The mother of all corruption scandals

When the new Iraqi government takes office soon, it will face the daunting task of reversing decades of state-sponsored looting.

This legacy is problematic, to say the least. In particular, infrastructure development — oil, water, electricity and roadworks — have suffered at the whims of dictatorship, the scheming of the oil-for-food programme and the opaque contracts of the Coalition Provisional Authority (CPA), which doled out billions of dollars worth of construction and engineering contracts at a breakneck pace in the aftermath of the war.

It is no surprise that countries recovering from armed conflicts are among the most vulnerable to corruption. Basic institutions have been decimated and warring parties often use corruption as a means to further their goals, justifying their behaviour in the context of war.

When the dust clears, former combatants may be tapped to fill government posts. And in the case of today’s Iraq, corruption could be funding insurgents and criminal networks. Add the billions of aid dollars that come tumbling in and you have a potentially toxic brew.

The scene unfolding does not bode well. Political factions occupy opulent villas vacated by Saddam Hussein’s henchmen after the dictator’s fall. Public institutions are struggling to find out how many employees they have on their payrolls. Safeguards are still missing, and ministries and state companies lack inventory systems. When no one knows how much money is flowing in and oil flowing out of the country, it is hard to control.

In matters of contracting, the CPA hardly set a good example for the emerging sovereign state. The most appalling cases include an apparent no-bid contract for the ministry of electricity worth more than $339-million, uncovered by KPMG Bahrain in a 2004 audit, and the granting of the Orwellian-sounding “indefinite delivery, indefinite quantity” contracts, which allow the government to award an unspecified amount of future work to approved contractors.

Measures have to be taken, starting today. The government should decentralise aid and reconstruction projects where possible, shortening reporting lines and strengthening a sense of ownership. A strong and independent local media is also vital to keep a watchful eye on those in power. Competitive and transparent bidding must be ensured. There must be decent pay and supervision for any government staff involved in procurement.

If urgent steps are not taken, Iraq will not become the emblem of democracy that many of us hope for, it will become the mother of all corruption scandals. — Inter Press Service

Peter Eigen is chairperson of Transparency International, whose Global Corruption Report 2005 was released on March 16

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