The British government is trying to stall an investigation into the
theft of more than $1.3bn (£740m) from the Iraqi Ministry of Defence,
senior Iraqi officials say.
The government wants to postpone the investigation to help its favoured
candidate Iyad Allawi, the former prime minister, in the election on 15 December.
The money disappeared during his administration.
The UK's enthusiasm for Mr Allawi may have led it into promoting a
cover-up of how the money was siphoned off and sent abroad. One Iraqi minister
believes the investigation will be dropped when the next government is formed.
The scandal is expected to explode with renewed force in the next few weeks.
The Independent has learnt of secret tape recordings of a wide-ranging conversation
between a Ministry of Defence official and a businessman, naming politicians
and officials involved.
"It is possibly one of the largest thefts in history," Ali Allawi,
Iraq's Finance Minister, said. "Huge amounts of money have disappeared.
In return we got nothing but scraps of metal." Most of the military purchases
were made in Poland and Pakistan. They included obsolete helicopters, armoured
vehicles unable to stop a bullet and grossly over-priced machine guns and bullets.
Payments were made in advance. Often the Ministry of Defence did not even have
a copy of contracts under which it was paying hundreds of millions of dollars.
Ahmed Chalabi, the Deputy Prime Minister, says William Patey, the British ambassador
in Baghdad, asked him not to give prominence to the scandal before the election
because this might "politicise the investigation". Mr Patey denies
he had asked for the investigation to be delayed.
A former senior British adviser was quoted as saying that Tony Blair was convinced
Mr Allawi "is the best hope" for Iraq. He added that Mr Blair had
sent a small team of operatives to give political help to Mr Allawi. In background
briefings, British officials have heavily supported the former prime minister
despite evidence that government corruption was rife under his administration.
Mr Allawi is a former member of the Baath party who fell out with Saddam Hussein
in the 1970s. Resident in Britain for many years, he became the leader of an
opposition group, the Iraqi National Accord. He has never denied a close association
with British intelligence and the CIA said he was justified in taking support
from any foreign intelligence service willing to help him fight Saddam.
Supporters of Mr Allawi have denounced allegations about widespread fraud while
he was prime minister in 2004-05 as an attempt to damage him before a close-fought
election next week. But documents seen by The Independent show Mr Allawi's office
authorising astonishingly large sums of money to be spent by the Defence Ministry.
The cabinet was excluded at the request of Hazem al-Shaalan, the Defence Minister.
He asked for and received permission from the prime minister's office to spend
money without oversight in September 2004, citing the gravity of the crisis
facing the Iraq. In November, Mr Shaalan received a letter from the cabinet
secretariat saying the prime minister had agreed to spend $1.7bn "for the
purpose of creating two rapid intervention divisions". By the winter of
2004, large sums were being sent out of Iraq in sacks filled with $100 bills
loaded on to planes. One shipment of $300m was noticed and intercepted.
The Iraqi army and police have paid heavily in lives because of the misappropriation
of the almost all the defence procurement budget. Insurgents are often better
armed than government forces. Soldiers travel through Baghdad in ageing white
pick-ups normally used to carry cabbages to the market.
The men chosen, primarily by the US, to run the Iraqi Defence Ministry were
extraordinarily inexperienced. They included Mr Shalaan, the Defence Minister,
who had worked in real estate in a small way in London during the 1990s. He
may have appealed to American and British advisers because he was vociferously
Ziyad Cattan was the head of military procurement at the Defence Ministry who
signed cheques for hundreds of millions of dollars. He openly admits to knowing
nothing about weapons. He returned to Iraq just before the war in 2003 after
27 years in Poland. His previous jobs included selling flowers, shoes and used
cars. At one time he ran a pizza parlour.
Mr Cattan is allegedly one of the voices secretly recorded when he was talking
in a car with Naer Mohammed Ahmed Jumaili. Mr Jumaili acted as middle man for
the arms deals, Mr Chalabi said at a press conference in Baghdad this week.
He said 35 cheques from the Ministry of Defence worth $1.1bn were paid into
Mr Jumaili's account at the Al Warkah Bank in Baghdad.
A mystery surrounding the alleged misappropriation of military procurement
budget is that it passed unnoticed by American and British officials in Baghdad.
This was despite the fact that they were supposedly supervising the build up
of a new Iraqi army and police force. Mr Shaalan and Mr Cattan both protest
that nothing was done in the Iraqi Ministry of Defence at this time that was
not known to the US.
A problem facing the investigation into the missing money is that so many politicians
and officials from the Sunni, Shia and Kurdish communities in Iraq were either
implicated or failed to notice what was happening. The National Assembly has
not lifted Mr Shaalan's parliamentary immunity.
Supporters of Mr Allawi, the Kurdish parties and some members of Shia religious
parties have sought to delay the investigation.
Britain has backed Mr Allawi strongly in the hope that as a secular Shia with
nationalists credentials he can unite people from the three main communities.
Despite British support, Iraqi political observers do not believe Mr Allawi
will be the next prime minister. Last weekend he was chased from the shrine
in the holy Shia city of Najaf by worshippers hurling shoes whom he says were
trying to kill him.
With most Iraqis voting on sectarian or ethnic lines Mr Allawi will be doing
well if he can win more than 25 seats in the 275-member Assembly.