Troops Stole Boxes of Iraq Reconstruction Cash ... Literally ... But There's a Lot More to the Story

Posted by Liliana Segura, AlterNet at 9:15 AM on April 13, 2009.

This weekend the Los Angeles Times ran an article titled "Some U.S. troops tempted by reconstruction cash," reporting that the Department of Justice is pursing some "three dozen prosecutions" of soldiers and others involving bribery for "reconstruction" projects in Iraq and Afghanistan.
The piece tells the story of one Army captain, a 28-year old graduate from West Point, who according to a federal indictment, "managed to skim more than $690,000 in cash as the civil affairs officer overseeing millions of dollars intended for reconstruction projects and payments to private Iraqi security forces northeast of Baghdad." In a particularly brazen move, Capt. Michael Dung Nguyen allegedly packed the cash into boxes, which he then mailed to his home in Beaverton, Oregon.
According to the LA Times, "at least 25 theft probes are underway."
The story has gotten relatively little attention, and no doubt the response to these crimes will take the predictable form of blaming it on a few bad apples. But, as the Times hints, the system that has produced this sort of corruption by U.S soldiers was ripe for abuse from the start. "The prosecutions reveal the extent to which troops have been tempted by the Pentagon's 'money as a weapon system' policy, which has left battlefields awash in cash."
Late last summer, the Washington Post ran a article titled "Money as a Weapon," which painted a picture of how, five years into the U.S. occupation, "American cash" had become the U.S. military's most valuable strategic counterinsurgency tool.

Soldiers walk the streets carrying thousands of dollars to pay Iraqis for doorways battered in American raids and limbs lost during firefights. Sheiks appeal to commanders to use larger pools of money locked away in Humvees and safes at military bases for new schools, health clinics, water treatment plants and generators, knowing that the military can bypass Iraqi and U.S. bureaucratic hurdles.

The cash was used for things big and small, many of which would ft neatly into the category "hearts and minds":

Army documents show that $48,000 was spent on 6,000 pairs of children's shoes; an additional $50,000 bought 625 sheep for people described in records as "starving poor locals" in a Baghdad neighborhood. Soldiers ordered $100,000 worth of dolls and $500,000 in action figures made to look like Iraqi Security Forces. About $14,250 was spent on "I Love Iraq" T-shirts. More than $75,000 sent a delegation to a women's and civil rights conference in Cairo. And $12,800 was spent for two pools to cool bears and tigers at Zawra Park Zoo in Baghdad.

The money comes from the Commander's Emergency Response Program (CERP), which has so far spent at least $2.8 billion in U.S. funds. It is not tied to international standards of redevelopment or normal government purchasing rules. Instead, it is governed by broad guidelines packaged into a field manual called "Money as a Weapon System."

But the Post examined congressional records and audits, spoke to U.S. troops and commanders, and studied a government database of some 26,000 CERP records. It's conclusion: the Money as a Weapon System -- which was designed to be a temporary measure -- "has evolved beyond its original goals." This was not a program defined by toys and T-shirts.

It has often been used for large projects that can take years to complete, is largely divorced from other reconstruction efforts and lacks the structure needed for overseers to know how well the program works.

Government auditors have also found problems with record keeping. In one case, the Army couldn't fully account for $135 million in CERP payments. Auditors and other experts complain that they are unable to judge whether CERP is effective.

That was August. This past February, in Iraq, reporter Dahr Jamail wrote a piece that showed in glaring detail how "effective" the "program" has been:

Driving through Fallujah, once the most rebellious Sunni city in this country, I saw little evidence of any kind of reconstruction underway. At least 70 percent of that city's structures were destroyed during massive U.S. military assaults in April, and again in November 2004, and more than four years later, in the "new Iraq," the city continues to languish.

...

Everything in Fallujah, and everyone there, has been touched to the core by the experience, but not everyone is experiencing the aftermath of the city's devastation in the same way. In fact, for much of my "tour" of Fallajah, I was inside a heavily armored, custom-built, $420,000 BMW with all the accessories needed in twenty-first century Iraq, including a liquor compartment and bulletproof windows.

...

To say that my newest mode of transportation was an upgrade that left me a bit disoriented would be (mildly put) an understatement. The BMW belonged to Sheik Aifan Sadun, head of the Awakening Council of Fallujah. Thanks to the Awakening movement that began forming in 2006 in al-Anbar Province, then the hotbed of the Sunni insurgency -- into which American occupation forces quickly poured significant amounts of money, arms, and other kinds of support -- violence across most of that province is now at an all-time low. This is strikingly evident in Fallujah, once known as the city of resistance, since the fiercest fighting of the American occupation years took place there.

"Today," wrote Jamail, "34-year-old Sheik Aifan may be the richest man in town, thanks to his alliance of self-interest with the U.S. occupation forces."
Jamail described how the sheik receives "regular installments of money" in the form of "shrink-wrapped bricks of $100 bills" from the U.S. military.

This practice, of course, is a lot less well-known than the supposed success of the "surge" instituted a few months later.
***
Thus far, according to the LA Times, $3.5 billion in taxpayer money has been spent on the Commander's Emergency Response Program, ostensibly on "humanitarian aid and community reconstruction projects" as well as the practice of hiring Sunni gunmen, "often former insurgents, as security officers with the U.S.-allied forces known as the Sons of Iraq."
But as Jamail wrote in February: "Don't misunderstand.This wasn't a careful, strategically laid, made-in-the-USA plan. It was a seat-of-the-pants, spur-of-the-moment quick fix."
Robert J. Stein Jr., a Coalition Provisional Authority official put it a different way. "This was more cash than Donald Trump had ever seen in his life," he said, according to the Times. Stein was sentenced to nine years in prison in 2006 for playing a part in a bribery, theft and money laundering case. "When you work around money like that," he told investigators, "it becomes, 'So what, it's just paper.'"

Liliana Segura is a staff writer and editor of AlterNet's Rights and Liberties and War on Iraq Special Coverage.