005 testimony in a hearing convened by Senate Democrats, former CPA official Franklin Willis described how occupation officials delivered "bricks of cash" to company officials: "We called Mike Battles in and said, 'bring a bag.'... We played football with the plastic wrapped bricks for a little while."

Not all of the company's employees were party to this corruption. After being hired in June 2003 as a security consultant, former FBI agent Robert J. Isakson warned company officials that their shell-company scheme was illegal, and bluntly told them he would have nothing to do with it. A federal lawsuit filed against Custer Battles relates that the company retaliated against Isakson by holding him and his son at gunpoint, disarming them, stripping them of their ID, and sending them "sans weapons or escort on a dangerous journey over land to Amman, Jordan." According to attorney Alan Grayson, who represents Isakson and another former Custer Battles employee named William Baldwin, other former employees have received death threats; one of them discovered a $50,000 bounty on his head.

Other former Custer Battles employees who are still employed by government contractors "reportedly fear retaliation from the Bush administration" out of concern that "the White House may cut off contracts for their current employers," reported the liberal journal Mother Jones. To reasonable people it may seem improbable that the administration would retaliate against officials who blow the whistle on a corrupt company that defrauded the U.S. government of tens of millions of dollars. Yet the administration refused to join in the lawsuit, insisting that the CPA, as a creature of a UN Security Council Resolution, is a "multinational entity" and thus was not an arm of the U.S. government.

Eventually, shamed into action by a Newsweek expose, the administration tacitly lent its support to the suit filed by Isakson and Baldwin while making it clear that it has no interest in investigating other allegations of fraud and corruption on the part of contractors in Iraq.

We Owe Them "Nothing"

Custer Battles, which continues to operate in Iraq, was just one of many such ventures that feasted on the CPA during the 15 months it ruled Iraq. Headed by L. Paul Bremer, a director of the high-octane Kissinger Associates consulting firm, the CPA was intended to supervise Iraq's oil production and the reconstruction of the nation's infrastructure.

The CPA was an outgrowth of the Pentagon's Office of Reconstruction and Humanitarian Assistance (OHRA), which was created when President Bush signed National Security Presidential Decision Directive 24 on January 20, 2003. As war correspondent George Packer reports in his book The Assassins' Gate: America in Iraq, the executive order creating the OHRA was drafted by the Pentagon's Office of Special Plans (OSP), a secretive and ideologically driven clique of neo-conservative activists who were responsible for most of the bogus intelligence used to make the case for invading Iraq.

The OSP was on intimate terms with Ahmad Chalabi, the convicted embezzler who headed a motley group of Iraqi exiles called the Iraqi National Congress (INC). Chalabi and his group were the chief source of the OSP's bad intelligence, and it was expected that once Saddam was gone, the INC would be installed as the new government of Iraq.

The OHRA had no "coherent postwar plan" for Iraq, writes Packer (who supported the war), because "the people in Washington who mattered never intended to stay in Iraq." One key Pentagon official told Packer: "Their plan was to turn it over to these [Chalabi-led] exiles very quickly and let them deal with the messes that came up." Larry Di Rita, a spokesman for Donald Rumsfeld, put the matter very bluntly in an April 2003 meeting with aid workers in Kuwait. After being queried about the need to reconstruct Iraq, "Di Rita slammed his fist down on the table," recounts Packer. "We don't owe the people of Iraq anything," he declared. "We're giving them their freedom. That's enough."

Although the CPA took physical possession of Iraq's oil industry, it did nothing to account for the nation's oil revenues. Former CIA officer Philip Giraldi noted in the October 24 American Conservative that because of the CPA's deliberate decision not to meter Iraqi oil exports, "no one will ever know how much revenue was generated during 2003 and 2004." As a result, no one will ever know how much of that money was "squandered, stolen, given away, or simply lost." It is known that at least $20 billion--two-thirds of it in cash--was cast into the Mesopotamian winds without oversight or accountability. Much of that money was shipped to Iraq hot off the printing presses.

License to Print Money

Between May 2003 and June 2004, the Federal Reserve Bank of New York airlifted an estimated 363 tons of freshly minted $100 bills to Iraq. The money was assembled in "cashpaks," each of which contained $1.6 million; 40 of those units would be stacked and shrink-wrapped on pallets and loaded onto C-130 military transport planes. Once in Iraq, the money--often in the form of bricks of c-notes--would be lavished on politically connected contractors or their local allies and agents. In April 2004, for instance, three Blackhawk helicopters delivered $1.5 billion in cash to a courier in Iraq's Kurdish region. Afterward, "no one was able to recall the courier's name or provide a good description of him," Giraldi recalls. Elsewhere, CPA officials handed out bags of cash to contractors from the back of trucks.

Like the toxic mold that overwhelmed New Orleans in Hurricane Katrina's wake, corruption flourished in the wake of the CPA-facilitated deluge of money into Iraq, fatally undermining whatever relatively stable civil society institutions existed. "One prominent [Iraqi] businessman estimates that 95 percent of all business activity involves some form of bribery and kickback," reports Giraldi. "The bureaucrats and fixers who live off of bribery are referred to by ordinary Iraqis as 'Ali Babas.'... For the average Iraqi businessman, there was formerly only one hand out, that of Saddam's designated minion. Now every hand is out. The educated and entrepreneurial are leaving the country in droves, as are most of the beleaguered Christian minority. Huge government appropriations are approved by Iraqi lawmakers and then simply disappear. Meanwhile, life for the average Iraqi does not improve."

The metastasizing corruption also abetted the growth of the terrorist insurgency. Since the reconstruction of Iraq's infrastructure never really got underway, the Iraqi people were given "little incentive to cooperate with the occupation," continues Giraldi. "Ongoing corruption in arms procurement and defense spending means that Baghdad will never control a viable army while the Shi'ite and Kurdish militias will grow stronger and produce a divided Iraq in which constitutional guarantees will be irrelevant."

While the CPA did nothing to help Iraq establish a free and stable society, it did offer profitable positions for members of the neo-conservative elite. One very suitable example is Washington attorney Michael H. Mobbs, a former law partner of Lewis "Scooter" Libby, the indicted ex-chief of staff for Vice President Cheney. Without any relevant skills, background, or experience beyond his neo-con credentials, Mobbs was tapped by Bremer to head civil administration in occupied Iraq. Mobbs spent most of his time in Iraq loitering in the country's Kurdish region in the company of Ahmad Chalabi, a convicted embezzler and con-man anointed by the neo-conservatives to be Iraq's post-Saddam leader.

Prior to being given that post in Iraq, Mobbs had performed two vital tasks on behalf of the neo-con cabal. The first was to compose the "Mobbs Declaration," a brief document written in late 2002 to justify the incarceration of U.S. citizen Yasser Esam Hamdi as an "enemy combatant."

A few weeks after filing his "declaration" in 2002, Mobbs led a meeting of a Pentagon energy group that "gave Halliburton a $1.9 billion 'task order' ... to develop secret contingency plans for the Iraqi oil industry," recounted the June 14, 2004 New York Times. Also present at that meeting was "Scooter" Libby, who is under federal indictment for allegedly helping to expose the identity of CIA officer Valerie Plame (as a way of retaliating against her husband, whistleblower Joseph Wilson). Libby's boss was Vice President Cheney, who is also the former CEO of Halliburton, which enjoyed a windfall of at least $8 billion as a result of the "task order" approved by Michael Mobbs.

Mobbs was hardly the only neo-con who found a lucrative sinecure in post-war Iraq. Giraldi points out that "a serious reconstruction effort came second to doling out the spoils to the war's most fervent supporters:"
 The CPA brought in scores of bright,
 young true believers who were nearly
 universally unqualified. Many
 were recruited through the Heritage
 Foundation website, where they had
 posted their resumes. They were
 paid six-figure salaries out of Iraqi
 funds, and most served in 90-day rotations
 before returning home with
 their war stories. One such volunteer
 was Simone Ledeen, daughter
 of leading neoconservative Michael
 Ledeen. Unable to communicate in
 Arabic and with no relevant experience
 or appropriate educational
 training, she nevertheless became
 a senior advisor for northern Iraq at
 the Ministry of Finance in Baghdad.
 Another was former White House
 Press Secretary Ari Fleischer's older
 brother Michael who, though utterly
 unqualified, was named director of
 private-sector development in all of

Global Racket

In parrying demands for an immediate withdrawal of our troops from Iraq, the administration and its supporters maintain that post-Saddam Iraq is a model and test case for a "global democratic revolution" that would supposedly liberate the Middle East and abolish the terrorist threat. For some, the Bush administration's revolutionary rhetoric echoes similar pronouncements issued by the Brezhnev-era Soviet regime, which also promised--or threatened--to "liberate" oppressed nations through invasion and subversion. And the unmitigated cronyism and corruption that characterize the reconstruction effort offers another parallel to Soviet "liberation" campaigns, which created a system of degenerate satellite regimes administered by faithful Communist Party functionaries who profited handsomely from their service to the "revolution."

Financial analyst and former Wall Street Journal correspondent Anne Williamson spent most of the 1990s in Russia, covering the emergence of that nation's new criminal elite. She sees the Bush administration's global democratic revolution/reconstruction project as kindred to the subsidized gangsterism that turned post-Soviet Russia into a huge sty of official corruption, with commissars, corporate criminals, academics, and internationalist bureaucrats all gorging themselves at the aid trough.

The war and reconstruction effort in Iraq, carried out through the CPA, a corrupt U.S./UN hybrid entity, is indeed intended to serve as a model for future efforts, not only in the Middle East, but throughout the area described by Pentagon analyst Thomas P.M. Barnett as the "non-integrating gap"--those nations and regions not firmly assimilated into the UN-defined global "rule set." And, not surprisingly, the Bush administration's eagerness to throw bags or bricks of cash in the direction of practically anyone who claims to be involved in "reconstruction" has created a huge constituency for future "liberation" projects.

"The parasites that infest the multilateral institutions,... frustrated for years now by the mounds of imperial dough going to military contractors, will be jubilant in executing their new 'mission' involving funds uncritically shoved first into their hands, ten percent of which at least will pass directly into those of corrupt, U.S.-controlled leaders," writes Williamson. "Mirabile dictu, all will be accomplished behind closed doors on the basis of 'national security' needs."

In this fashion, globalist bureaucrats and corporate leaders will grow fatter, multilateral agencies will grow more powerful, and neo-con ideologues will be able to pursue their demented designs--even as the public at large grows poorer, and the terrorist threat to our nation grows more acute. All of this vindicates the despairing conclusion of Major General Smedley Butler, recipient of two Medals of Honor during his 33 years of service in the U.S. Marine Corps, that war is a "racket."
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Title Annotation:IRAQ; Custer Battles' contract
Author:Grigg, William Norman
Publication:The New American
Geographic Code:7IRAQ
Date:Jan 23, 2006
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