Blackwater banned from Iraq

Taken from Al-Jazeera News Agency, January 30, 2009

Blackwater, a US private security firm, has been barred from providing security for US diplomats in Iraq for its alleged involvement in the deaths of at least 17 civilians in 2007.

The Iraqi interior ministry on Thursday said the measure followed the firm's "improper conduct and excessive use of force".

"It is because of the shooting incident in 2007 ... [Blackwater] came to us and applied and we refused them. They tried by all means to stay here and we said 'no'," General Abdel Karim Khalaf, an interior ministry spokesman, told AFP.

Five former Blackwater guards are awaiting trial in the US for the incident that took place in September 2007.

One Blackwater guard has pleaded guilty to voluntary manslaughter and attempt to commit manslaughter over that incident.

A US embassy official in Baghdad and Khalaf gave no exact exit date for Blackwater employees.

They also did not clarify whether the Blackwater guards would be allowed to continue guarding US diplomats until a date is decided.

"We don't have specifics about dates. We are working with the government of Iraq and our contractors to address the implications of this decision," the US embassy official said.

Immunity stripped
Blackwater employees who have not been implicated in the 2007 shooting incident will be allowed to work with a different employer in Iraq.

The security contracting company deny any misconduct over the shooting. They say guards opened fire after coming under attack when a car in a US state department convoy broke down in Baghdad's Nisoor Square.

Erik Prince, Blackwater's founder, acknowledged that the loss of the contract would hurt the company, but said that the company's exit from Iraq would also endanger the diplomats it has protected.

"Our abrupt departure would far more hurt the reconstruction team and the diplomats trying to rebuild the country than it would hurt us as a business," he said.

The decision not to renew the Blackwater contract comes in the wake of a US-Iraqi security agreement approved in November which gives Iraq the right to decide which Western security companies can work in Iraq.

Gary Jackson, Blackwater's president, said it will remove its nearly two dozen aircraft and 1,000 security contractors from Iraq within 72 hours of receiving an order to leave.

Up until the beginning of this year, Western security contractors enjoyed blanket immunity from Iraqi law.

This has since been reversed to allow security contractors to be prosecuted in Iraq.

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The case has also been complicated because, at the time of the attack, private contractors like Blackwater operated without any clear legal oversight and it could be argued they did not have to answer either to Iraqi or US laws.

Under the deal Blackwater had with the US government, it was allowed to repair the vehicles involved in the attack before investigators saw them, taking away key forensic evidence. - source: Al-Jazeera 08 December, 2008

When you have contractors with immunity from being prosecuted then there is something wrong somewhere.

Rice tops US 'official gift list'

Taken from BBC News, Wednesday, 24 December 2008

US Secretary of State Condoleezza Rice has topped the list of US officials for the number of gifts received in 2007, a state department report shows.







Ms Rice received $312,000 (£211,000) worth of jewels from the king of Saudi Arabia - worth three times more than his gifts to President George W Bush.

Among the presents listed for First Lady Laura Bush were "nuts and dried fruit" from the Dalai Lama - worth $6.

However, all gifts remain public property in keeping with US law.

In January 2007, Saudi King Abdullah presented Ms Rice with a diamond and emerald set - including a necklace, bracelet, earrings and a ring - worth $147,000 (£100,000), according to the list.

In July 2007, he gave Ms Rice a set of diamond and ruby jewellery valued at $165,000.

The inventory also includes a $170,000 flower petal necklace he gave Ms Rice in 2005, which the department says was not previously disclosed.

Earlier, the state department reported erroneously that the jewellery valued at $147,000 had been given to Ms Rice by King Abdullah II of Jordan, not the Saudi monarch.

Fitness machines
Mr Bush's wife, Laura, also received a diamond and sapphire set from the Saudi monarch, but hers was worth just half that given to Ms Rice at $85,000.

From the same Arab leaders, President Bush received just over $100,000 in gifts in 2007, the list shows.

Among the more offbeat gifts, Swedish Prime Minister Fredrick Reinfeldt honoured the US leader with a $570 made-in-Sweden power saw equipped "with comfort grip handles", presumably for use at his Texas ranch.

And the prime minister of Singapore gave Mr Bush $450 worth of fitness equipment, including a uSurf Wave Action Exerciser and an iGallop Core and Abs Exerciser.

The wife of Japan's former Prime Minister Shinzo Abe gave Mrs Bush two hand-embroidered pillows with the names and images of first dogs Barney and Miss Beazley worth $100.

Unfortunately for the recipients, the gifts must be turned over to the General Services Administration in accordance with US law, which bars politicians and officials from accepting personal presents in almost all circumstances.

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If these were the official gift from states - I wonder what the unofficial gifts might be - i.e hidden in Swss bank accounts etc. It's no surprise that the Saudi & other Arab Monarchs waste money offering jewels when they know fully well that it will eventually go to the state rather than to the individual. It must be even hurtful for Muslims around the world to see money wasted when it could have been used to feed the poor etc.

Official History Spotlights Iraq Rebuilding Blunders

Taken from The New York Times, December 13, 2008
By JAMES GLANZ and T. CHRISTIAN MILLER

BAGHDAD — An unpublished 513-page federal history of the American-led reconstruction of Iraq depicts an effort crippled before the invasion by Pentagon planners who were hostile to the idea of rebuilding a foreign country, and then molded into a $100 billion failure by bureaucratic turf wars, spiraling violence and ignorance of the basic elements of Iraqi society and infrastructure.

(for original PDF Document - Click here!)

The history, the first official account of its kind, is circulating in draft form here and in Washington among a tight circle of technical reviewers, policy experts and senior officials. It also concludes that when the reconstruction began to lag — particularly in the critical area of rebuilding the Iraqi police and army — the Pentagon simply put out inflated measures of progress to cover up the failures.

WATER Students used water from a faucet at the Khulafa al-Rashideen school in Baghdad in October. Access to potable water plummeted after the 2003 invasion.

In one passage, for example, former Secretary of State Colin L. Powell is quoted as saying that in the months after the 2003 invasion, the Defense Department “kept inventing numbers of Iraqi security forces — the number would jump 20,000 a week! ‘We now have 80,000, we now have 100,000, we now have 120,000.’ ”

Mr. Powell’s assertion that the Pentagon inflated the number of competent Iraqi security forces is backed up by Lt. Gen. Ricardo S. Sanchez, the former commander of ground troops in Iraq, and L. Paul Bremer III, the top civilian administrator until an Iraqi government took over in June 2004.

Among the overarching conclusions of the history is that five years after embarking on its largest foreign reconstruction project since the Marshall Plan in Europe after World War II, the United States government has in place neither the policies and technical capacity nor the organizational structure that would be needed to undertake such a program on anything approaching this scale.
The bitterest message of all for the reconstruction program may be the way the history ends. The hard figures on basic services and industrial production compiled for the report reveal that for all the money spent and promises made, the rebuilding effort never did much more than restore what was destroyed during the invasion and the convulsive looting that followed.

COMMUNICATION Landline phone service plunged after the invasion, forcing Iraqis to rely on cellphone companies, above.

By mid-2008, the history says, $117 billion had been spent on the reconstruction of Iraq, including some $50 billion in United States taxpayer money.

The history contains a catalog of revelations that show the chaotic and often poisonous atmosphere prevailing in the reconstruction effort.

When the Office of Management and Budget balked at the American occupation authority’s abrupt request for about $20 billion in new reconstruction money in August 2003, a veteran Republican lobbyist working for the authority made a bluntly partisan appeal to Joshua B. Bolten, then the O.M.B. director and now the White House chief of staff. “To delay getting our funds would be a political disaster for the President,” wrote the lobbyist, Tom C. Korologos. “His election will hang for a large part on show of progress in Iraq and without the funding this year, progress will grind to a halt.” With administration backing, Congress allocated the money later that year.

In an illustration of the hasty and haphazard planning, a civilian official at the United States Agency for International Development was at one point given four hours to determine how many miles of Iraqi roads would need to be reopened and repaired. The official searched through the agency’s reference library, and his estimate went directly into a master plan. Whatever the quality of the agency’s plan, it eventually began running what amounted to a parallel reconstruction effort in the provinces that had little relation with the rest of the American effort.

Money for many of the local construction projects still under way is divided up by a spoils system controlled by neighborhood politicians and tribal chiefs. “Our district council chairman has become the Tony Soprano of Rasheed, in terms of controlling resources,” said an American Embassy official working in a dangerous Baghdad neighborhood. “ ‘You will use my contractor or the work will not get done.’ ”

A Cautionary Tale
The United States could soon have reason to consult this cautionary tale of deception, waste and poor planning, as troop levels and reconstruction efforts in Afghanistan are likely to be stepped up under the new administration.

The incoming Obama administration’s rebuilding experts are expected to focus on smaller-scale projects and emphasize political and economic reform. Still, such programs do not address one of the history’s main contentions: that the reconstruction effort has failed because no single agency in the United States government has responsibility for the job.

Five years after the invasion of Iraq, the history concludes, “the government as a whole has never developed a legislatively sanctioned doctrine or framework for planning, preparing and executing contingency operations in which diplomacy, development and military action all figure.”

ELECTRICITY A new generator in Baghdad in 2007. Electricity output is now only slightly higher than it was before the war.

Titled “Hard Lessons: The Iraq Reconstruction Experience,” the new history was compiled by the Office of the Special Inspector General for Iraq Reconstruction, led by Stuart W. Bowen Jr., a Republican lawyer who regularly travels to Iraq and has a staff of engineers and auditors based here. Copies of several drafts of the history were provided to reporters at The New York Times and ProPublica by two people outside the inspector general’s office who have read the draft, but are not authorized to comment publicly.


OIL The production of oil at Iraqi fields, like the one above, 370 miles southeast of Baghdad, has been below prewar levels.

Mr. Bowen’s deputy, Ginger Cruz, declined to comment for publication on the substance of the history. But she said it would be presented on Feb. 2 at the first hearing of the Commission on Wartime Contracting, which was created this year as a result of legislation sponsored by Senators Jim Webb of Virginia and Claire McCaskill of Missouri, both Democrats.

The manuscript is based on approximately 500 new interviews, as well as more than 600 audits, inspections and investigations on which Mr. Bowen’s office has reported over the years. Laid out for the first time in a connected history, the material forms the basis for broad judgments on the rebuilding program.

In the preface, Mr. Bowen gives a searing critique of what he calls the “blinkered and disjointed prewar planning for Iraq’s reconstruction” and the botched expansion of the program from a modest initiative to improve Iraqi services to a multibillion-dollar enterprise.

Mr. Bowen also swipes at the endless revisions and reversals of the program, which at various times gyrated from a focus on giant construction projects led by large Western contractors to modest community-based initiatives carried out by local Iraqis. While Mr. Bowen concedes that deteriorating security had a hand in spoiling the program’s hopes, he suggests, as he has in the past, that the program did not need much outside help to do itself in.

Despite years of studying the program, Mr. Bowen writes that he still has not found a good answer to the question of why the program was even pursued as soaring violence made it untenable. “Others will have to provide that answer,” Mr. Bowen writes.

“But beyond the security issue stands another compelling and unavoidable answer: the U.S. government was not adequately prepared to carry out the reconstruction mission it took on in mid-2003,” he concludes.

The history cites some projects as successes. The review praises community outreach efforts by the Agency for International Development, the Treasury Department’s plan to stabilize the Iraqi dinar after the invasion and a joint effort by the Departments of State and Defense to create local rebuilding teams.

But the portrait that emerges over all is one of a program’s officials operating by the seat of their pants in the middle of a critical enterprise abroad, where the reconstruction was supposed to convince the Iraqi citizenry of American good will and support the new democracy with lights that turned on and taps that flowed with clean water. Mostly, it is a portrait of a program that seemed to grow exponentially as even those involved from the inception of the effort watched in surprise.

Early Miscalculations
On the eve of the invasion, as it began to dawn on a few officials that the price for rebuilding Iraq would be vastly greater than they had been told, the degree of miscalculation was illustrated in an encounter between Donald H. Rumsfeld, then the defense secretary, and Jay Garner, a retired lieutenant general who had hastily been named the chief of what would be a short-lived civilian authority called the Office of Reconstruction and Humanitarian Assistance.

The history records how Mr. Garner presented Mr. Rumsfeld with several rebuilding plans, including one that would include projects across Iraq.

“What do you think that’ll cost?” Mr. Rumsfeld asked of the more expansive plan.

“I think it’s going to cost billions of dollars,” Mr. Garner said.

“My friend,” Mr. Rumsfeld replied, “if you think we’re going to spend a billion dollars of our money over there, you are sadly mistaken.”

In a way he never anticipated, Mr. Rumsfeld turned out to be correct: before that year was out, the United States had appropriated more than $20 billion for the reconstruction, which would indeed involve projects across the entire country.

Mr. Rumsfeld declined to comment on the history, but a spokesman, Keith Urbahn, said that quotes attributed to Mr. Rumsfeld in the document “appear to be accurate.” Mr. Powell also declined to comment.

The secondary effects of the invasion and its aftermath were among the most important factors that radically changed the outlook. Tables in the history show that measures of things like the national production of electricity and oil, public access to potable water, mobile and landline telephone service and the presence of Iraqi security forces all plummeted by at least 70 percent, and in some cases all the way to zero, in the weeks after the invasion.

Subsequent tables in the history give a fast-forward view of what happened as the avalanche of money tumbled into Iraq over the next five years.

Dashed Expectations
By the time a sovereign Iraqi government took over from the Americans in June 2004, none of those services — with a single exception, mobile phones — had returned to prewar levels.

And by the time of the security improvements in 2007 and 2008, electricity output had, at best, a precarious 10 percent lead on its levels under Saddam Hussein; oil production was still below prewar levels; and access to potable water had increased by about 30 percent, although with Iraq’s ruined piping system it was unclear how much reached people’s homes uncontaminated.

Whether the rebuilding effort could have succeeded in a less violent setting will never be known. In April 2004, thousands of the Iraqi security forces that had been oversold by the Pentagon were overrun, abruptly mutinied or simply abandoned their posts as the insurgency broke out, sending Iraq down a violent path from which it has never completely recovered.

At the end of his narrative, Mr. Bowen chooses a line from “Great Expectations” by Dickens as the epitaph of the American-led attempt to rebuild Iraq: “We spent as much money as we could, and got as little for it as people could make up their minds to give us.”

Secrets of Iraq's death chamber

Prisoners are being summarily executed in the government's high-security detention centre in Baghdad.

Taken from The Independent, UK, Tuesday, 7 October 2008

By Robert Fisk

Like all wars, the dark, untold stories of the Iraqi conflict drain from its shattered landscape like the filthy waters of the Tigris. And still the revelations come.

The Independent has learnt that secret executions are being carried out in the prisons run by Nouri al-Maliki's "democratic" government.

The hangings are carried out regularly – from a wooden gallows in a small, cramped cell – in Saddam Hussein's old intelligence headquarters at Kazimiyah. There is no public record of these killings in what is now called Baghdad's "high-security detention facility" but most of the victims – there have been hundreds since America introduced "democracy" to Iraq – are said to be insurgents, given the same summary justice they mete out to their own captives.

The secrets of Iraq's death chambers lie mostly hidden from foreign eyes but a few brave Western souls have come forward to tell of this prison horror. The accounts provide only a glimpse into the Iraqi story, at times tantalisingly cut short, at others gloomily predictable.

Those who tell it are as depressed as they are filled with hopelessness.

"Most of the executions are of supposed insurgents of one kind or another," a Westerner who has seen the execution chamber at Kazimiyah told me. "But hanging isn't easy." As always, the devil is in the detail.

"There's a cell with a bar below the ceiling with a rope over it and a bench on which the victim stands with his hands tied," a former British official, told me last week. "I've been in the cell, though it was always empty. But not long before I visited, they'd taken this guy there to hang him. They made him stand on the bench, put the rope round his neck and pushed him off. But he jumped on to the floor. He could stand up. So they shortened the length of the rope and got him back on the bench and pushed him off again. It didn't work."

There's nothing new in savage executions in the Middle East – in the Lebanese city of Sidon 10 years ago, a policeman had to hang on to the legs of a condemned man to throttle him after he failed to die on the noose – but in Baghdad, cruel death seems a speciality.

"They started digging into the floor beneath the bench so that the guy would drop far enough to snap his neck," the official said. "They dug up the tiles and the cement underneath. But that didn't work. He could still stand up when they pushed him off the bench. So they just took him to a corner of the cell and shot him in the head."

The condemned prisoners in Kazimiyah, a Shia district of Baghdad, are said to include rapists and murderers as well as insurgents. One prisoner, a Chechen, managed to escape from the jail with another man after a gun was smuggled to them. They shot two guards dead. The authorities had to call in the Americans to help them recapture the two. The Americans killed one and shot the Chechen in the leg. He refused medical assistance so his wound went gangrenous. In the end, the Iraqis had to operate and took all the bones out of his leg. By the time he met one Western visitor to the prison, "he was walking around on crutches with his boneless right leg slung over his shoulder".

In many cases, it seems, the Iraqis neither keep nor release any record of the true names of their captives or of the hanged prisoners. For years the Americans – in charge of the notorious Abu Ghraib prison outside Baghdad – did not know the identity of their prisoners. Here, for example, is new testimony given to The Independent by a former Western official to the Anglo-US Iraq Survey Group, which searched for the infamous but mythical weapons of mass destruction: "We would go to the interrogation rooms at Abu Ghraib and ask for a particular prisoner. After about 40 minutes, the Americans brought in this hooded guy, shuffling along, shackled hands and feet.

"They sat him on a chair in front of us and took off his hood. He had a big beard. We asked where he received his education. He repeatedly said 'Mosul'. Then he said he'd left school at 14 – remember, this guy is supposed to be a missile scientist. We said: 'We know you've got a PhD and went to the Sorbonne – we'd like you to help us with information about Saddam's missile project'. But I said to myself : 'This guy doesn't know anything 'bout fucking missiles.' Then it turned out he had a different name from the man we'd asked for, he'd been picked up on the road by the Americans four months earlier, he didn't know why. So we said to the Americans: 'Wrong gentleman!' So they put the shackles on him and took him back to his cell and after 20 or 30 minutes, they'd bring someone else. We'd ask him where he went to school and he told us he had never been to school.

"Wrong person again. It was a complete farce. The incompetence of the US military was astounding, criminal. Eventually, of course, they found the right guy and brought him in and took his hood off. He was breathing heavily, overweight, pudgy, disoriented, a little bit scared."

On this occasion, the Americans had found the right man. The British and American investigators asked the guards to remove the man's shackles, which they did – but then they tied one of the man's legs to the floor. Yes, he had a PhD.

Again, the official's testimony: "We went through his history, what he'd worked on – he was obviously just a minor functionary in one of Saddam's missile programmes. Iraqi scientists didn't have the knowledge how to make nuclear missiles nor did they have the financial support necessary. It just remained in the dreams of Saddam."


The scientist-prisoner in Abu Ghraib miserably told his captors that he'd been arrested by the Americans after they'd knocked on his front door in Baghdad and found two Kalashnikov rifles a woman's hijab, verses from the Koran and, obviously of interest to his captors, "physics and missile textbooks on his bookshelves." But this supposedly valuable prisoner was never charged or previously interviewed even though he admitted he was a rocket scientist.

"I don't know what happened to him," the former official told me. "I tried to tell the UK and the US military that we've arrested this man but that he's got a wife, children, a family. I said that by locking up this one innocent person, you've got 50 men radicalised overnight. No, I don't know what happened to him."

For many of the investigators working for the Anglo-American authorities in Baghdad, the trial for the crime for which the Iraqi dictator was himself subsequently hanged was a fearful experience that ultimately ended in disgust. Through captured documents, they could see the dark, inner workings of Saddam's secret police. The idea of the Saddam trial was less to bring members of the former regime to justice than to show Iraqis how justice and the rule of law should operate.

"It was exhilarating to see Saddam being cross-examined," one of the court investigators said. "The low point was when he was executed. What drove me on was seeing how Saddam dealt with his victims – I was looking at a microcosm of all the deaths that had taken place in Iraq. But when he was executed, it was done in such a savage way."

Saddam Hussein was hanged in the same "secure" unit at Kazimiyah where Mr al-Maliki's people, in an echo of Saddamite Baathist terror, now hang their victims.

Iraq The death penalty
* The death penalty in Iraq was suspended after Saddam Hussein was deposed in 2003. It was reinstated by the interim government in August 2004.
* The United Nations, the European Union and international human rights organisations all spoke out against the reintroduction.
* At the time, the government claimed the death penalty was a necessary measure until the country had stabilised. Amnesty International claims that "the extent of violence in Iraq has increased rather than diminished, clearly indicating that the death penalty has not proved to be an effective deterrent."
* Saddam, left, his half-brother Barzan al-Tikriti and Iraq's former chief judge Awad Hamed al-Bandar were hanged at the end of 2006 for their part in the killings of 148 people in the mainly Shia town of Dujail in 1982. Illicit videos of all three executions later became public. Saddam's body could be seen on a hospital trolley, his head twisted at 90 degrees. Barzan – Iraq's former intelligence chief –was decapitated by the noose. Officials said it was an accident.
* According to Amnesty, there were at least 33 executions reported in Iraq last year. About 200 people were estimated to have been sentenced to death.

'Your company is bankrupt, you keep $480m. Is that fair?'

Taken from the Guardian, UK, Tuesday October 7 2008

By Andrew Clark in New York and Elana Schor in Washington

It was a showdown to cherish for critics of Wall Street's culture of enrichment. The grim-faced boss of the bankrupt bank Lehman Brothers was left squirming yesterday as a veteran Democrat roasted him over his multimillion-dollar pay.

With the startled look of a man unaccustomed to sharp examination, Lehman chief executive Richard Fuld clashed bluntly with the chairman of the House oversight committee, Henry Waxman, on Capitol Hill.

Called on to explain why Lehman collapsed last month, Fuld began with a note of humility, saying he felt "horrible" over the demise of the 158-year-old institution. "I want to be very clear," Fuld said. "I take full responsibility for the decisions I made and for the actions I took."

In a brief speech which was heard in silence, Fuld told legislators that if he could turn back the clock he would do many things differently. As soon as he finished speaking, sparks began to fly.

The chairman of the committee held up a chart suggesting that Fuld's personal remuneration totalled $480m (£276m) over eight years, including payouts of $91m in 2001 and $89m in 2005.
"Your company is now bankrupt and our country is in a state of crisis," said Waxman, a liberal from California. "You get to keep $480m. I have a very basic question: Is that fair?"

After a long pause, Fuld said the figure was exaggerated: "The majority of my compensation, sir, came in stock. The vast majority of the stock I got I still owned at the point of our [bankruptcy] filing."

Waxman cut him off, saying that even if the figure was slightly lower, it was "unimaginable" to much of the public. "Is that fair, for a CEO of a company that's now bankrupt, to make that kind of money? It's just unimaginable to so many people."

"I would say to you the $500m number is not accurate," said Fuld. "I'd say to you, although it's still a large number, for the years you're talking about here, my cash compensation was close to $60m, which you've indicated here, and I took out closer to $250m [in shares]."

Interrupting again, Waxman listed Fuld's collection of property, including a $14m ocean-front villa in Florida and a home in an exclusive ski resort.

"You and your wife have an art collection filled with million dollar paintings," Waxman said.

"Your former president, Joe Gregory, used to travel to work in a helicopter."

A pugnacious congressman with a bald head and military moustache, Waxman warmed to his theme: "You made all this money taking risks with other people's money."

Refusing to give ground, Fuld said his pay had been set by an independent compensation committee which spent "a tremendous amount of time" making sure executives' interests were aligned with those of shareholders.

"When the company did well, we did well," Fuld said. "When the company did not do well, we didn't do well."

Waxman disagreed: "Mr Fuld, there seems to be a breakdown, because you did very well when the company was doing well and you did well when the company was not doing well. And now your shareholders who owned your company have nothing. They've been wiped out."

Fuld's evidence was his first public appearance since Lehman failed, sparking a chain of events which has sent shockwaves through the global financial system and prompted the US government to begin a $700bn bail-out of the banking sector.

A lifelong Lehman employee who joined the firm as an intern in 1966, Fuld has been blamed for the debacle by many of the bank's 28,000 staff - including those in London who have accused senior management of filleting Lehman's British operation of money in the bank's final days.

Deadpan and emotionless, Fuld repeatedly frustrated congressmen by answering questions with lengthy, technical financial explanations.

Frustrated by his demeanour, a Republican congressman, John Mica, tried humour: "If you haven't discovered your role, you're the villain today. You've got to act like a villain."

Fuld stared back wordlessly, without a shadow of a smile.

Afghan president 'pardoned rapists'

Taken from the Independent, UK,
By Kate Clark in Kabulm, 24 August 2008

The Afghan president, Hamid Karzai, has pardoned three men who had been found guilty of gang raping a woman in the northern province of Samangan.

The woman, Sara, and her family found out about the pardon only when they saw the rapists back in their village.

“Everyone was shocked,” said Sara’s husband, Dilawar, who like many Afghans uses only one name. “These were men who had been sentenced and found guilty by the Supreme Court, walking around freely.”

Sara’s case highlights concerns about the close relationship between the Afghan president and men accused of war crimes and human rights abuses.

The men were freed discreetly but the rape itself was public and brutal. It took place in September 2005, in the run up to Afghanistan’s first democratic parliamentary elections.

The most powerful local commander, Mawlawi Islam, was running for office despite being accused of scores of murders committed while he had been a mujahedeen commander in the 1980s and a Taliban governor in the 1990s, and since the fall of the Taliban in 2001. Sara said one of his sub-commanders and body guards had been looking for young men to help in the election campaign.

“It was evening, around the time for the last prayer, when armed men came and took my son, Islamuddin, by force. I have eye-witness statements from nine people that he was there. From that night until now, my son has never been seen.”

Dilawar said his wife publicly harangued the commander twice about their missing son. After the second time, he said, they came for her. “The commander and three of his fighters came and took my wife out of our home and took her to their house about 200 metres away and, in front of these witnesses, raped her.”

Dilawar has a sheaf of legal papers, including a doctors’ report, which said she had a 17mm wound in her private parts cut with a bayonet. Sara was left to stumble home, bleeding and without her trousers.

When I met the couple in May 2006, they were in hiding and struggling to pursue the four men through the courts, petitioning the parliament, the president, human rights organisations and the United Nations. Sara and Dilawar say that one of the men involved in the attack used money and connections to repeatedly evade justice, particularly after his boss, Mawlawi Islam, became an MP and, they allege, was fully able to protect him.

In January 2007, Mawlawi Islam was assassinated. However, the other three men accused of the gang rape were put on trial, found guilty and sentenced to 11 years in prison. Abdul Basir died in jail. The other two rapists, Nur Mohammad and Kheir Mohammad, were released last May. The commander was found not guilty.

A copy of the pardon was numbered, dated in May and appeared to bear the personal signature of Hamid Karzai. It recommended the men’s release because, it said, “they had been forced to confess to their crimes.”

When showed copies of the presidential pardon and court papers, President Karzai’s spokesman, Hamayun Hamidzada, was visibly shocked and said that if the documents proved genuine, Mr Karzai would be “upset and appalled.”

He said it was impossible that President Karzai could knowingly have signed a pardon for rapists, but refused to speculate on how the pardon could have come about. He promised an investigation into all aspects of the case, including the - as yet unsolved - mystery of Sara’s missing son.

He denied that there was one law for the rich and well-connected in Afghanistan and another for people like Sara. “There are difficulties - we’re rebuilding institutions, including our justice institutions and there are shortcomings, but the president and the government are committed to the rule of law on all equally.”

A UN human rights official said that, although she could not remember a similar case of the president giving a pardon in such a serious case, corruption in the police and courts was endemic.
The MP, Mir Ahmad Joyenda, said cases similar to Sara’s were actually becoming more common. The police and the courts, he said, were usually under the sway of local commanders.

“The commanders, the war criminals, still have armed groups,” he said. “They’re in the government. Karzai, the Americans, the British sit down with them. They have impunity.

They’ve become very courageous and can do whatever crimes they like.”

Sara and Dilawar are again in hiding, having felt too vulnerable to stay in their village. Dilawar was prepared to discuss the case. In Afghanistan, speaking about rape means risking further dishonour, but when asked whether he minded Sara’s story being publicised, Dilawar said, “We’ve already lost our son, our honour, we’ve sold our land to pay for legal costs and we’ve lost our home – what else can we lose?”

Iraq contractors 'cost US $85bn'

Taken from Al-Jazeera News Agency, 13 Aug 2008

The US government has spent at least $85 billion on private contractors during the 2003 Iraq war and its aftermath, a government review has said.

About 20 per cent of money spent for operations in Iraq has gone to contractors, the Congressional Budget Office (CBO) said.

At present there are at least 190,000 contractors in Iraq and in neighbouring countries, a ratio of about one per US service member, the report said.

The report sparked heavy criticism by US Democrats, with Senator Kent Conrad, chairman of the US senate budget committee, saying the reliance on contractors "restricts accountability and oversight; opens the door to corruption and abuse and ... may significantly increase the cost to American taxpayers".

The study did not include figures for 2008 and therefore the total paid tocontractors for work in Iraq since the invasion could be even higher, possibly topping $100 billion by the end of this year, the report said.

The US military has relied increasingly on contractors in its wars as it reduced the size of its own forces.

Increased scrutiny
The CBO estimated on Tuesday that between $6 billion to $10 billion has gone to pay for security work in Iraq, which was comparable to the costs of having a US military unit performing the same tasks.

The work of contractors in Iraq - of whom between 25,000 to 30,000 are in security work - has faced increased scrutiny following a series of fatal incidents involving Iraqi civilians.

Last September, 17 Iraqis were killed in a shooting involving contractors from Blackwater security company, an incident that provoked furious protests from the Iraqi government and strained relations with the US.

The US Justice Department is expected to decide soon whether to bring charges over the incident, although Blackwater itself is not expected to be prosecuted.

The firm recently announced that they planned to scale back their securitycontracting business and focus on other areas, due in part to negative publicity from the shooting.

In addition, contracting companies such as Halliburton, previously run by Dick Cheney, the US vice-president, and KBR, formerly known as Kellogg, Brown and Root, have also been accused of overcharging and corruption.

Charles Tiefer, a professor of government contracting at the University of Baltimore Law School, told the New York Times newspaper that the scale of contractor usage in Iraq was

"unprecedented".
"It was considered an all-out imperative by the administration to keep troop levels low, particularly in the beginning of the war, and one way that was done was to shift money and manpower to contractors," he told the paper.

"But that has exposed the military to greater risks from contractor waste and abuse."

‘Vultures’ expose corruption

Hedge funds lift the lid on African deception

Taken from The Sunday Times, June 15, 2008
By Tony Allen-Mills

ON a spring morning in Paris three years ago, a young African oil executive went on a shopping spree. He spent £1,600 at Escada on the Avenue Montaigne, and £3,700 a few doors down at Christian Lacroix. A couple of weeks later he spent £4,000 at Ermenegildo Zegna and £3,200 at Louis Vuitton.

By the end of 2005, Denis Christel Sassou-Nguesso had charged more than £112,000 to his personal Hong Kong-issued credit card, up from £64,000 the previous year.

Last August Mr Justice Stanley Burnton dismissed an attempt by Sassou-Nguesso in the High Court to suppress publication of his credit card bills. Last month he lost a related action in Hong Kong.

So why is Sassou-Nguesso such an embarrassment for several prominent British and French companies – not to mention the celebrities and politicians, among them Gordon Brown, who have argued so vociferously for poor African countries to be forgiven their international debts?

The answer has all the elements of a detective novel, complete with straw men, false noses, hidden bank accounts, and American bankers who have been derided as “vultures”, but who have managed to find out more about corruption in Africa than Scotland Yard and the FBI.

It is a story that leads from the oil-rich coast of western Africa to the gas-guzzling consumers of America and Europe, via a trail of government fraud and corporate deceit that successive UK judges have publicly condemned.

It starts with Sassou-Nguesso, the son of Denis Sassou-Nguesso, president of the Republic of the
Congo, one of the world’s poorest countries. Two-thirds of Congolese people subsist on less than 50p a day.

The Sassou-Nguessos are no strangers to allegations of profligate spending. Their country, also known as Congo-Brazzaville to distinguish it from the bigger adjacent Democratic Republic of Congo, controls Africa’s fourth-largest proven oil reserves. It pumps crude at about 235,000 barrels a day, worth £5.8 billion a year at today’s record prices.

When Sassou-Nguesso senior visited New York for a recent United Nations summit, bottles of Kristal champagne popped as his entourage ran up a hotel bill of £169,000 – of which £100,000 was paid in cash. Yet he repeatedly claims his country is too poor to pay off its debts.

In May last year, when he was still chancellor, Gordon Brown said he was shocked that poor African countries were being pursued by international hedge-fund creditors seeking to turn a profit on old debt they had bought at a discount.

Brown demanded international action to protect Africans from so-called “vulture funds” whose pursuit of highly indebted countries was, he said, “nothing short of scandalous”.

It was a theme close to the heart of Bono, Bob Geldof and other anti-poverty campaigners who have turned African debt relief into a popular cause.

When Danny Glover, the Hollywood actor and activist, testified before Congress last year, he urged the American government to “follow the example of Gordon Brown . . . to stop vulture funds from devouring African economic progress”.

Yet the case of Congo-Brazzaville and its free-spending rulers offers a radically different perspective on debt relief, and who, exactly, is responsible for obstructing economic progress.

Earlier this year, in a little-noticed, out-of-court settlement, the Brazzaville government paid off its “vulture” creditors, thereby ending almost a decade of legal wrangling that stretched from Bermuda and the Virgin Islands via Paris, New York and Hong Kong to London’s High Court.

It was a startling surrender for a country that has spent much of the past 10 years dodging its creditors, ignoring court orders and pleading to join the debt-relief programme run by the World Bank and the International Monetary Fund. Why give in to the vultures just as world opinion had clearly turned against the hedge funds?

My search for an answer started on the 35th floor of a Fifth Avenue skyscraper in mid-town Manhattan. This is the headquarters of Elliott Associates, a $10 billion (£5 billion) hedge fund that specialises in so-called “distressed” debt – the packages of national and corporate loans turned bad that are routinely sold by banks trying to tidy up their balance sheets.

“Our approach has always been to look for countries with a good prospect of re-negotiating debt,” Jay Newman, a senior Elliott portfolio manager, told me in the company boardroom overlooking Central Park. “We do not acquire the debt of countries that have no means to pay.”

In the late 1990s, an Elliott subsidiary named Kensington International purchased several packages of overdue Congo debt with a collective value of about $100m. It was a perfectly legal transaction and Kensington swiftly won a series of judgments in British and other courts ordering Brazzaville to pay up. The hedge fund’s attempts to initiate negotiations were ignored.

Thus began a game of cat-and-mouse across the world as Elliott’s team of private detectives and forensic accountants attempted to identify shipments of Congolese oil that might be seized and sold to repay the outstanding debts.

Armed with court-approved powers to subpoena witnesses and with search warrants, the Elliott team began a journey into the murky depths of the international oil trade. It would subsequently emerge in court that the Brazzaville government had established a network of sham companies (known in French as faux nez, or “false noses”) and bogus executives (“straw men”) in the hope of concealing their oil transactions.

The breakthrough came in 2005, when Elliott detectives discovered two consignments of Congo oil had been loaded on a vessel called the Nordic Hawk for sale to Glencore, a British company set up by Marc Rich, the Swiss-based trader. Glencore intended to sell the oil on to BP in what should have appeared as a standard and un-noteworthy industry transaction.

Kensington promptly applied to the High Court in London for injunctions to seize the proceeds of the Nordic Hawk consignments on the grounds they were fraudulently concealed sales by the Brazzaville government.

The transcript of Mr Justice Cook’s ruling, among hundreds of court documents reviewed by The Sunday Times, found that Denis Gokana, the head of the national Congo oil company SNPC, had set up a series of front companies and was in effect selling Congo’s oil to himself to disguise its true origins.

Somewhere along the way millions of dollars went missing, and the judge noted that an examination of the bank statements of one of Gokana’s companies “reveals that there was virtually no connection between the cash passing through its bank accounts and the sums it should have received for the oil it sold”.

Where the money went remains a mystery.

Critics of vulture funds say the pursuit of African debtors forces them to resort to unconventional measures to protect sovereign assets. Oxfam is among the charities to denounce vulture funds for “profiting from poverty”.

Undeterred by the “vulture” slurs, Elliott identified a new target. It decided to go after the middlemen. In 2005, Kensington filed a civil suit against BNP Paribas, the French bank, accusing it of conspiring with the SNPC “to divert oil revenues from the Republic of Congo into the pockets of powerful Congolese public officials, while at the same time protecting both the oil and oil revenues from seizure by legitimate creditors”.

BNP denied that its banking arrangements with the Congo were anything other than routine, but a New York judge rejected the company’s motion to have charges dismissed. The case was ultimately dropped as part of the settlement between Elliott and Brazzaville.

Kensington also went back to court in London, where it was attempting to obtain information and documents concerning a related pair of British companies, Vitol Services and Vitol Broking, and their dealings with Congo.

Elliott’s investigators had established that the Vitol companies had made substantial payments to Hong Kong accounts controlled by prominent Congo oil executives. Among them was Denis Christel, the president’s son, who was also head of Cotrade, SNPC’s trading arm.

Kensington argued before Mr Justice Gross of the UK commercial court in January 2007 that “the only credible explanations for these payments are that either they were made to assist Congo in hiding its assets, or they were made as corrupt kickbacks in return for valuable business”.

Vitol promptly startled the oil world by pleading the British equivalent of the Fifth Amendment – it did not want to testify for fear of incriminating itself.

The judge ultimately rejected the Vitol claim, and the case went to appeal. Despite extensive allegations of bribery and corruption detailed in court, no British police investigation has been launched. The Vitol case has also been dropped as a result of the Elliott settlement.

At first, Sassou-Nguesso shrugged off Elliott’s attempts to seize Congo’s assets. “If this is not robbery, what is?” the president once complained to Fortune magazine.

“Who is stealing from the poor?” He dismissed the hedge funds as “snakes in the ocean” and “thug gangsters” who hid in Caribbean tax havens.

Then Elliott’s trail led to Hong Kong, and to Denis Christel’s credit-card receipts.

These first surfaced publicly on the website of Global Witness, a London-based anti-corruption pressure group that has long been monitoring Congo. The group claimed in a 2005 report that the country’s main economic asset “has for too long been managed for the private profit of the elite rather than for the benefit of its entire population”.

The documents produced by Global Witness purported to show that at least part of Denis Christel’s personal expenditure had been paid for by an offshore company he controlled, Long Beach. The same company had received payments from sham oil companies set up by Gokana.

When Sassou-Nguesso went to court in London in August to make Global Witness remove the documents from its site, Mr Justice Burnton noted “it is an obvious possible inference that his expenditure has been financed by secret personal profits made out of dealings in oil sold by Cotrade. The profits of Cotrade’s oil sales should go to the people of the Congo, not to those who rule it or their families”.

The judge declined to suppress the documents. He concluded: “Once there is a good reason to doubt the propriety of the financial affairs of a public official, there is a public interest in those affairs being open to public scrutiny.”

Attempts to obtain a comment from the Brazzaville government were unsuccessful last week, but the president must have realised the spotlight on his family’s private affairs wasn’t going away.

The publication of the Hong Kong credit-card bills “made them get serious” about negotiating a settlement, a source familiar with the case said.

The terms of the settlement prevent Newman from providing details, but the question arises: Did the hedge fund really make a profit after all those years of expensive sleuthing around the globe?

In a newspaper article describing the Nordic Hawk affair, Newman likened the pursuit of Congo’s oil revenues to “a magical mystery tour”.

He said: “Far from being under control, as Bono and [others] would have us believe, corruption in Africa is out of control.

“Seasoned Third World bosses like President Sassou-Nguesso know all too well how to manipulate soft-hearted campus sensibilities and dysfunctional international financial institutions like the IMF.”

Last week Newman declined to address the profit issue, but had no regrets about his company’s approach. “It’s about the rule of law,” he said.

In the course of its near-decade-long pursuit of Congo, Elliott has probably done more than any other national or corporate entity to expose corruption in Africa. It has identified the middlemen who facilitate corrupt payments; it has traced the money trail from British oil traders to luxury boutiques in Paris.

And where was Scotland Yard while all this mischief was being exposed? Brown’s response, a month before he became prime minister last year, was to “deplore the activities of so-called vulture funds”.

Compare that to the remarks of Brice Mackosso, a Congolese citizen who campaigns for transparency in the handling of the country’s oil wealth. “If it were not for these vulture funds we would not know any facts about the way our country’s wealth is being taken away,” he said.

In June last year, a consortium of three French anti-corruption groups filed a civil complaint in Paris alleging the ruling families of Angola, Burkina Faso, Equatorial Guinea, Gabon and Congo-Brazzaville had acquired millions of euros worth of French assets that they could not have afforded on their official salaries.

The case was dismissed in November but not before a resulting police investigation accumulated hundreds of documents, including property titles, cheques, bank orders and invoices. Among them was evidence that earlier this year, the wife and son of Sassou-Nguesso bought separate flats on the same street near the Boulevard Saint-Germain for a total of £3.6m.

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I'd just like to say well done to the Hedge Fund teams and all those organisation that exposed these evil people - they had done a great job in exposing corruption of some of the richest people from one of the poorest countries in the world. When things like this happen you do wonder why international governments don't use powers to flush out these people. Maybe oil is the key word?

As for the UK government and international celebrates promoting Africa to be debt free so that it could have a fresh start - this is a good idea but we really do need to control those that exploit the countries from within.

US issues threat to Iraq's $50bn foreign reserves in military deal

Taken from Independent, UK
By Patrick Cockburn, 06 June 2008

The US is holding hostage some $50bn (£25bn) of Iraq's money in the Federal Reserve Bank of New York to pressure the Iraqi government into signing an agreement seen by many Iraqis as prolonging the US occupation indefinitely, according to information leaked to The Independent.

US negotiators are using the existence of $20bn in outstanding court judgments against Iraq in the US, to pressure their Iraqi counterparts into accepting the terms of the military deal, details of which were reported for the first time in this newspaper yesterday.

Iraq's foreign reserves are currently protected by a presidential order giving them immunity from judicial attachment but the US side in the talks has suggested that if the UN mandate, under which the money is held, lapses and is not replaced by the new agreement, then Iraq's funds would lose this immunity. The cost to Iraq of this happening would be the immediate loss of $20bn. The US is able to threaten Iraq with the loss of 40 per cent of its foreign exchange reserves because Iraq's independence is still limited by the legacy of UN sanctions and restrictions imposed on Iraq since Saddam Hussein invaded Kuwait in the 1990s. This means that Iraq is still considered a threat to international security and stability under Chapter Seven of the UN charter. The US negotiators say the price of Iraq escaping Chapter Seven is to sign up to a new "strategic alliance" with the United States.

The threat by the American side underlines the personal commitment of President George Bush to pushing the new pact through by 31 July. Although it is in reality a treaty between Iraq and the US, Mr Bush is describing it as an alliance so he does not have to submit it for approval to the US Senate.

Iraqi critics of the agreement say that it means Iraq will be a client state in which the US will keep more than 50 military bases. American forces will be able to carry out arrests of Iraqi citizens and conduct military campaigns without consultation with the Iraqi government.

American soldiers and contractors will enjoy legal immunity.

The US had previously denied it wanted permanent bases in Iraq, but American negotiators argue that so long as there is an Iraqi perimeter fence, even if it is manned by only one Iraqi soldier, around a US installation, then Iraq and not the US is in charge.

The US has security agreements with many countries, but none are occupied by 151,000 US soldiers as is Iraq. The US is not even willing to tell the government in Baghdad what American forces are entering or leaving Iraq, apparently because it fears the government will inform the Iranians, said an Iraqi source.

The fact that Iraq's financial reserves, increasing rapidly because of the high price of oil, continue to be held in the Federal Reserve Bank of New York is another legacy of international sanctions against Saddam Hussein. Under the UN mandate, oil revenues must be placed in the Development Fund for Iraq which is in the bank.

The funds are under the control of the Iraqi government, though the US Treasury has strong influence on the form in which the reserves are held.

Iraqi officials say that, last year, they wanted to diversify their holdings out of the dollar, as it depreciated, into other assets, such as the euro, more likely to hold their value. This was vetoed by the US Treasury because American officials feared it would show lack of confidence in the dollar.

Iraqi officials say the consequence of the American action was to lose Iraq the equivalent of $5bn. Given intense American pressure on a weak Iraqi government very dependent on US support, it is still probable that the agreement will go through with only cosmetic changes. Grand Ayatollah Ali al-Sistani, the immensely influential Shia cleric, could prevent the pact by issuing a fatwa against it but has so far failed to do so.

The Grand Ayatollah met Abdul Aziz al-Hakim, the leader of the Islamic Supreme Council of Iraq (ISCI), which is the main supporter of the Iraqi government, earlier this week and did not condemn the agreement or call for a referendum. He said, according to Mr Hakim, that it must guarantee Iraqi national sovereignty, be transparent, command a national consensus and be approved by the Iraqi parliament. Critics of the deal fear that the government will sign the agreement, and parliament approve it, in return for marginal concessions.

Revealed: Secret plan to keep Iraq under US control

Bush wants 50 military bases, control of Iraqi airspace and legal immunity for all American soldiers and contractors

Taken from The Independent, UK
By Patrick Cockburn, 05 June 2008

A secret deal being negotiated in Baghdad would perpetuate the American military occupation of Iraq indefinitely, regardless of the outcome of the US presidential election in November.

The terms of the impending deal, details of which have been leaked to The Independent, are likely to have an explosive political effect in Iraq. Iraqi officials fear that the accord, under which US troops would occupy permanent bases, conduct military operations, arrest Iraqis and enjoy immunity from Iraqi law, will destabilise Iraq's position in the Middle East and lay the basis for unending conflict in their country.

But the accord also threatens to provoke a political crisis in the US. President Bush wants to push it through by the end of next month so he can declare a military victory and claim his 2003 invasion has been vindicated. But by perpetuating the US presence in Iraq, the long-term settlement would undercut pledges by the Democratic presidential nominee, Barack Obama, to withdraw US troops if he is elected president in November.

The timing of the agreement would also boost the Republican candidate, John McCain, who has claimed the United States is on the verge of victory in Iraq – a victory that he says Mr Obama would throw away by a premature military withdrawal.

America currently has 151,000 troops in Iraq and, even after projected withdrawals next month, troop levels will stand at more than 142,000 – 10 000 more than when the military "surge" began in January 2007. Under the terms of the new treaty, the Americans would retain the long-term use of more than 50 bases in Iraq. American negotiators are also demanding immunity from Iraqi law for US troops and contractors, and a free hand to carry out arrests and conduct military activities in Iraq without consulting the Baghdad government.

The precise nature of the American demands has been kept secret until now. The leaks are certain to generate an angry backlash in Iraq. "It is a terrible breach of our sovereignty," said one Iraqi politician, adding that if the security deal was signed it would delegitimise the government in Baghdad which will be seen as an American pawn.

The US has repeatedly denied it wants permanent bases in Iraq but one Iraqi source said: "This is just a tactical subterfuge." Washington also wants control of Iraqi airspace below 29,000ft and the right to pursue its "war on terror" in Iraq, giving it the authority to arrest anybody it wants and to launch military campaigns without consultation.

Mr Bush is determined to force the Iraqi government to sign the so-called "strategic alliance" without modifications, by the end of next month. But it is already being condemned by the Iranians and many Arabs as a continuing American attempt to dominate the region. Ali Akbar Hashemi Rafsanjani, the powerful and usually moderate Iranian leader, said yesterday that such a deal would create "a permanent occupation". He added: "The essence of this agreement is to turn the Iraqis into slaves of the Americans."

Iraq's Prime Minister, Nouri al-Maliki, is believed to be personally opposed to the terms of the new pact but feels his coalition government cannot stay in power without US backing.

The deal also risks exacerbating the proxy war being fought between Iran and the United States over who should be more influential in Iraq.

Although Iraqi ministers have said they will reject any agreement limiting Iraqi sovereignty, political observers in Baghdad suspect they will sign in the end and simply want to establish their credentials as defenders of Iraqi independence by a show of defiance now. The one Iraqi with the authority to stop deal is the majority Shia spiritual leader, Grand Ayatollah Ali al-Sistani. In 2003, he forced the US to agree to a referendum on the new Iraqi constitution and the election of a parliament. But he is said to believe that loss of US support would drastically weaken the Iraqi Shia, who won a majority in parliament in elections in 2005.

The US is adamantly against the new security agreement being put to a referendum in Iraq, suspecting that it would be voted down. The influential Shia cleric Muqtada al-Sadr has called on his followers to demonstrate every Friday against the impending agreement on the grounds that it compromises Iraqi independence.

The Iraqi government wants to delay the actual signing of the agreement but the office of Vice-President Dick Cheney has been trying to force it through. The US ambassador in Baghdad, Ryan Crocker, has spent weeks trying to secure the accord.

The signature of a security agreement, and a parallel deal providing a legal basis for keeping US troops in Iraq, is unlikely to be accepted by most Iraqis. But the Kurds, who make up a fifth of the population, will probably favour a continuing American presence, as will Sunni Arab political leaders who want US forces to dilute the power of the Shia. The Sunni Arab community, which has broadly supported a guerrilla war against US occupation, is likely to be split.

Private equity funds risk destabilising poor countries: UNCTAD

Taken from Yahoo News, Tuesday, October 16
By William French, AFP

Private equity funds are an increasing force among global investors but their short-term approach risks destabilising some developing countries, the United Nations trade and development agency said on Tuesday.

Private equity funds were involved in 889 merger and acquisition deals in 2006, some 18 percent of the global total and worth a record 158 billion dollars (111 billion euros), the UN Conference on Trade and Development (UNCTAD) said in its "World Investment Report 2007."

Overall, global foreign direct investment (FDI) reached 1,306 billion dollars in 2006, up 38 percent and close to the record 1,411 billion dollars set in 2000.

Investment growth occurred across all regions of the global economy, from developed countries to the developing world and the "transition" economies of Southeast Europe and the former Soviet Union, the report said.

Mergers and acquisitions remained the driving force behind FDI and private equity's growing role in this field merits serious study given its different investment strategy, UNCTAD said.

"We need to understand the role and the behaviour of the private equity funds more," UNCTAD director general Supachai Panitchpakdi told journalists.

"To me, they do not look like long-term investors," he said.

Private equity groups specialise in raising cash from private investors and banks, which they then use to buy underperforming publically listed companies, which are taken private, restructured and re-sold, often at great profit.

Britain and North America are the most important regions for fundraising and investments by private equity firms but continental Europe and Asia are gaining ground, the UNCTAD report said.

The largest private equity takeover to date is the 45 billion dollar purchase of Texas utility TXU by a consortium including Kohlberg Kravis Roberts, Texas Pacific Group and major Wall Street banks including Goldman Sachs.

"Private equity funds have typically shorter time horizons than public companies engaged in buyouts as they are inclined to look for options that offer quick returns," the UNCTAD report said.

Supachai warned that the short-term investment strategy inherent in private equity deals "can sometimes destabilise countries if they are overly dependent on these equity funds.

"They dismantle companies and sell plants ... unlike the kind of greenfield investment we like to see," he added.

"Greenfield" investments are projects such as new power plants or factories constructed from scratch.

UNCTAD said that growing competition in the private equity market and the soaring cost of investments casts some doubts as to the sustainability of the high level of their FDI activity.

Private equity funds have long been criticised by trade unions and left-wing politicians for so-called "asset stripping" and a cavalier attitude towards the workers in companies they acquire.

Two years ago, Germany's Social Democrat party chief Franz Muentefering, currently the government's labour minister, famously likened the investment funds to "locusts" for allegedly stripping companies of their most valuable assets and then moving on.

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It is true that Private equity firms are nothing but asset strippers. Their main aim is to make money in the short run. Unfortunately that is the life we live today, everybody looking after themselves and not others as a famous economist once said... in the long run we are all dead!

We’re Here To Make A Difference, Say Contractors Who Risk Life In Baghdad

Taken from the Times, UK, June 4, 2007
By Deborah Haynes

Mortar bombs, rockets and the threat of kidnapping are daily risks faced by hundreds of Western consultants in Baghdad who offer advice and expertise to the fledgling Iraqi Government.

Far from the promise of a fat pay cheque at the end of each month, many of these people say they choose to do the job because they believe their input can make a difference.

The kidnappings last week of a British consultant and his four security guards serve as a grim reminder of the price paid by these experts pay when things go wrong.

“I am not here for the money, I am not here as a mercenary and I am not running away from a broken life somewhere else,” said one Western consultant, who offers government ministries advice on management skills such as how to create IT systems.

“I am concerned about the state of things and the impact on the Middle East and I am worried about US relations with this country. I felt a moral obligation to come because of my relevant expertise,” said the consultant, who has worked in the region for the past 15 years and unlike most lives in the city beyond the green zone.

Another consultant, a Briton who specialises in helping governments to learn basic project management skills and has lived in Baghdad’s fortified green zone for three years, said that his team “really feels we owe it to Iraq to help build back their country”.

He continued: “You are building a government from scratch and the bureaucracy to support that government . . . but it is small steps. It is hard enough to do that in a stable environment. When it is extremely unstable it magnifies the problem 100 per cent.”

Trips by foreign consultants into the “red zone” – namely the rest of Baghdad – have nearly always involved some form of security detail, but the escalating violence since 2004 has reduced the number of places they are able to visit.

Restrictions on movement will likely become tighter still after the abduction of the IT consultant and his security team, who were snatched in daylight from a Finance Ministry building last Tuesday.

“Since the events of last week we have taken additional security precautions. The situation is monitored daily and we take the advice of our security teams,” the British consultant said.

The security threat has slowed progress on training and consultancy projects at the ministries.

It has also prompted many educated Iraqis to flee the country in search of a safer life abroad.

Those Iraqis who continue to work at government offices face an even greater risk from an insurgent attack than their Western counterparts as they are more exposed and few have full-time protection.

“I have nothing but admiration for the resilience and moral strength of some of the Iraqis I work with,” the British consultant told The Times.

Western advisors have been helping with reconstruction in Iraq since the invasion. After ministries regained sovereignty in 2004 the consultants were kept on to implement reconstruction efforts funded by coalition governments and aid organisations.

As a result, trips to ministry offices to train staff or meet Iraqi officials are an important part of the job, despite the dangers.

Foreigners working in Iraq also have the burden of the emotional strain placed on family and friends at home.

The Western consultant said he would consider leaving if abductions became more frequent but added: “I am not going to give up yet. There have been a few occasions when I have been nervous but those are less than you might think. I wouldn’t be coming back if the risks were too high.”

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The rebuilding of Iraq is a must BUT when the rebuilding is done using Iraqi money by allied countries who destroyed Iraq in the first place then something smells really bad and to not call the employees of these private companies MERCENARIES will be unjustified. Lets get it straight - People are there for the money. If these people felt sorry for Iraq and wanted to rebuild it then they would do it for free through various humanitarian organisations. I doubt anyone would feel sorry for them if they met their end.

A lot of money has been invested in Iraq but have disappeared through administration. Most of the companies in Iraq have received favouritism to do the contractual work. Contractors have been given special immunity from prosecution that even the allied troops don't have. Oil has regularly been smuggled out of Iraq from positions guarded by these contractors - lets be honest - did we expect anything less?

Recommended reading:
Independent, UK - The security industry: Britain's private army in Iraq

Bank Of New York Accused By Russians Of Money Laundering

Taken from The times, UK, 18/05/2007
Tom Bawden in New York

Russia’s customs service said that it was suing the Bank of New York for $22.5 billion (£11.3 billion) in compensation for an alleged money-laundering scheme in which US companies colluded with Russian banks to defraud its Government.

The Federal Customs Service said that the Bank of New York, the world’s largest “custodian” of assets, played a central role in a laundering campaign in the late 1990s to help clients to avoid Russian taxes and import duties and to hide money obtained through crime.

Maxim Smal, a lawyer for the customs service, said that between 1996 and 1999 “an illegal scheme was organised to legalise monetary resources that were brought into Russia without paying taxes.

“Violations were discovered that, I think, border on the criminal and this is why we decided to file a claim in the court and seek damages.”

Russia’s suit, which will be detailed at a press conference today, stems from a previous case involving the Bank of New York, which is in the process of merging with Mellon Financial.

Lucy Edwards, a former vice-president in the bank’s Eastern European division, and her husband, Peter Berlin, pleaded guilty last year to conspiring to help to move $7 billion to small US companies from Russian banks in order to hide the money from the authorities.

The couple were sentenced to six months’ house arrest, put on probation for five years and ordered to pay a $20,000 fine and $685,000 in compensation.

Their sentencing came after the Bank of New York had admitted failing to report $7 billion in suspicious Russian transactions and agreeing a $38 million payout.

Before a press conference yesterday, Andrey Strukov, head of the customs service legal department, would only say: “The Federal Customs Service confirms the filing of the suit against the Bank of New York. [It] is filing the suit for $22.5 billion in damages inflicted against the Russian Federation.”

However, the Bank of New York questioned the merit of the Russian lawsuit, which it said it had not seen.

“We understand from press reports that a lawsuit has been filed against the company by a Russian agency described as the Federal Customs Service,” the bank said.

“While we have not seen the complaint, based on our knowledge of the facts, we believe any such suit would be totally without merit, if not frivolous, and we would expect to defend it vigorously.

“The company was previously approached by lawyers purporting to represent this agency, who claimed to be able to dispose of the matter for a tiny fraction of the amount now claimed.

“It should be noted that the events related to the lawsuit occurred more than ten years ago and were previously resolved by the company.”

Bank of New York’s $16.6 billion takeover of Mellon, first announced in December last year, brings together New York’s oldest bank, founded in 1784, with the Pittsburgh institution that bankrolled the Pennsylvanian steel industry in the 19th century.

It revives a failed attempt by Bank of New York to buy Mellon in 1998 for $23.7 billion, which foundered with a disagreement over the carve-up of senior positions. Mellon went on to sell its consumer banking division to Royal Bank of Scotland in 2001 for $2.1 billion.

The new entity will have $16.6 trillion of assets under custody for which it will carry out low-margin back-office functions, such as record-keeping and fund accounting.

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Who said there was no such thing as a "get rich quick scheme" - It has been provenly tested by many exiled Oligarchies!

Billions In Oil Missing In Iraq, U.S. Study Says

Taken from The New York Times, May 12, 2007
By JAMES GLANZ

Between 100,000 and 300,000 barrels a day of Iraq’s declared oil production over the past four years is unaccounted for and could have been siphoned off through corruption or smuggling, according to a draft American government report.

Using an average of $50 a barrel, the report said the discrepancy was valued at $5 million to $15 million daily. The report does not give a final conclusion on what happened to the missing fraction of the roughly two million barrels pumped by Iraq each day, but the findings are sure to reinforce longstanding suspicions that smugglers, insurgents and corrupt officials control significant parts of the country’s oil industry.

The report also covered alternative explanations for the billions of dollars worth of discrepancies, including the possibility that Iraq has been consistently overstating its oil production.



Iraq and the State Department, which reports the numbers, have been under relentless pressure to show tangible progress in Iraq by raising production levels, which have languished well below the United States goal of three million barrels a day. Virtually the entire economy of Iraq is dependent on oil revenues.

The draft report, expected to be released within the next week, was prepared by the United States Government Accountability Office with the help of government energy analysts, and was provided to The New York Times by a separate government office that received a review copy. The accountability office declined to provide a copy or to discuss the draft.

Paul Anderson, a spokesman for the office, said only that “we don’t discuss draft reports.” But a State Department official who works on energy issues said that there were several possible explanations for the discrepancy, including the loss of oil through sabotage of pipelines and inaccurate reporting of production in southern Iraq, where engineers may not properly account for water that is pumped along with oil in the fields there.

“It could also be theft,” the official said, with suspicion falling primarily on Shiite militias in the south. “Crude oil is not as lucrative in the region as refined products, but we’re not ruling that out either.”

Iraqi and American officials have previously said that smuggling of refined products like gasoline and kerosene is probably costing Iraq billions of dollars a year in lost revenues. The smuggling of those products is particularly feared because officials believe that a large fraction of the proceeds go to insurgent groups. Crude oil is much more difficult to smuggle because it must be shipped to refineries and turned into the more valuable refined products before it can be sold on the market.

The Shiite militia groups hold sway around the rich oil fields of southern Iraq, which dominate the country’s oil production, the State Department official said. For that reason, he said, the Shiite militias are more likely to be involved in theft there than the largely Sunni insurgents, who are believed to benefit mostly from smuggling refined products in the north.

In the south, the official said, “There is not an issue of insurgency, per se, but it could be funding Shia factions, and that could very well be true.”

“That would be a concern if they were using smuggling money to blow up American soldiers or kill Sunnis or do anything that could harm the unity of the country,” the official said.

The report by the accountability office is the most comprehensive look yet at faltering American efforts to rebuild Iraq’s oil and electricity sectors. For the analysis of Iraq’s oil production, the accountability office called upon experts at the Energy Information Administration within the United States Department of Energy, which has long experience in analyzing oil production and exports worldwide.

Erik Kreil, an oil expert at the information administration who is familiar with the analysis, said a review of industry figures around the world — exports, refinery figures and other measures — could not account for all the oil that Iraq says it is producing. The administration also took into account how much crude oil was consumed internally, to do things like fuel Iraqi power plants and refine into gasoline and other products.

When all those uses of the oil were taken into consideration, Mr. Kreil said, Iraq’s stated production figures did not add up.

“Either they’re producing less, or they’re producing what they say and the difference is completely unaccounted for in any of the places we think it should go,” Mr. Kreil said. “Either it’s overly optimistic, or it’s unaccounted for.”

Several analysts outside the government agreed that such a large discrepancy indicated that there was either a major smuggling operation in place or that Iraq was incapable to generate accurate production figures.

“That’s a staggering amount of oil to lose every month,” said Philip K. Verleger Jr., an independent economist and oil expert. “But given everything else that’s been written about Iraq, it’s not a surprise.”

Mr. Verleger added that if the oil was being smuggled out of Iraq, there would be a ready market for it, particularly in smaller refineries not controlled by large Western companies in places like China, the Caribbean and even small European countries.

The report also contains the most comprehensive assessment yet of the billions of dollars the United States and Iraq spent on rebuilding the oil and electricity infrastructure, which is falling further and further behind its performance goals.

Adding together both civilian and military financing, the report concludes that the United States has spent $5.1 billion of the $7.4 billion in American taxpayer money set aside to rebuild the Iraqi electricity and oil sectors. The United States has also spent $3.8 billion of Iraqi money on those sectors, the report says.

Despite those enormous expenditures, the performance is far short of official goals, and in some cases seems to be declining further. The average output of Iraq’s national electricity grid in 2006, for example, was 4,300 megawatts, about equal to its value before the 2003 invasion. By February of this year, the figure had fallen still further, to 3,800 megawatts, the report says.

All of those figures are far short of the longstanding American goal for Iraq: 6,000 megawatts.

Even more dispiriting for Iraqis, by February the grid provided power for an average of only 5.1 hours a day in Baghdad and 8.6 hours nationwide. Both of those figures are also down from last year.

The story is similar for the oil sector, where — even if the Iraqi numbers are correct — neither exports nor production have met American goals and have also declined since last year, the report says.

American reconstruction officials have continued to promote what they describe as successes in the rebuilding program, while saying that problems with security have prevented the program from achieving all of its goals. But federal oversight officials have frequently reported that the program has also suffered from inadequate oversight, poor contracting practices, graft, ineffective management and disastrous initial planning.

The discrepancies in the Iraqi oil figures are broadly reminiscent of the ones that turned up when some of the same energy department experts examined Iraq’s oil infrastructure in the wake of the oil-for-food scandals of the Saddam Hussein era. In a United Nations - sponsored program that was supposed to trade Iraq’s oil for food, Mr. Hussein and other smugglers were handsomely profiting from the program, investigations determined.

In reports to Congress before the 2003 invasion that ousted Mr. Hussein, the accountability office, using techniques similar to those called into play in its most recent report, determined that in early 2002, for example, 325,000 to 480,000 barrels of crude oil a day were being smuggled out of Iraq, the majority through a pipeline to Syria.

But substantial amounts also left Iraq through Jordan and Turkey, and by ship in the Persian Gulf, routes that could also be available today, said Robert Ebel, a senior adviser at the Center for Strategic and International Studies in Washington.

“Any number of adjacent countries would be glad to have it if they could make some money,” Mr. Ebel said.

Mr. Ebel said the lack of modern metering equipment, or measuring devices, at Iraq’s wellheads made it especially difficult to track smuggling there. The State Department official agreed that there were no meters at the wellheads, but said that Iraq’s Oil Ministry had signed a contract with Shell Oil to study the possibility of putting in the meters.

The official added that an American-financed project to install meters on Iraq’s main oil platform in the Persian Gulf was scheduled to be completed this month.

As sizable as a discrepancy of as much as 300,000 barrels a day would be in most parts of the world, some analysts said it could be expected in a country with such a long, ingrained history of corruption.

“It would be surprising if it was not the case,” said John Pike, director of GlobalSecurity.org, which closely follows security and economic issues in Iraq. He added, “How could the oil sector be the exception?”
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It's strange that oil stocks go missing in Iraq when they are located in some of the most guarded places in American hands. How could this be you may ask? It's not long ago that it was reported that there was a lot of corruption and mis-spening by US contractors and mercesonaries. All the blame seems to be going to everyone exepect for the US government. In the same week a plunge in American petrol stocks to a 16-year low has prompted the IEA to call on Opec to open its taps and bring more crude oil to the market before the summer. The IEA’s warning and continued disruption to Nigerian oil exports pushed the price of Brent crude up almost a dollar to $66.67. Continued strong petrol demand in America is confounding the oil market and the Paris-based agency pointed to 930,000 barrel per day (bpd) oil and product stock draw in the first quarter of this year. Overall, world demand for oil is expected to rise by 1.8 per cent in 2007, an increase of 1.5 million bpd compared with last year’s rise in demand of 0.7 million bpd. Isn't it time we looked to consume less fossil fuels by designing better engines that consume less fuel but at the same time is more efficient or we look at alternative fuels to power motor cars? We like spending monies on buying arsenal to kill each other yet saving the planet seems to be the least of our worries.

Iraq Rebuilding 'Is Failing'

Taken from Al-Jazeera News Agency, APRIL 30, 2007
By Tom Ackerman

A US audit has found many of Iraq's reconstruction projects are falling apart and oil production is still below pre-war levels.However, Washington said it was Iraq's responsibility to maintain its infrastructure.The report describes widespread waste, decay and deterioration.



Inspectors said measures to keep rebuilt infrastructure operating were not carried out by the Iraqis. Problems were found complying with international standards and construction sites did not meet safety objectives.

The report also said that electricity supply in Baghdad was down to less than seven hours a day on average, and only 15 out of 142 planned health care centres had been completed.

At Baghdad airport, it said, 10 out of 17 new generators were no longer working because they had not been maintained properly.

Corruption
The sewer system at Erbil's modernised paediatric hospital leaks, medical waste clogged drains, and a new incinerator was not being used.

And after the renovation of Iraq's civil defence headquarters, there was evidence of water damage and wiring that posed a risk of electrical fires. In its official response to the findings, the Pentagon said once the projects were transferred to Iraqis the US gave up control and authority over them.

The report also criticised the Iraqi government's efforts to combat corruption, which costs at least $5bn a year.

It found that Nuri al-Maliki, the Iraqi prime minister, had blocked 48 corruption investigations involving 102 people.