COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HENRY A. WAXMAN, California, Chairman TOM LANTOS, California TOM DAVIS, Virginia EDOLPHUS TOWNS, New York DAN BURTON, Indiana PAUL E. KANJORSKI, Pennsylvania CHRISTOPHER SHAYS, Connecticut CAROLYN B. MALONEY, New York JOHN M. MCHUGH, New York ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana DANNY K. DAVIS, Illinois TODD RUSSELL PLATTS, Pennsylvania JOHN F. TIERNEY, Massachusetts CHRIS CANNON, Utah WM. LACY CLAY, Missouri JOHN J. DUNCAN, JR., Tennessee DIANE E. WATSON, California MICHAEL R. TURNER, Ohio STEPHEN F. LYNCH, Massachusetts DARRELL E. ISSA, California BRIAN HIGGINS, New York KENNY MARCHANT, Texas JOHN A. YARMUTH, Kentucky LYNN A. WESTMORELAND, Georgia BRUCE L. BRALEY, Iowa PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of VIRGINIA FOXX, North Carolina Columbia BRIAN P. BILBRAY, California BETTY McCOLLUM, Minnesota BILL SALI, Idaho JIM COOPER, Tennessee JIM JORDAN, Ohio CHRIS VAN HOLLEN, Maryland PAUL W. HODES, New Hampshire CHRISTOPHER S. MURPHY, Connecticut JOHN P. SARBANES, Maryland PETER WELCH, Vermont PHIL SCHILIRO, Chief of Staff PHIL BARNETT, Staff Director EARLEY GREEN, Chief Clerk DAVID MARIN, Minority Staff Director (II) Most of our attention has been focused on military questions. Is the surge working? Can we reduce the number of troops? Should we set a redeployment date? These are all important questions, but they aren't the only ones that matter. As General Petraeus has observed, “There is not a military solution to a problem like Iraq.” Political reconciliation is the key to achieving lasting peace in Iraq, and one of the keys to political reconciliation is combating corruption. That is why we are holding today's hearing. An honest assessment of corruption in Iraq will provide insight into whether political progress is possible. We are very fortunate that David Walker, the Comptroller Gen- eral of the Government Accountability Office, and Stuart Bowen, e Special Inspector General for Iraq Reconstruction, will share their expertise with us this morning. I want to give special thanks to Judge Radhi Hamza al-Radhi for agreeing to testify. Judge Radhi was the commissioner of Iraq's Commission on Public Integrity. He was appointed to this post by Ambassador Bremer, and his job was to identify and prosecute cor- ruption in Iraq. Judge Radhi knows too well the horrors of life under Saddam Hussein. He was one of Saddam's torture victims, and he never hesitated when our government asked him to take job leading the fight against corruption in Iraq. Christopher Griffith, the Senior Advisor to the U.S. Office of Ac- countability and Transparency, told our committee that Judge Radhi is “the most honest government of Iraq official that I have met in my 21 months in this country.” Another senior Embassy official told us that Judge Radhi has a reputation as "courageous, honest and effective." From everything I can tell, Judge Radhi did exactly what we asked the Iraqis to do. He stood up for freedom, he stood for democ- racy, and he stood up for honest government. Now he finds himself without a country. Judge Radhi is under attack by the Maliki government and he and his family are the tar- gets of serious and persistent death threats. Thirty-one of Judge Radhi's employees and 12 of their family members have been as- sassinated. He can't return to Iraq, and he is seeking asylum in the United States. Judge Radhi will tell us there is an epidemic of corruption in Iraq. While he served as the head of the Commission on Public In- tegrity, he opened 3,000 corruption cases. He found extensive cor- ruption throughout the government, especially in the Ministries of Defense, Interior and Oil. In all, his efforts identified $18 billion, a staggering sum, lost to corruption. Judge Radhi will tell us that corruption is undermining political reconciliation, turning ordinary Iraqis against the government and fueling the insurgency. The Maliki government is our ally in Iraq, but we need to ask: is the Maliki government too corrupt to succeed? If the Maliki gov- ernment is corrupt, we need to ask whether we could in, good con- science, continue to sacrifice our blood and tax dollars to prop his regime. PENYA WAKAT, CALIFORNIA, CHAMAN TON LANTOS, CALIFORUM EDOUMUS TOMS, NEW YORK PAULE, KUOROK, PENNSYLVANIA CAROLYN . MALONEY, NEW YORK ELUNTE CUNONGS, MATIYLAND DENNIS J. VACINACH. CHUO DAWY K DAMS, UNONS JOHN TERREY, MASSACHUSETTS W. LACY CLAY, MISSOURI OWNEL WATION, CAUPONU STEPHEN F. LIICH MUSSACHUSETTS JOHA YA MT. CE MICHY BRUCEL IMLEY,lon ELEANOR HOUNES NORTON, DISTRICT OF COLOM BETTY MOTOUUM, NESOTA MOOVER CHRIS VAN MOULEN, MIND PALL W HOOR NEW IRE CHRISTOME MUARWY, CONNECTICUT JOHN. SANONNE, WATANO PETER WELCK, VERMONT ONE HUNDRED TENTH CONGRESS Congress of the United States House of Representatives COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 2157 RAYBURN HOUSE OFFICE BUILDING WASHINGTON, DC 20515-6143 Mon prema001 Frems Naturament no 2 6074 www.oversighthouse pou MAMA RAHANG MINORITY MENSEN DAN BURTON, NOWN CHRISTOPHER SHARE, CONNECTIOUT JOHN M. MCHUGM, NEW YORK JOHN L MCA FLORA M KE SOLDER, INOW FOOD AUSSELL PAITS, PENNSYLVMM CHRIS CORANON, UTAN JONN J. OUNCAN, R, TEGNESSEE MICHELA TURNIER, OHO DREU E CALIFORNIA KENNY MAACHWNT, FDUS LMWA WESTMORELANO, GEORGIA PATAICK 7. MCHTENRY. NORTH CAROUN VINGRIA POBOL NORTH CAROLINA MUN P. BURAY, CALIFORNIA BUL SALJ, DANO JM JORDAN, ONO MEMORANDUM October 4, 2007 To: Members of the Committee on Oversight and Government Reform Fr: Majority Staff, Committee on Oversight and Government Reform Re: Additional Loformation on Iraqi Corruption and U.S. Efforts Today the Committee is holding a hearing on “Assessing the State of Iraqi Corruption." The hearing will focus on two primary issues: (1) the extent of corruption within the Iraqi government and (2) the effectiveness of U.S. efforts to assist the Iraqis in combating corruption. In preparation for the hearing, the Committee staff conducted transcribed interviews with cight current and former U.S. Embassy officials with responsibility for anticorruption efforts in Iraq. This memorandum summarizes what these officials told the Committee. SUMMARY According to President Bush, combating corruption in Iraq is a comerstone of U.S. policy. In 2005, President Bush stated: “Corruption is a problem at both the national and local levels of the Iraqi government. We will not tolerate fraud - So our embassy in Baghdad is helping to demand transparency and accountability for the money being invested in reconstruction. ... (The Iraqi people expect money to be spent openly and honestly — and so do the American people.” He reiterated this commitment in 2006, stating: “We'll help Iraqi leaders combat corruption ... so Iraqis can build a transparent, accountable government." The State Department has created two entities to lead the U.S. anti-corruption efforts in Iraq: an Office on Accountability and Transparency (OAT), which acts as the primary liaison to Irag's Commission on Public Integrity and other anti-corruption bodies, and an Anticorruption Working Group, which is supposed to coordinate U.S. anticomuption efforts. The Embassy officials that the Committee interviewed worked for or supervised OAT or participated in the work of the Anticorruption Working Group. The officials the Committee interviewed describe a multitude of problems that have impeded the anticorruption efforts of both OAT and the Anticorruption Working Group. These, include the absence of a coordinated anticorruption strategy, vacancies and high turnover in key positions, poor attendance at meetings, and lack of regular work product. The internal dissention is so severe that OAT is no longer participating in the meetings of the Anticorruption Working Group, a situation that the Executive Secretary of the Working Group calls “very disturbing." Excerpts from the interviews illustrate the dysfunction and disarray that appear to be frustrating U.S. anticorruption efforts: When Judge Arthur Brennan, the former Director of OAT, was asked if he was “aware of any coordinated US strategy to fight corruption in Iraq,” he responded: "No.".. James Santelle, who supervises the activities of OAT as the Rule of Law Coordinator for the Embassy, told the Committee: "you have got a system where the coordination is lacking." Michael Richards, the Executive Secretary of the Anticorruption Working Group, described the meetings of the working group as follows: "to be completely embarrassingly honest with you, a lot of these meetings don't have a lot of people in them, so there's not a lot of conversation going on.” When he was asked whether the Anticorruption Working Group prepares work products such as regular memos or reports, he stated: “I would like to be able to say that we've done quite a bit in this area, but.. unfortunately, we have not." The Committee staff asked the State Department officials their views about the extent of corruption in Iraq and its impact on the U.S. mission in Iraq. The State Department instructed these officials not to answer these questions. The position of the State Department is that any discussion about corruption in Iraq - including even "[b]road statements/assessments that judge or characterize the quality of Iraqi governance" - must occur in a classified setting and be withheld from the public. 1. BACKGROUND President Bush has stated that anticorruption efforts are a key component of U.S. Policy in Iraq. In December 2005, the President said: Corruption is a problem at both the national and local levels of the Iraqi government. We will not tolerate fraud - So our embassy in Baghdad is helping to demand transparency and accountability for the money being invested in reconstruction. We've helped the Iraqi people establish institutions like a Commission on Public Integrity and a stronger Supreme Board of Audit to improve oversight of the rebuilding process. Listen, the Iraqi people expect money to be spent openly and honestly --- and so do the American people.' In January 2006, the President said: America and our coalition partners will stand with the Iraqi people during this period of transition. We will continue helping Iraqis build an impartial system of justice, so they can replace the rule of fear with the rule of law. We'll help Iraqi leaders combat corruption by strengthening Iraq's Commission on Public Integrity - so Iraqis can build a transparent, accountable government. And we will help Iraq's new leaders earn the confidence of their citizens, by helping them build effective government ministries, The critical task of promoting integrity in the Iraqi ministries has been assigned to the Department of State, which has established two primary entities to lead U.S. anticorruption efforts. One of these entities is the Office of Accountability and Transparency (OAT), which was established in December 2006 to provide full-time guidance to the three primary anticorruption institutions in Iraq: the Iraqi Commission on Public Integrity, the Iraqi Board of Supreme Audit, and Iraqi Inspectors General. OAT was created in response to a July 2006 report of the Special Inspector General for Iraq Reconstruction, which stated: “Currently, there is no single office that has the authority or responsibility for oversight and to ensure all anticorruption efforts are focused on a common goal or that efforts are being performed in the most efficient manner."Organizationally, OAT is under the supervision of the Rule of Law Coordinator in the U.S. Embassy in Iraq. The other primary anticorruption entity is the Anticorruption Working Group, an interagency task force that is supposed to coordinate U.S. efforts. Members of the Anticorruption Working Group include, or have included, all of the following State Department offices with anticorruption responsibilities: Economic Affairs, Political Affairs, Political- Military Affairs, Public Affairs, Foreign Commercial Service, Rule of Law, Iraq Transition Assistance Office, USAID, and Bureau of International Narcotics and Law Enforcement Affairs. The Anticorruption Working Group also includes members from other agencies, including the Department of Justice Attaché, Department of Treasury Attaché, Multi-National Force-Iraq Offices of Inspector General and Strategic Effects, and Multi-National Security Transition Command-Iraq. The British government and nongovernmental organizations have also participated in Anticorruption Working Group meetings. President George W. Bush, President Discusses War on Terror and Rebuilding Iraq (Dec. 7, 2005). 2 President George W. Bush, President Addresses Veterans of Foreign Wars on the War on Terror (Jan. 10, 2006). Special Inspector General for Iraq Reconstruction, Joint Survey of the U.S. Embassy- Iraq's Anticorruption Program (Report No. SIGIR-06-021) (July 28, 2006). . 10 To assess the extent of corruption in Iraq and the effectiveness of the U.S. response, the Committee staff conducted transcribed interviews with eight Embassy officials involved in OAT or the Anticorruption Working Group. These eight officials are: Ambassador Charles Ries, Economics Minister and Coordinator for Economic Transition in Iraq Michael Richards, Labor Attaché, Economics Affairs Section, and Executive Secretary of the Anticorruption Working Group James Santelle, Rule of Law Coordinator Scott Winne, former Acting Rule of Law Coordinator Judge Arthur Brennan, former Director, Office of Accountability and Transparency Vincent Foulk, Senior Consultant, Office of Accountability and Transparency Christopher Griffith, Senior Advisor, Office of Accountability and Transparency James Mattil, Chief of Staff, Office of Accountability and Transparency This memorandum summarizes key points that emerged from the interviews with these officials. II. LACK OF COORDINATION Judge Arthur Brennan, who served as the director of the Office of Accountability and Transparency for part of 2007, was asked whether there was an overall U.S. strategy for : combating Iraqi corruption: awar During the time you were there, were you aware of any coordinated US strategy to fight corruption in Iraq? A. No.4 Judge Brennan also said: "I think Ambassador Crocker was serious about going forward on this, but I don't think everybody is serious about it, and if they are serious, then somebody else should have been doing their job." * House Committee on Oversight and Government Reform, Interview of Arthur Brennan, 11 (Sept. 24, 2007) sid. at 46. James Santelle, the Rule of Law Coordinator, supervises the activities of OAT. He said that a lack of coordination was caused by multiple bureaucratic “stove-pipes": (We did over time develop what are called stove-piped institutions. And many of them are on that [Embassy organization) chart, and they all were legitimately put in place to address this problem as it was perceived and to identify this need to develop some training here and develop some outreach here and do all these good, important things. And all of a sudden we wake up one moming and we realize we have got all these institutions and maybe there is some overlap and there is not coordination. And through nobody's intentional, purposeful, you know, malfeasance, misfeasance, nonfeasance, as I have said before, you have got a system where the coordination is lacking. And at some point you step up and you say we need now to coordinate that. MI. TURNOVER AND STAFFING PROBLEMS Since OAT was established last year, it has had at least three directors, and perhaps more. State Department official Boots Poliquin was acting director from January to June. In June, Judge Brennan became the permanent director of OAT, but he was forced to leave for unrelated family reasons in July. On September 17, 2007, the Committee staff were informed that Suneeta Sahgal took over as acting director in August. Until her appointment, she had served as a paralegal who performed primarily administrative tasks." On October 3, 2007, Committee staff were informed that funding for Ms. Sahgal's position has now been eliminated." The Anticorruption Working Group has also lacked leadership over the past year. The coordinator of the working group left in December 2006 and was not replaced until June 2007." Michael Richards, the Executive Secretary of the Working Group, told Committee staff that the Anticorruption Working Group did not meet in the interim."? House Committee on Oversight and Government Reform, Interview of James Santelle, 121-22 (Sept. 26, 2007). 'ld. at 18; Office of the Special Inspector General for Iraq Reconstruction, Status of U.S. Government Anticorruption Efforts in Iraq (Report No. SIGIR-07-007) (July 24, 2007). 8 House Committee on Oversight and Government Reform, Interview of Arthur Brennan, 56 (Sept. 24, 2007). House Committee on Oversight and Government Reform, Interview of James Santelle, 20 (Sept. 26, 2007). House Committee on Oversight and Government Reform, Interview of Scott Winne (Oct. 3, 2007). "House Committee on Oversight and Government Reform, Interview of Michael Richards, 18 (Oct. 2, 2007). 12 Ich Inadequate staffing has also hampered the activities of the Rule of Law Coordinator, which oversees OAT. Mr. Santelle, the Rule of Law Coordinator, told the Committee: I wrote a memo back in February 1 saying, in order to do this accurately and effectively, I need 14 people. I need a budget person, I need a personnel person, I need a manager, I need people in all these different units to do this well. I don't have that. Next week I lose my deputy. 2 weeks after that I lose my next attorney. And I've just got no staff. That's too far. I have very few staff to manage this overall operation." IV. LACK OF ATTENDANCE AND WORK PRODUCT According to Mr. Richards, meetings of the Anticorruption Working Group are poorly attended. He told the Committee: (A) lot of what we talked about is how difficult it is to get things accomplished. ... But you know, to be completely embarrassingly honest with you, a lot of these meetings don't have a lot of people in them, so there's not a lot of conversation going on.' Mr. Richards also told the Committee that the Working Group produces little in the way of work product: Q: In terms of the work products of the Anticorruption Working Group, do you prepare regular memos, regular reports, regular documents? Do you have a regular work product that you provide to your superiors? A: I would like to be able to say that we've done quite a bit in this area, but unfortunately, we have not." Earlier this year, Mr. Santelle directed that OAT should cease participating in working group meetings: We've heard that OAT no longer is participating in [the Anti-Corruption Working Group). And I believe it was at your direction. A: Mm-hmm. 13 House Committee on Oversight and Government Reform, Interview of James Santelle, 103 (Sept. 26, 2007). 14 House Committee on Oversight and Government Reform, Interview of Michael Richards, 48 (Oct. 2, 2007). 15 Id. at 14. 11 Broad statements/assessments which judge or characterize the quality of Iraqi governance or the ability/determination of the Iraqi government to deal with corruption, including allegations that investigations were thwarted/stifled for political reasons; Statements/allegations concerning actions by specific individuals, such as the Prime Minister or other GOI officials, or regarding investigations of such officials.".... The interview with Vincent Foulk, a senior consultant in OAT, illustrates the unusual breadth of these restrictions. The Committee staff asked Mr. Foulk whether “Prime Minister Maliki or his associates obstructed any anticorruption investigations in Iraq to protect his political allies.” Mr. Foulk responded: “I cannot answer that over an open forum."20 The Committee staff asked: "do you believe that the Government of Iraq currently has the political will or the capability to root out corruption within its government?” Mr. Foulk responded: “That would require that I violate the guidelines given to me by the State Department.9:21 Mr. Foulk also would not answer: "what effect does corruption play on the ability of the Iraqi Government ... to suppress the armed insurgency?r?l2 what effect does corruption have on the progress the Iraqi Government has made or is able to make toward political reconciliation?"123 or "[d]o you agree that there is a large-scale corruption problem pervading the Government of Iraq?»:24 At one point, the Committee staff read Mr. Foulk a public statement Secretary of State Condoleezza Rice made in October 2006 praising Iraqi Prime Minister Maliki's efforts in "rooting out potential corruption" in the Interior Ministry and asked, “Do you agree with the Secretary's broad characterizations of the Interior Ministry?” Mr. Foulk answered: “I cannot discuss this in an open forum.º225 "E-Mail from Joel E. Starr, Deputy Assistant Secretary of State for Legislative Affairs, to Staff, House Committee on Oversight and Government Reform (Sept. 24, 2007). 20 House Committee on Oversight and Government Reform, Interview of Vincent Foulk, 27 (Sept. 25, 2007). 21 Id. at 34. Id. 23 Id. at 35. 24 Id. at 54, 25 Id. at 32. 13 Chairman WAXMAN. Sometimes this committee breaks down along party lines during hearings, and I hope that won't be the case today. Whether one supports or opposes the President's policy, we can't ignore the reality of corruption in Iraq, and we can't ig- nore the reality that corruption is undermining the political progress our troops are fighting and dying for. If we are going to invest more lives and billions more dollars in Iraq, we need to know whether there is a political will in Iraq to succeed. That is why today's hearing is so essential. I want to recognize the ranking member, Tom Davis, for his opening statement.. [The prepared statement of Chairman Henry A. Waxman fol- lows:] 14 Opening Statement of Rep. Henry A. Waxman Chairman, Committee on Oversight and Government Reform Hearing on Assessing the State of Iraqi Corruption October 4, 2007 Today's hearing is one of the most important that we will have this year. President Bush has made Iraq our nation's top foreign policy priority. We all know that has meant extraordinary sacrifices for our troops and their families. Over 3,800 of our soldiers have made the ultimate sacrifice in Iraq and another 28,000 have been wounded. And we have already spent over $450 billion on the war, with hundreds of billions more still to come. The Iraq war is the number one issue in all our congressional districts and the issue we have spent the most time debating here in Congress. Most of our attention has been focused on military questions. Is the surge working? Can we reduce the number of troops? Should we set a redeployment date? 18 The Maliki government is our ally in Iraq. But we need to ask: Is the Maliki government too corrupt to succeed? And if the Maliki government is corrupt, we need to ask whether we can in good conscience continue to sacrifice our blood and tax dollars to prop up his regime. These are important questions, but they are questions that Secretary Rice and the State Department do not want us to raise. For last several weeks, the Committee staff have been interviewing the State Department officials in charge of .. anticorruption efforts in Iraq. What we have learned is that these efforts appear to be in a state of complete disarray. The Committee's investigation has revealed that the anticorruption efforts are dysfunctional, underfunded, and a low priority. The officials we interviewed told us -- on the record – that the State Department has no coordinated strategy for fighting corruption. At key meetings of the Embassy's Anticorruption Working Group, almost no one shows up. One 19 official told us: “I would like to be able to say that we've done quite a bit in this area, but unfortunately, we have not.” Another official, Judge Arthur Brennan, the former Director of the Office of Accountability and Transparency at the U.S. Embassy in Baghdad, said: “I think Ambassador Crocker was serious about going forward on this, but I don't think everybody is serious about it, and if they are serious about it, then somebody else should have been doing their job.” Incredibly, Secretary Rice directed these officials not to answer any questions about the extent of corruption in Iraq and its effect on political reconciliation and the insurgency. Her position is that all information that reflects poorly on the Maliki government is classified. At one point, my staff asked an official whether he agreed with a public statement of Secretary Rice praising the anticorruption efforts of the Iraqi Interior Ministry. The official told us: “I cannot discuss this in an open forum." If we are going to invest more lives and billions more dollars in Iraq, we need to know whether there is the political will in Iraq to succeed. That's why today's hearing is so essential. 22 ma Mr. DAVIS OF VIRGINIA. Thank you, Mr. Chairman. It is a sovereign responsibility of every democratic government to root out and prosecute official corruption. Sustaining the trust and confidence of the governed requires proactive visible programs to deter and punish those who would plunder the public resources for private gain. We need to be vigilant about fighting corruption here at home as the chairman often reminds us, and we should help emerging de- mocracies build their capacity to combat for pervasive deep-rooted malfeasance. This hearing an important and timely opportunity to assess U.S. Government efforts to nurture anti-corruption capabilities in the fledgling government of Iraq, but I have some concerns about the ted intention to investigate the status of Iraqi corrup- tion and the functioning of Iraqi government ministries. Good government and, small d, democrats in Iraq don't need to be lectured by this committee on the extent of corruption in their country. They need our help in building the structures, policies and processes to fight it, and we can't afford to be naive or wear cul- tural blinders when looking at ways to address a longstanding, deeply ingrained problem. We didn't bring corruption to Iraq, and it won't stop when we leave. Saddam Hussein's looting of the United Nations Oil for Food Program was emblematic of the leaky economic systems and cor- rupt habits the current government inherited. Coalition Provision Authority Order 55, establishing the Iraqi Commission on Public Integrity, acknowledged the battle against corruption is a long term struggle that requires lasting commit- ment to change behavior at all levels of government. Today, despite creation of national enforcement systems in Iraq and U.S. Embassy programs to mentor inspectors and judges, it seem ment has yet to materialize either in their government or ours. According to the same CPA order, anti-corruption programs in Iraq have long been viewed as arbitrary and intermittent. Appar- tly, they still are. The former head of Iraq's main anti-corruption investigatory body, Judge Radhi, joins us this morning to describe the many challenges he faced trying to investigate corruption claims in a society splintered by sectarian violence and political score-settling. Our efforts so far don't appear to have helped much. A very co- gent Embassy-consolidated anti-corruption strategy was put to- gether but just a year ago. It looks good on paper, but like other capacity-building programs in Iraq our anti-corruption assistance has suffered from missed deadlines, shifting priorities, structural instability and lack of strong leadership. In fact, evidence of that organization disarray triggered this hearing. A draft statistical report commissioned by the U.S. Em- bass fice of Accountability and Transparency on corruption in- vestigations by Iraqi agencies was embellished with hearsay and anecdotes about blocked cases and official favoritism. Before being vetted or finalized, it was leaked to the media. The State Department then turned light comedy into high farce by classifying the report which was already on the internet because it 23 said things everyone had already heard about lax anti-corruption enforcement in Iraq. But there are serious questions we need to address today. What should we do to help the Iraqis fight corruption, mindful that they are a sovereign nation? What can we do, given the current security environment, and what will we do to implement an effective strat- egy to help the Iraqis help themselves? The answers matter, not just to accountants and lawyers, but to all Iraqis and every American there. Funds stolen from the people of Iraq sap the growth of civil society and fuel lawlessness and vio- lence. Finally, there is no avoiding the unmistakable subtext of this hearing, the premise that a corrupt Iraqi government doesn't merit further American sacrifice or life or treasure. By that measure, some would have the United States cede our sovereignty to groups like Transparency International and disavow anyone too far down their annual list of corrupt states, but that is far too narrow a view of how the most powerful Nation on Earth determines who to befriend and where to pursue our interests. As one political veteran observed, having discovered an illness, it is not terribly useful to prescribe death as a cure. We can help the Iraqis treat the disease of official corruption without killing their chance to stand as an independent sovereign nation. Let me thank you, Mr. Chairman, for agreeing to our request to invite Ms. Claudia Rosett to testify. We are disappointed that she is not in the first panel, and we have to go to a third panel to hear her. All our witnesses today bring important information to this dis- cussion, and their unique perspectives will add depth and context to our oversight. Thank you. [The prepared statement of Hon. Tom Davis follows:] 24 TOM DAVIS, VIRGINIA HENRY A WAXMAN, CALIFORNIA CHAIRMAN RANKING HINOPTY MEMBER ONE HUNDRED TENTH CONGRESS Congress of the United States House of Representatives COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 2157 RAYBURN HOUSE OFFICE BUIH DING WASHINGTON, DC 20515-6143 Maority 7021 224-5001 Menonry 12221 225-5014 Statement of Rep. Tom Davis Ranking Republican Member Committee on Oversight and Government Reform October 4, 2007 It is the sovereign responsibility of every democratic government to root out and prosecute official corruption. Sustaining the trust and confidence of the governed requires proactive, visible programs to deter and punish those who would plunder public resources for private gain. We need to be vigilant about fighting corruption here at home, as the Chairman often reminds us. And we should help emerging democracies build their capacity to combat pervasive, deeply-rooted malfeasance. So this hearing offers an important and timely . . opportunity to assess U.S. government efforts to nurture anti-corruption capabilities in the fledgling government of Iraq. But I have some concerns about the Majority's stated intention to investigate the status of Iraqi corruption" and the functioning of Iraqi government ministries. We're not the Committee on Oversight and Iraqi Government Reform. We have more than enough to do keeping tabs on our own agencies and programs. The sovereign government of Iraq decides how to spend its own money and how to fight corruption. Good government (small “d”) democrats in Iraq don't need to be lectured by this committee on the extent of corruption in their country. They need our help building the structures, policies and processes to fight it. Nor can we afford to be naïve or wear cultural blinders when looking at ways to address a longstanding, deeply-ingrained problem. We didn't bring corruption to Iraq, and it won't stop when we leave. Saddam Hussein's looting of the United National Oil for Food Program was emblematic of the leaky economic systems and corrupt habits the current government inherited. Coalition Provision Authority Order 55, establishing the Iraq Commission on Public Integrity (CPI), acknowledged "the battle against corruption is a long- term struggle that requires lasting commitment to change behavior at all levels of government.” Today, despite creation of national enforcement systems in Iraq and U.S. embassy programs to mentor inspectors and judges, it seems that commitment has yet to materialize, either in their government or ours. According to the same CPA Order, anti-corruption programs in Iraq had long been viewed as “arbitrary and intermittent.” Apparently, they still are. The former head of Iraq's main anti-corruption investigatory body, Judge Rahdi, joins us this morning to describe the many challenges he faced trying to investigate corruption claims in a society splintered by sectarian violence and political score-settling. Page 1 of 2 26 Chairman WAXMAN. Thank you, Mr. Davis. For our first panel, we have Judge Radhi Hamza al-Radhi, former head of the Iraqi Commission on Public Integrity. Mr. MICA. Mr. Chairman. Chairman WAXMAN. Yes. Does the gentleman seek recognition? Mr. MICA. Point of order, I would ask regular order so that Mem- bers be allowed to present opening statements. I did have one if I could be allowed. Chairman WAXMAN. Well, I am sorry the rules do not require that Members give opening statements. The practice of this com- mittee under Chairmen Burton and Davis was not to give the right Members to offer opening statements, so we will proceed under the rules. Judge Radhi Hamza al-Radhi, former head of the Iraqi Commis- sion on Public Integrity, Mr. David Walker, Comptroller General of the United States, and Mr. Stuart Bowen, Special Inspector Gen- eral for Iraq Reconstruction, we are pleased to welcome all of you to our committee today. The practice of this committee is to take all testimony under oath. So if you would please rise and raise your hands. I would like to administer the oath to you. [Witnesses sworn.] Chairman WAXMAN. The record will reflect the fact that each of the witnesses answered in the affirmative. Mr. DAVIS OF VIRGINIA. Mr. Chairman, could we have the trans- lator identified for the record please? Chairman WAXMAN. Yes. Could the translator identify herself? Ms. BEHRENS. Nina K. Behrens, the Department Interpreter. Chairman WAXMAN. Thank you very much. I would like to suggest that when we get to questions, because we do have a translator, that each Member be given 7 minutes be- cause it will take time for translation. Mr. DAVIS OF VIRGINIA. Mr. Chairman, I would just insist on reg- ular order. We had asked that our witness be put in the first panel which would have expedited and, I think, allowed for that, but since we are not going to get to our witness until the third panel, we want to move things along. Chairman WAXMAN. OK, then we will go to 5 minute intervals. We did accommodate the minority at their request for the witness, but apparently not exactly where they would like to have her. We would like to hear from each of you, starting with General Walker if we might. STATEMENTS OF DAVID WALKER, COMPTROLLER GENERAL OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABIL- ITY OFFICE; JUDGE RADHI HAMZA AL-RADHI, COMMIS- SIONER OF PUBLIC INTEGRITY IN IRAQ; AND STUART BOWEN, SPECIAL INSPECTOR GENERAL FOR IRAQ RECON- STRUCTION STATEMENT OF DAVID WALKER Mr. WALKER. Thank you, Chairman Waxman, Mr. Davis. Pleas- ure to be back before the House Oversight and Government Reform Committee. 27 I am pleased to be here today to discuss the GAO report that we issued today on U.S. Efforts to Build the Capacity of Iraqi Min- istries. It is my understanding it has been provided to this commit- tee. The development of competent and loyal government ministries in Iraq is critical to stabilizing that country. Iraq's 34 ministries are responsible for ensuring security through the armed forces and police and providing essential government services such as elec- tricity, water and health care. The ministries are Iraq's largest em- ployer with an estimated 2.2 million government workers. U.S. efforts to build the capacity of Iraqi ministries include pro- grams to advise and help Iraqi government employees to develop the skills to plan programs, execute budgets, and deliver effective services. In 2005 and 2006, the United States provided $169 million for programs to help build the capacity of key civilian and security ministries. The administration received an additional $140 million fiscal year 2007 and requested $255 million for fiscal year 2008. In doing this report, we traveled to the region including Bagh- dad, interviewed officials from U.S. Government and other inter- national organizations and collected other information that was available for us to review. In summary, we found the following: U.S. efforts to help the ca- pacity of the Iraqi national government have been characterized by, first, multiple U.S. agencies leading efforts without overarching di- rection from a lead agency or a strategic plan that integrates these various efforts and, second, shifting timeframes and priorities in re- sponse to varying and sometimes deteriorating conditions in Iraq. U.S. efforts to develop Iraqi ministerial capacity face four key challenges that pose risk to their success and long term sustain- ability. These include significant shortages of Iraqi ministry em- ployees with the necessary skills and knowledge to conduct key tasks, sectarian influence over the militia infiltration of some min- istries, corruption within the ministries and poor security condi- tions that endanger employees and cause skilled workers to leave the country. The U.S. Government is beginning to develop an overall strategy for ministerial capacity development although agencies have been implementing separate programs since 2003. GAO's work in this area shows that the overall strategy for ca- pacity development should include, first, a clear purpose, scope and methodology; second, a delineation of U.S. roles and responsibilities in coordination with other donors including the United Nations; third, clear goals and objectives linked to Iraqi priorities; and, fourth, performance measures and milestones; and last, fifth, the costs, resources needed and assessment of program risk. Individual U.S. capacity development efforts have included some but not all of these components. All are necessary for sustainable success. We, therefore, have recommended to the State Department that it, in conjunction with the Iraqi government, complete an overall strategic and integrated strategy for U.S. capacity development ef- forts. Congress, we believe, should also consider conditioning future appropriations on the completion of such a strategy. 31 Mr. Chairman and Members of the Committee: I am pleased to be here today to discuss our report issued today on U.S. efforts to build the capacity of Iraqi ministries. The development of competent and loyal government ministries is critical to stabilizing and rebuilding Iraq. Iraq's 34 ministries are responsible for ensuring security through the armed forces and police and providing essential government services, such as electricity, water, and health care. The ministries are Iraq's largest employer, with an estimated 2.2 million government workers. U.S. efforts to build the capacity of Iraqi ministries include programs to advise and help Iraqi government employees develop the skills to plan programs, execute budgets, and effectively deliver services. In 2005 and 2006, the United States provided $169 million for programs to help build the capacity of key civilian and security ministries. The administration received an additional $140 million in fiscal year 2007 and requested $255 million for fiscal year 2008. My testimony today discusses (1) the nature and extent of U.S. efforts to develop the capacity of Iraqi ministries, (2) the key challenges to these efforts, and (3) the extent to which the U.S. goverment has an overall integrated strategy. This statement is based on the report we issued today.' To accomplish our report objectives, we reviewed and analyzed U.S., Iraqi, donor government, United Nations (UN), and World Bank reports and data. We conducted fieldwork in Washington, D.C.; New York City, Baghdad, Iraq; and Amman, Jordan. At these locations, we met with officials and contractors working for the Departments of State (State), Defense (DOD), Treasury, Justice, the U.S. Agency for International Development (USAID), the United Nations (UN), the World Bank, European Union, and the Iraqi government. We conducted our review in accordance with generally accepted government auditing standards. . . 'GAO-08-117, Stabilizing and Rebuilding Iraq: U.S. Ministry Capacity Development Efforts Need an Overall Integrated Strategy to Guide Efforts and Manage Risk (Washington, D.C.: Sept. 2007). Page 1 : GAO-08-124T 34 As of May 2007, six U.S. agencies were implementing about 53 projects at individual ministries and other national Iraqi agencies. State, USAID, and DOD lead the largest number of programs and provide about 384 U.S. military, government, and contractor personnel to work with the ministries. DOD provides over half (215) of the personnel to the Ministries of Defense and Interior to advise Iraqi staff in developing plans and policies, building ministry budgets, and managing personnel and logistics. State and USAID together provide an additional 169 advisors to the 10 key civilian ministries. Although State, USAID, and DOD have improved the coordination of their capacity-building efforts since early 2007, there is no lead agency or strategic plan to provide overarching guidance. Two factors explain the lack of a lead agency. First, from their inception in 2003, U.S. ministry capacity-building efforts evolved without an overall plan or the designation of a lead entity. U.S. agencies provided distinct assistance to four successive governments in response to Iraq's immediate needs, according to U.S. officials. This approach first began under the Coalition Provisional Authority whereby U.S. advisors ran the ministries using U.S. and Iraqi funds and made personnel and budget decisions. Attempts to create an overall capacity development plan were dropped in late 2003 after the United States decided to transfer control of the ministries to an interim government. A second factor has been the delay in implementing recommendations from a 2005 State assessment that characterized U.S. capacity development programs as uncoordinated, fragmented, duplicative and disorganized. State recommended a unified effort among State, DOD, and USAID, with the latter providing overall coordination and leadership. The recommendations were not implemented. However, in July 2007, State named an ambassador to direct civilian capacity-building programs, including USAID efforts. Shifting priorities also have affected U.S. capacity development efforts, particularly in response to continued security problems. In early 2007, the U.S. mission refocused its capacity development program as part of the surge strategy associated with the administration's New Way Forward. "The four governments are the Coalition Provisional Authority (April 2003 to June 2004); the interim government (June 2004 10 May 2005); the transitional goverment (May 2005 to May 2006); and the permanent government (May 2006 to the present). Page 4 GAO-08-124T 36 Second, Iraq's government confronts significant challenges in staffing a nonpartisan civil service and addressing militia infiltration of key ministries. In June 2007, DOD reported that militias influenced every component of the Ministry of Interior. In particular, the Ministry has been infiltrated by members of the Supreme Islamic Council of Iraq and its Badr Organization, as well as Muqtada al-Sadr's Mahdi Army.' Furthermore, the Iraqi civil service remained hampered by staff whose political and sectarian loyalties jeopardized the civilian ministries' abilities to provide basic services and build credibility among Iraqi citizens, according to U.S. government reports and international assessments.* DOD further found that government ministries and budgets were sources of power for political parties, and staff ministry positions were rewarded to party cronies. The use of patronage hindered capacity development because it led to instability in the civil service as many staff were replaced whenever the government changed or a new minister was named, according to U.S. officials. Third, according to State, widespread corruption undermines efforts to develop the government's capacity by robbing it of needed resources, some of which are used to fund the insurgency; by eroding popular faith in democratic institutions seen to be run by corrupt political elites; and by spurring capital flight and reducing economic growth. According to a State assessment, one-third of the 12 civilian ministries surveyed had problems with "ghost employees" (that is, nonexistent staff listed on the payroll). In addition, the procedures to counter corruption adopted at all but one of the civilian ministries surveyed were partly effective or ineffective. Similar problems existed in the security ministries, according to DOD." Finally, the security situation remains a major obstacle to developing capacity in areas vital to the government's success. The high level of "This organization changed its name from Supreme Council for Islamic Revolution in Iraq in May 2007 DOD, Measuring Stability and Security in Iraq: Report to Congress in Accordance with The Department of Defense Approprialions Act 2007, Section 9010, Public Law 109-289 (Washington, D.C.: June 2007). *GAO, Securing, Stabilizing, and Rebuilding Iraq: Key Issues for Congressional Oversight, GAO-07-308SP (Washington, D.C.: Jan. 9, 2007). "DOD, Measuring Slability and Security in Iraq: Report to Congress in Accordance with the Department of Defense Approprialions Act 2007, Section 9010, Public Law 109-289 (Washington, D.C.: Mar. 2007). Page 6 GA0-08-124T 37 violence hinders U.S. advisors' access to their counterparts in the : ministries, increases absenteeism among ministry employees, and contributes to "brain drain" as ministry employees join the growing number of Iraqis leaving the country. According to a UN report, between March 2003 and June 2007, about 2.2 million Iraqis left the country and 2 milion were internally displaced. According to U.S. and international officials, the flow of refugees exacerbates Iraqi ministry capacity shortfalls because those fleeing tend to be disproportionately from the educated and professional classes. A November 2006 UN report stated that an estimated 40 percent of Iraq's professional class had left since 2003. The United States Is Beginning to Develop a Strategy for Capacity Development Efforts In February 2007, State officials provided GAO with a three-page, high- level outline proposing a U.S. strategy for strengthening Iraqi ministerial capacity. This document was a summary with few details and no timeline. A senior USAID official indicated that it is uncertain whether the high-level summary will be developed into a strategy, although the administration received $140 million in funding for its capacity development efforts in fiscal year 2007 and requested $255 million for fiscal year 2008. GAO has previously identified the desirable elements of a strategy: a clear purpose, scope, and methodology; a delineation of U.S. roles, responsibilities, and coordination; desired goals, objectives, and activities tied to Iraqi priorities; performance measures, and a description of costs, resources needed, and risks. Table 2 summarizes the key elements of a strategy and provides examples of the status of the U.S. approach as of September 2007. GAO-06-124T 43 Chairman WAXMAN. Thank you very much, Mr. Walker. Mr. Bowen, let's hear from you next. STATEMENT OF STUART BOWEN Mr. BOWEN. Thank you. Good morning, Chairman Waxman, Ranking Member Davis, members of the committee. Thank you for this opportunity to testify before you today on the important sub- ject of this hearing, the State of Iraqi Corruption. This past August, I visited Iraq for the 17th time since my ap- pointment 372 years ago as the Special Inspector General for Iraq Reconstruction. While in Baghdad, I met with key Coalition and Iraqi officials on the subject of corruption within the government of Iraq. SIGĪR has regularly reported on this issue over the course of our 14 quarterly reports, and we conducted 2 audits on the subject of U.S. support for Iraqi anti-corruption and, in a word, found that support has been disappointing. Corruption within Iraq's government is a significant and serious problem. It is an Iraqi problem which the government of Iraq has recognized. A recent report submitted by Iraq pursuant to the re- quirements of the recently enacted International Compact for Iraq identified “high levels of corruption and an immature accountabil- ity framework” within the government of Iraq. So it is something that the Iraqi government on the record recently has recognized. As the ranking member pointed out, we did not bring corruption to Iraq, and it will not be gone whenever we leave, but it is an issue that fundamentally can undermine our efforts to build a de- mocracy, a fledgling democracy. Since mid-2003, Iraq has struggled against a violent insurgency. Corruption has concomitantly afflicted the Iraqi government, exert- ing a corrosive force upon its growing democracy. SIGIR has described that force as a second insurgency. Prime Minister Maliki recently echoed that sentiment when he referred to the struggle against corruption as "the second war in Iraq," and Deputy Prime Minister Barham Salih told my office that corruption "threatens the state.” So there is a recognition, but is there a response? That is the subject, I think, of an important aspect of this hear- ing. What response is forthcoming, both within the U.S. program and within the Iraqi government? Within the Iraqi government, there are three key entities who have charge of fighting this second insurgency. The Board of Su- preme Audit has been around since 1927. It is the analogue to the Government Accountability Office and its focus is on the audit of Iraqi ministries. The Commission on Public Integrity and the Iraqi Inspector Gen- eral system was created in 2004 by the Coalition Provisional Au- thority. Judge Radhi, who was the commissioner until recently of the CPI, is someone with whom I have met on every trip I have made to Iraq, virtually every trip, and his office and my office work very closely on our investigations and exchange information as rel- evant. His office along with the 29 IGs and the Board of Supreme Audit comprise 4,000 officials assigned to fight corruption, but the tide of Article 136(b) of Iraq's Criminal Code is a notorious structural obstacle impeding Iraq's anti-corruption efforts. This provision allows any Iraqi minister to grant by fiat complete immunity from prosecution to any ministry employee accused of wrongdoing. In addition, an order issued by the Prime Minister this past spring requires Iraqi law- enforcement authorities to obtain permission from the Prime Minister's Office before investigating current or former ministers. These actions are incompatible with a functional democracy. Iraq's anti-corruption institutions lack a clear definition of their roles and responsibilities. Laws necessary to clarify these matters have yet to be passed by Iraq's Council of Representatives. Of note, the International Compact for Iraq says that progress on this front is essential for Iraq's democracy to succeed. Capacity Iraq's anti-corruption agencies face significant capacity and resource shortfalls. Enormous training shortfalls exist in the important fields of investigations, audit, and management. The Government of Iraq must remedy the problems of insufficient staffing and inadequate budgets if these institutions are to succeed. Signs of Progress Despite these grim challenges, there are some limited signs of progress in Iraq on the anti-corruption front. Investigators and auditors have begun to receive more training. The BSA just completed a World Bank training program in Jordan; and the BSA has organized 57 training programs for more than 800 employees over the past two years. The inspectors general have formed the Iraq IG Organization, and its chairman is conducting assessments of each IG. Of recent note, a Joint Anti-Corruption Council was established this summer within the Office of the Prime Minister, an apparent positive move forward, but one that still requires clearer direction and more robust support from the Prime Minister. U.S. Assistance for Iraq's Anti-corruption Efforts SIGIR has conducted two reviews on the United States' programs aimed at assisting Iraq's anti-corruption institutions; the reviews found these programs inadequate, both in funding and execution. SIGIR reported last year that, as of June 2006, only $65 million had been allocated to anti-corruption activities, amounting to three-tenths of one percent of the Iraq Relief and Reconstruction Fund. Since 2003, the U.S. has worked to establish law-enforcement institutions, management systems, training programs, transparency initiatives, and campaigns to increase citizens' ment. These efforts, however, have suffered from poor coordination and focus. The U.S. provided neither adequate leadership nor sufficient resources to meet the challenge. SIGIR found, for example, that there was no single coordinative point for U.S. support to Iraqi anti-corruption efforts. SIGIR 07-015T Page 5 of 9 50 . Managing the anti-corruption support activities of the various U.S. agencies is complex and requires a clear strategic plan. SIGIR found, however, that no strategic plan for this mission was ever developed. Moreover, there was no program of planned activities, no framework for outlining the roles and responsibilities of participating agencies, and no integrated budget identifying the resources needed for implementation. There exists a " recurrent problem with "stove-piping" among the federal agencies working on anti- corruption efforts in Iraq; and coordination among military advisors, embassy personnel, and PRT representatives is hampered by staff shortages and organizational disconnects. Despite these largely negative findings, SIGIR did find that the anti-corruption efforts within the Ministries of Defense and Interior are more robust than those within other ministries because of resources provided by the Department of Defense through the Multi-National Security Transition Command (MNSTC-1). The other ministerial IGs share a single U.S. advisor. Leadership and Organizational Challenges with U.S. Efforts Since SIGIR first identified the support shortfall for anti-corruption efforts in mid-2006, the Embassy has been unable to secure enduring and effective leadership for its anti- corruption program. Thus, the effort has languished, excepting a few points of progress. Significantly, the Embassy has yet to complete its promised assessment of U.S. government anti-corruption efforts nor has it drafted an integrated, strategic plan. SIGIR made 13 recommendations in last year's audit. Eleven remain open, including: Provide the necessary resources to have sufficient direction and oversight of the Embassy's anti-corruption program, including a senior leader from the Department of State and a senior officer from the Multi-National Force. Both of these positions should be filled with staff that has the background to bring value to the positions. Update: While a staff member in the Embassy Economics section has been designated to preside over meetings of the U.S. Anti-Corruption Working Group, the operational arm of U.S. anti-corruption efforts, the Office of Accountability and Transparency (OAT), still lacks a director (DOJ is providing an acting director). Additionally, the recent reorganization of OAT under the Rule of Law Coordinator has produced an unclear reporting relationship with the Economic Section of the Embassy. Adding to the coordination challenge, Multi-National Forces - Iraq (MNF-I) continues to operate its own Rule of Law (ROL) program that is separate from OAT and the Embassy's other ROL efforts. Continue the ongoing efforts to recruit an Iraqi local national staff member to provide support to the full-time Anti-corruption Program Manager. This individual should have the necessary skill level to be instrumental in forging joint U.S./Iraqi anti- corruption initiatives. SIGIR 07-015T Page 6 of 9 51 Update: A Bilingual/Bicultural Advisor was recently identified to assist as the IG advisor. Progress toward hiring a lead Iraqi national staff member for overall anti- corruption efforts is limited. Establish a joint executive steering group, with the Anti-corruption Program Manager as the chairperson, that would have oversight on all U.S. government anti-corruption programs to ensure that all initiatives are working toward a common goal in the most efficient and effective manner. Update: The Joint Anti Corruption Council was established this year as an Iraqi program. It lacks US advisory representation and was designed that way by the Government of Iraq (GOI). Without a joint coordinating body and without an identified leader of OAT, there is not a single coordination point between the U.S. government and the GOI on anti-corruption efforts. Direct the joint executive steering group to provide periodic reports, minimally quarterly, to report on progress, barriers, funding needs, etc. Update: No reports provided. Establish a policy that will require all participating organizations to vet new anti- corruption initiatives through the new joint executive steering group. Update: Not established. Direct the joint executive steering group to conduct a complete review of each U.S.- funded anti-corruption program, and assess how that program helps achieve the U.S. government's strategic goals for anti-corruption. Update: No assessment conducted. Direct the members of the Anti-Corruption Working Group (ACWG) to develop action plans for each activity's program in concert with the overall strategic goals. Update: No overall strategic plan governs anti-corruption efforts on the USG side. Establish a baseline for each anti-corruption program to document a starting point for the program in order to measure progress. Update: No baseline established. Establish interim and long term objective(s) for each anti-corruption program consistent with the overall anti-corruption program strategy. . Update: Not accomplished (see SIGIR audit 07-007). SIGIR 07-01ST Page 7 of 9 52 Engage the new Iraqi anti-corruption counterparts within the new government and establish the U.S. - Iraqi Anti-corruption Task Force working group. este raqiraqiti Update: No effective high-level coordination exists between U.S. government efforts and the GOI. The GOI, in creating the JACC, directed that U.S. and UK participation occur by invitation only. Encourage the new Iraqi government to establish its own working groups with regional and international partners. Update: Some progress toward this reported as part of International Compact efforts. Develop and implement an action plan to: o Identify the training requirements of the Commission on Public Integrity, Board of Supreme Audit, Central Criminal Court of Iraq, and inspectors general with special emphasis on requirements that apply to all four institutions; Update: Work is underway for training requirements within the three anti- corruption entities. o Prioritize the identified training requirements; Update: Work is underway to prioritize training requirements. o Identify training solutions for those requirements that can cut across multiple institutions to avoid duplication and maximize resources. Update: Work is underway to identify training solutions. In our recent review, which updates last year's audit, SIGIR found a continued lack of high-level support for Iraq's anti-corruption efforts and urged that the Embassy address the outstanding 2006 recommendations. SIGIR suggested the Embassy to include in its plans an estimated completion date for corrective actions. We also asked that it define a schedule of anti-corruption programs, activities, and initiatives. Once identified, the Embassy should complete a rigorous assessment of its major anti-corruption initiatives. SIGIR 07-015T Page 8 of 9 53 The Challenges Ahead Continuing to improve support for Iraq's three anti-corruption entities is critical. Although imperfect and under various forms of siege, they are the only extant bulwark against corruption in the GOI. Incipient training programs for anti-corruption officials are underway, but they require improved coordination and additional resources. For the past three years, officials have discussed the development of a joint training facility in Irag to assist all three entities. Developing a new training facility would be an important step toward building permanent capacity within Iraq's most important law-enforcement institutions. In the interim, the World Bank is working to strengthen Iraq's anti-corruption programs, albeit in venues outside of Iraq. A World Bank presence inside Iraq would have a much more positive effect on these support efforts. U.S. government assistance faces an important test in the coming months. The mission requires a more coordinated approach to anti-corruption efforts, including a better- defined strategic plan that is tied to sufficient financial and human resources. This newly-defined effort must link directly with the most critical institutions and officials in the Iraqi government to have any hope of achieving progress in the fight against Iraq's “second insurgency." Closing Mr. Chairman, members of the Committee, thank you for your time and attention to these important matters, and I look forward to answering your questions. SIGIR 07-0151 Page 9 of 9 56 TESTIMONY OF JUDGE RADHI HAMZA al-RADHI Commissioner, Commission on Public Integrity, Republic of Iraq . Hearing on Assessing the State of Iraqi Corruption, October 04, 2007. i . House Committee on Oversight and Government Reform The Status of Corruption in the Iraqi Government To Our Distinguished Chairman and Respected Members of the United States Congress, Ladies and Gentlemen: GREETINGS I am Judge Radhi Hamza al-Radhi, Commissioner of the Commission on Public Integrity (“CPI”), Republic of Iraq. I have the honor to be here among you today to discuss with you the most important problems facing Iraq after the recent change. The change which led the United States and its allies in Iraq to eliminate the highest dictatorship in the world, that of Saddam Hussein. The dictatorship he built on the corpses, money and the suffering of Iraqis. I want to thank the American people who have sacrificed their life and money in order to achieve noble goals that are worthy of respect. The goal for Iraqi's rights, for the ending of their suffering and for the spread of democracy throughout Iraq, which is the key to progress and growth. Thank- you and thank-you thousands of times for everyone who participated and sacrificed for these noble goals. REASONS FOR AN IRAQI COMMISSION ON PUBLIC INTEGRITY • Iraq is a rich country; however its infrastructure is essentially nonexistent and much work needs to be done. Building democracy requires transparency from the Government in order for that government to manage socio-economic matters. The Iraqi people are smart and hard working and are looking for progress. For that they deserve a fair and honest government. 58 amount time and of money to hold this Commission accountable to disseminate and promote the ethics of integrity for my country. The functioning of CPI has been outstanding even under very difficult circumstances. It has been able to build several important departments or directorates within 3 years, such as: • The Directorate General of Prevention and Transparency, which prepared a Code of Conduct for all Iraqi government employees and has also prepared a Financial Disclosure program to disclose the financial interests of senior employees such as the general director and superior officers. The Directorate General for Non-Governmental Organization relations, which contacted most NGOs in Iraq in order to motivate them to achieve their objectives and solve their problems honestly. Some of these organizations have played a significant role in my country to develop morals and contribute to the reconstruction of Iraq and also to put pressure on the Government to provide better services to the Iraqi people, The Directorate General for Education, which worked to educate government employees on their duties and responsibilities, including promoting the Code of Conduct, educating Iraqi public on their rights and responsibilities as well as promoting the Hotline. In conjunction with the Ministry of Education, it worked to develop a curriculum for Iraqi school children to promote public service and ethics. It had a public affairs department to work with International and domestic news media organizations. • In addition, the Directorate General for Investigations investigated corruption in government departments and ministries. RESULTS During these three years, there have been many results produced for an organization so young and new to my country. I will briefly expand on many of the areas above such our work with educating the government ministries in the Code of Conduct, work on Financial Disclosure, the establishment of an INTERPOL liaison office, printing and distribution of educational materials 59 for children, a Civil Service Reform conference and NGO conference, Investigation Department has expanded with the establishment of a Forensics Division, an Investigative Research Division, a Witness Protection Program and facilities, the establishment of a Statistics Division in the Administration Department which promulgates annual reports to the Iraqi government and the Iraqi people on the activities of CPI, the initial establishment of a Public Integrity and Ethics Institute to professionalize the civil service and provide training for CPI, the Board of Supreme Audit and the Inspectors General, the establishment of an anticorruption Hotline to receive calls from Iraqi citizens for the first time in Iraq's history, the printing and distribution Hotline promotional materials and other CPI materials. For the first time, perhaps in Middle East history, a minister was arrested, in accordance with the Rule of Law in a non-political, non- sectarian manner on corruption charges. Unfortunately, this case was early in our investigation process before the full force of opposition to CPI was organized. Of the 3,000 corruption cases we successfully investigated and forwarded to the courts for adjudication, only 241 cases to date were adjudicated with guilty sentences ranging between six months and one hundred and twenty years. However, the cost of corruption that my Commission has uncovered so far across all ministries in Iraq has been estimated to be as high as $18 billion. GUIDING PRINCIPLE I have lead my life governed by these few words, “Law is above all, no one is above the law." This guiding principle applies to all government departments and ministries neutrally, fully and without regard to sect, ethnicity, party affiliation, tribe or religion. MAIN OBSTACLES The main obstacles in our work are: • Violence, intimidation and personal attacks. Since the establishment of the Commission of Public Integrity, 31 employees have been assassinated as well as at least an additional 12 family members. In a number of cases, my staff and their relatives have been kidnapped or detained and tortured prior to being killed. Many of these people were gunned down at close range. This includes my staff member Mohammed Abd Salif who 60 was gunned down with his seven month pregnant wife. In one case of targeted death and torture, the Security Chief on my staff, was repeatedly threatened with death. His father was recently kidnapped and killed because of his son's work at CPI. His body was found hung from a meat hook. One of my staff members who performed clerical duties was protected by my security staff, but his father was kidnapped because his son worked at CPI. This staff member's father was 80 years old. When his dead body was found, a power drill had been used to drill his body with holes. Waleed Kashmoula was the head of CPI's Mosul branch office reporting directly me. In March 2005, A suicide bomber met with Waleed in his office wearing a suicide vest. He greeted Waleed and then detonated his vest killing Waleed. This was a specific targeted killing of CPI leadership. These are just a few examples, there are many more which were directed to my staff, me and our families. Personally, for example, my family's home has been attacked by rockets. I have had a sniper bullet striking near me as I was outside my office. We know the corrupt will stop at nothing. They are so corrupt that they will attack their accusers and their families with both guns and meat hooks as well as counter charges of corruption. So that the accusers become the accused in a deadly game that all of us have witnessed. • The Prime Minister and his government have refused to recognize the independence of the Commission on Public Integrity, even though the Iraqi Constitution sets forth the independence of CPI in point No. 102,103. • The interference of the Iraqi Government in Commission matters; officials and agencies in the Iraqi Government sent us formal letters forbidding us to take any action against the presidency, council of ministries and former and current ministers. • The use of Article 136, Section B of the Criminal Procedures Law No. 23 of 1971, which prevented us from transmitting many corrupt employees' cases to court until we received permission from the minister of the agency we were investigating! This presented obvious problems. The same thing applied to corrupt ministers: We could not take any action until we could get the permission of the Prime Minister! Based on that, many 61 corruption cases have been closed by the ministers and the Prime Minister, at an estimated worth of one hundred billion Iraqi dinar. In addition to the obstacles of Article 136, there was pressure put on the judiciary not to prosecute cases on behalf of individuals. The Executive, Legislative and Judicial branches of the Iraqi Government did not work as required to promote the Rule of Law and fight corruption in Iraq. The executive branch often protected corrupt employees and actively attempted to eradicate or control the Commission. The legislative branch did not revise the anticorruption laws. The judiciary branch succumbed to pressure and did not adjudicate corruption cases. The government did not appoint leaders, particularly ministers and Inspectors General that would fight corruption within ministries. In order to promote sectarian agendas, professional technocrats who were qualified to perform vital government services and administration were not appointed. Importantly, it has been impossible for the Commission on Public Integrity to safely and adequately investigate oil corruption where Sunni and Shia militias have control of the metering, transport and distribution of Iraqi oil. This has resulted in the Ministry of Oil effectively financing terrorism through these militias. Additionally, my small group of investigators investigated the largest number of cases in the Ministry of Defense and Ministry of Interior. As you might imagine, investigating the security forces of Iraq is very difficult, but necessary for an Iraqi future of transparency and the Rule of Law. 62 THE FUTURE As the committee can appreciate, this is not an easy situation to resolve and it will not be resolved quickly or completely. Obviously the Government of Iraq, with the help of the US government, needs to resolve the specific obstacles that I have listed above. Further, the people who were dedicated and honest under my tenure at the Commission on Public Integrity need to be protected and supported and those who infiltrated the Commission for sectarian political reasons must be re-staffed with people who are truly committed to its mission and its guiding principle that “No one is above the law.” If this does not happen, I am afraid that the Commission itself can be used as a tool of oppression as well as a tool of the corrupt to further -- not stop -- corruption. Finally, the people of Iraq must see advances by the Government on the political level, on economic reconstruction, on basic services, amenities and infrastructure, and on the rule of law. The Government of Iraq will fail and the Iraqi and American people will continue to suffer if the militias, and militia controlled parts of the Iraqi government, including the security forces, are not brought under control. Sectarian corruption has eroded work of the Americans and Iraqi people to build a better future for Iraq and the region. CONCLUSION Let me share with you my situation -- at the least to the extent I am able right now. I and a staff delegation from the Commission on Public Integrity of the Republic of Iraq came to the United States on August 24, 2007, for forensics and evidence training with the US Department of Justice. During our visit, threats against me and my family in Iraq escalated to a point where, together with the immense pressure of the last two years from the highest levels of the Iraqi Government, regretfully and painfully caused me to seek appropriate US Government protection. Thank you for your attention and patience, and please feel free to ask any questions, Judge Radhi Hamza al-Radhi The Chairman of the Integrity Commission in Iraq 64 of dollars. Yet, you are not allowed to investigate corruption relat- ing to the sale of oil. Why would the national government stop you from stopping the corruption of oil sales which then go to the militias that are fight- ing the government? Mr. AL-RADHI. [Translated by Ms. Behrens.] Because these mili- tias are from the parties, from the blocks, and therefore this is a financial source or financial revenue for them, and that is why they forbid us from investigating such cases. In addition, that those who manage who direct these directorates are from their own political affiliations. Chairman WAXMAN. So it is your statement to us that around $18 billion, maybe more, has been used for corruption instead for proper purposes like reconstruction, hospitals, electricity and fight- ing against terrorism in Iraq. Is that your statement? Mr. AL-RADHI. [Translated by Ms. Behrens.] Can you repeat the question, Mr. Chairman? Chairman WAXMAN. Is it your view that $18 billion is not being used for hospitals, reconstruction, electricity and to even fight ter- rorism because it is being siphoned off by corruption? It is going to corruption? Mr. AL-RADHI. [Translated by Ms. Behrens.] All these amounts were spent over the 3-years, but when you go to the field or you go to the ground, you don't see signs of reconstruction. You only see 2 percent to 5 percent of reconstruction happening. When you go to the field and you don't find water nor electricity nor fuel and Iraq is the country of oil, then Iraq is importing oil now. So you don't see reconstruction. Chairman WAXMAN. Thank you. General Walker, you feel so intense about this corruption issue that you have even recommended to us that we should limit our money to Iraq, requiring them before they get the money to stop the corruption. Is that your view? Mr. WALKER. Slightly different, Mr. Chairman. The United States has been trying to help fight corruption and build capacity in the Iraqi ministries since 2003, but we haven't had a strategic and integrated plan. We haven't had appropriate metrics and mile- stones. We haven't had appropriate responsibility and accountabil- ity noted. Therefore, we believe that the Congress should consider condi- tioning future appropriations for this effort to making sure that plan is done and effectively implemented so that we can achieve some results rather than just have more efforts. Chairman WAXMAN. Thank you. Mr. Bowen, do you agree from your observations in Iraq that cor- ruption is increasing rather than decreasing in Iraq? Mr. BOWEN. That is what I said. The rising tide is in part attrib- utable to the politicization of the rule of law, specifically the direc- tive from the Prime Minister's Office requiring permission to be ob- tained before initiating prosecutions of any minister, former min- ister and the like. One distinction I want to draw here, though, is that Judge Radhi is talking about his oversight of Iraqi money and the $18 billion 65 in the Iraq Relief and Reconstruction Fund is taxpayer money that is not within his jurisdiction, within mine. Chairman WAXMAN. As I understood his statement, he thought over a 3-year period, there has been a waste of $18 billion of Iraqi funds. Mr. BOWEN. Right. I just want to be sure that the $18 billion, it is the same number as the Iraq Relief and Reconstruction Fund. Chairman WAXMAN. Just happens to be the same number. Mr. BOWEN. Yes, I want to draw the distinction between the two so there is not confusion as has occurred in the past. On the U.S. side, corruption has not been a significant component to date that we have uncovered. Chairman WAXMAN. If I asked how high up in the Iraqi govern- ment this corruption goes. Judge Radhi, does it go all the way to the Prime Minister? Do you think that Prime Minister Maliki is in- volved in corruption himself? Mr. AL-RADHI. [Translated by Ms. Behrens.] As a judge, I cannot say that someone is engaged in something unless I have evidence and proof. However, Maliki has protected some of his relatives that were involved in corruption endeavors and especially some of his relatives. Chairman WAXMAN. And he has allowed other ministers to pro- tect their employees from any investigation? Mr. AL-RADHI. [Translated by Ms. Behrens.] Yes, and for that reason the Council of Ministers, the Prime Minister has closed cases related to 100 billion Iraqi dinars and, in Iraqi currency, such an amount is not a small amount. Chairman WAXMAN. Thank you very much Mr. Davis. Mr. DAVIS OF VIRGINIA. Thank you, Mr. Chairman. First of all, let me ask unanimous consent that all Members have 5 legislative days to submit opening statements for the record. Chairman WAXMAN. Without objection, that will be the order. Mr. DAVIS OF VIRGINIA. Mr. Walker, the GAO report released today discusses corruption in Iraq and references to a State De- partment Embassy report from December 2006. Mr. WALKER. That is correct. Mr. DAVIS OF VIRGINIA. Can you tell us anything about this 2006 report which is now classified? Mr. WALKER. What I can tell you is that the 2006 report, based upon publicly available information, noted serious concerns with regard to the nature and extent of corruption in Iraq, also noted that there had been significant diversion of oil and fuel, both fuel and oil that is produced within Iraq as well as that is purchased e of Irag, and then stolen and sold on external markets. So the bottom line is that the State Department report noted that the United States is trying hard to try to build capacity, in- cluding to try to fight corruption, but corruption is a serious prob- lem involving large sums of money. Mr. DAVIS OF VIRGINIA. Do you know what data were used to prepare the report? Mr. WALKER. I don't have that available to me, Mr. Davis, but I am happy to try to find out for you. 67 Mr. AL-RADHI. [Translated by Ms. Behrens.] It is better than the daily killing that takes place in their original country. Mr. ISSA. I appreciate that. I want to call your attention, Judge, to a letter written on Sep- tember 20th to the U.S. Citizenship and Immigration Service con- cerning your family and their welfare, naming some nine members of your family. Have you seen this letter before? Mr. AL-RADHI. [Translated by Ms. Behrens.] Yes, this is a private matter, and I do not wish to talk about it, especially that my family is subject to private circumstances. Mr. ISSA. Now I certainly understand that, but in order to under- stand the workings of this committee, I think it is important that we ask some very limited questions. We are not going to name any names other than to note that the letter is signed by Chairman Waxman, Chairman Lantos, Chair- man Conyers and Chairman Thompson, Bennie Thompson, the Chairmen of Homeland Security, House Judiciary, House Govern- ment Oversight and Reform and the Foreign Affairs Committees. Chairman WAXMAN. The gentleman's time has expired. Is there a question pending? Mr. ISSA. Yes, very briefly. When were you first involved in the request for this letter to ask that your family, your entire family, be brought to the United States as a refugee and particularly was that prior to or after you came here under a diplomatic visa? Mr. AL-RADHI. [Translated by Ms. Behrens.] I came to the United States under the auspices of the U.S. Department of Justice on a workshop, on a training workshop along with 10 of my employees. The Prime Minister, to get rid of me, so I don't return to my country, has put forth this issue, this issue of prosecuting me. Chairman WAXMAN. Please, if you have more to say. Mr. AL-RADHI. [Translated by Ms. Behrens.] I love my family. I love my country. I love to serve my country. However, these threats have been an obstacle for me. Chairman WAXMAN. Thank you very much. Mr. Cummings. Mr. CUMMINGS. First of all, I want to thank you, all the wit- nesses, but you, Judge Radhi, thank you very much for your brav- ery and your integrity. Can you tell us about the threats that you and your family have faced, briefly? Mr. AL-RADHI. [Translated by Ms. Behrens.] After I referred sev- eral cases pertaining some of the political blocs governing there to the courts in corruption cases, they referred me to the Parliament, charged me with this issue, and I would say that I was successful in combating corruption there. They were unable to remove confidence in me in front of the Par- liament. They also accused me in courts with the same charges, and again in courts they were unable to successfully get something against me. Mr. CUMMINGS. Judge Radhi, let me ask you this. Mr. AL-RADHI. [Translated by Ms. Behrens.] In addition to what I said in my testimony, in my deposition. 68 Mr. CUMMINGS. Judge Radhi, who is Salam al-Maliki? Was he the former Iraqi Minister of Transportation? Mr. AL-RADHI. [Translated by Ms. Behrens.] Yes, he is the former Iraqi Minister of Transportation. He is a relative of the Prime Min- ister. We had referred this person to the courts for corruption. However, the Prime Minister has resorted to closing this case. Mr. CUMMINGS. You got a letter in regard to that, did you not? I am going to show you a document on the screen. What does this letter tell you to do in regards to the investigation of Prime Minister Maliki's cousin, Mr. Salam? Mr. AL-RADHI. [Translated by Ms. Behrens.] Not to followup on the case and not to investigate, and there was a request to close the case. Knowing that Salam had violated the constitution and the Prime Minister has approved that. Mr. CUMMINGS. Did he ever grant you permission to reopen the case? Mr. AL-RADHI. [Translated by Ms. Behrens.] No. We have at- tempted to move the case forward, but the Prime Minister had closed it. Mr. CUMMINGS. Why do you think he closed it? Mr. AL-RADHI. [Translated by Ms. Behrens.] First, because Salam al-Maliki is affiliated with one of the parties of the Shiite alliance or coalition and, second, because this gentleman is one of his rel- atives. Mr. CUMMINGS. Mr. Walker, when Judge Radhi testified a little bit earlier, he basically said he didn't even have the power to audit the oil revenues. Is that correct? In other words, he has the power, but he doesn't get the oppor- tunity to do so. Mr. WALKER. Well, my understanding is that the judge's respon- sibility is not to conduct audits. It may be to conduct investiga- tions. Audits typically are done by the Board of Supreme Audit which is our counterpart organization, and Dr. Abd el-Basit is President of that organization. Mr. CUMMINGS. Are you able to do it? You said it comes under you. Mr. WALKER. Well, we cannot audit Iraqi funds. We can only get involved where it involves U.S. funds, and obviously the Special In- spector General for Iraq has been set up to try to be able have an on the ground presence in Iraq to do certain types of activities. But we do do audit work in Iraq, but it is on U.S. funds, not Iraqi funds. Mr. CUMMINGS. Thank you. Mr. WALKER. I might note that, as I said before, Mr. Cummings, we have worked very closely, meaning GAO, with our counterpart organization in Iraq, and corruption is rampant in Iraq. It is a seri- ous problem. It has been for a while, continues to be a problem. We have a situation, as was mentioned by Stuart Bowen, that while there hasn't been massive corruption that he has found with regard to U.S. activities in Iraq, there is huge waste there. I might also note that security is a real concern. When I went to visit my counterpart in 2006, we couldn't meet where we were 70 We have the record set: the only President ever impeached on grounds of personal malfeasance, the most number of convictions and pleas guilty by friends and associates, the most number of cab- inet officials to come under criminal investigation, the most num- ber of witnesses to flee the country to refuse to testify, the most number of witnesses to die suddenly, the first President sued for sexual harassment. The list goes on and on of the last administra--, tion. Now let me be fair. Forty Government officials were indicted or convicted in the wake of Watergate. nother number, 47 individuals in business association with the Clinton administration were convicted or pleaded guilty to crimes, with 33 occurring during the Clinton administration itself. Now, this also talks about the Reagan administration. There is a total of 31 Reagan administration convictions. So my point is that no administration is left without corruption. Additionally, I want to ask the Judge a question. Mr. Clinton gave a pardon to a gentleman by the name of Mr. Rich. Mr. Rich was involved in an Oil for Food scandal which I understand that money went to prop up the Saddam Hussein regime. Are you aware of any of the Oil for Food scandal incidents or Mr. Rich? Mr. AL-RADHI. [Translated by Ms. Behrens.] Corruption is found all over the world, and I have heard about corruption in the file of the Oil for Food program. Iraqi is cooperating with other coun- tries to gather information about this issue. However, I believe the issue is different in Iraq for many rea- sons. First, the infrastructure in Iraq is almost equal to zero. Serv- ices in the country are almost equal to zero. Iraq is a wealthy country. Imagine that the budget of 2007 is $41 billion and $30 billion is what remains from the previous and ear- lier years. Don't you think that $71 billion, such an amount that can build an entire country, don't you think that it deserves a fol- lowup and attention? Corruption is corruption in all times, and I am a professional and I fight corruption because this is my profession to do so. Mr. MICA. Thank you. I appreciate it. Chairman WAXMAN. Thank you very much, Judge Radhi. I just wanted to inform the gentleman. I don't want to make any comments, although I would like to make comments, but I won't make comments on his round of questioning. When we were re- quested by the Justice Department not to inquire with Blackwater's recent episode in September, we honored that re- quest. We have always honored requests from the Justice Depart- ment. Mr. Lynch. Mr. LYNCH. Thank you, Mr. Chairman. First of all, I want to thank the chairman and the ranking mem- ber for holding this hearing. I also want to thank Comptroller General Walker and also In- spector General Bowen for your great work on our behalf, and I also want to thank the Judge. I appreciate the risk to yourself, and I offer the prayers of our country for 31 employees of your ministry that have been killed and also their families. 71 Judge Radhi, your testimony says that your investigators identi- fied about $18 billion as the estimated cost of corruption in Iraq. There is so much to go on here. I have to pick just one case so I can ask some questions about it. This is a case involving Aiham Alsammarae. I hope I have that right. He was the head of or very high in the electricity industry. The Ministry of Electricity, I guess it is called. I want to ask you. Do you recall the facts surrounding Aiham Alsammarae? Mr. AL-RADHI. (Response in foreign language.] Mr. LYNCH. Just briefly, I am trying to get the facts. You don't need a long explanation. Just basically tell me what he was being investigated for. What were the allegations against Mr. Alsammarae? Mr. AL-RADHI. [Response in foreign language.] Mr. LYNCH. How about a leading question? How much money was Mr. Alsammarae accused of embezzling, stealing? Mr. AL-RADHI. [Translated by Ms. Behrens.] It is not embezzle- ment. It is a waste of public money. Mr. LYNCH. OK. Corruption involving how much money, hun- dreds of millions? Mr. AL-RADHI. [Translated by Ms. Behrens.] In each ministry, a particular, a certain amount of money, and the total across all min- istries is $18 billion; for electricity, $2 billion. Mr. LYNCH. $2 billion, OK. Mr. Alsammarae, I understand, was arrested and held in prison inside the Green Zone, but he somehow escaped. Do you know the facts surrounding that? Mr. AL-RADHI. [Translated by Ms. Behrens.] I know some of the facts that surround this case, and I know that a U.S. protection company has helped him get away. Mr. LYNCH. Do you know what the name of that U.S. protection agency might have been? Mr. AL-RADHI. [Translated by Ms. Behrens.] I believe it is DynCorp. Mr. LYNCH. OK, Blackwater. Now, with the assistance of Blackwater, do you know where? Chairman WAXMAN. He said DynCorp. Mr. LYNCH. Oh, DynCorp, I am sorry. I am sorry, DynCorp. Thank you for that correction. So DynCorp, a U.S. contractor, helped this person get out of jail in the Green Zone. Do you know where Mr. Alsammarae is right now? Mr. AL-RADHI. [Translated by Ms. Behrens.] This is not impor- tant to me. What matters to me is there is absentia order or court order against this man, and that is a sentence for 3 years. Mr. LYNCH. It may not be important to you, but it is important to this committee. Is it your understanding that this gentleman is in Chicago, in the United States right now? Mr. AL-RADHI. [Translated by Ms. Behrens.] Three years sen- tence awaiting him, and there are 11 other charges against him fielded through the Interpol. 72 Mr. LYNCH. All right, my understanding, and I will offer it for testimony, is that our staff did talk to this gentleman. He is in Chi- cago. I will yield back, Mr. Chairman. Chairman WAXMAN. Thank you very much, Mr. Lynch. Let me explain that on the House floor, we have votes, and we have a number of votes. So we are going to recess now for around 40 minutes. I would request that Members come back here as quickly as possible after the last vote, so we can continue the ques- tions. We thank you for your patience. We stand recessed. [Recess.] Chairman WAXMAN. Before Mr. Burton arrives because he is next, Mr. Lynch, you were asking a question and you were in the middle of your question. Do you want to complete your last ques- tion? Mr. LYNCH. Thank you, Mr. Chairman. I am going to ask Mr. Bowen. I have tried to establish that the former Iraqi Electricity Minister was accused of corruption of po- tentially hundreds of millions of dollars. He was arrested. He was brought to the Green Zone. I believe it was a DOD facility. We are talking the Unites States Military. He was then broken out of that jail or removed from that jail by a U.S. contractor. We have evidence it was DynCorp or testimony that it was DynCorp. Mr. Bowen, is that your understanding of the facts of this case? Mr. BOWEN. Yes, but with the one additional fact that he was convicted by that Iraqi court and was awaiting sentencing. Mr. LYNCH. Is there an investigation ongoing relative to the han- dling of this case? Mr. BOWEN. I can't comment on our ongoing investigations. Mr. LYNCH. OK, so if it is an ongoing investigation, it must be ongoing. Can you tell, Mr. Bowen? Look, I have followed your work in Iraq, and I appreciate greatly what you are doing tremendous work, and I appreciate. Can you tell me, the allegation that this gentleman is in Chicago, is that correct? Is that your understanding? Mr. BOWEN. That is what I have heard, yes. Mr. LYNCH. OK, I will let it go at that. Thank you, Mr. Chairman. Chairman WAXMAN. Yes, Mr. Lynch. Mr. Burton, I think you are next. Mr. BURTON. Thank you, Mr. Chairman. Was there any corruption under Saddam Hussein? Mr. AL-RADHI. [Translated by Ms. Behrens.] Yes, sure. Oil was for Saddam and for Saddam's family only. Mr. BURTON. Were you ever prosecutor when Saddam Hussein was in power? Mr. AL-RADHI. [Translated by Ms. Behrens.] Yes. Mr. BURTON. How long were you a prosecutor when Saddam Hussein was in power? 73 Mr. AL-RADHI. [Translated by Ms. Behrens.) After I graduated from the Judicial Institute, he did not consider as a member of the prosecution, but he dealt with me as a regular employee. Mr. BURTON. You were not a prosecutor from 1979 to 1992? Mr. AL-RADHI. [Response in foreign language.] Mr. BURTON. It shouldn't be that difficult to answer. Either you were or you weren't. Mr. AL-RADHI. [Translated by Ms. Behrens.] I graduated from the Institute as a prosecutor. Mr. BURTON. So you were a prosecutor from 1979 to 1992. Mr. AL-RADHI. [Translated by Ms. Behrens.] Only the last 3 years. Mr. BURTON. What did you do before that from 1979 to 1992? Mr. AL-RADHI. [Translated by Ms. Behrens.] I was managing the funds of the juveniles or the orphans. Those were under 18 years old. Mr. BURTON. You were a prosecutor for over 3 years under Sad- dam Hussein. How did you get appointed to these positions? Mr. AL-RADHI. [Translated by Ms. Behrens.] I have worked as an attorney until the change. Mr. BURTON. But you were a prosecutor for the government. Mr. AL-RADHI. [Translated by Ms. Behrens.] In the court of mis- demeanors, yes. Mr. BURTON. How did you get that job? Mr. AL-RADHI. [Translated by Ms. Behrens.] Yes, when I grad- uated from the Judicial Institute, they did not appoint me, but be- cause I was a non-Baathist. But afterwards because of my work managing the funds of the orphans, I was appointed to that. Then in 1992, because of great pressure, I left. Mr. BURTON. Well, the record shows that you were in the Sad- dam Hussein regime from 1979 to 1992 and that you were a public prosecutor and that you did work under Saddam Hussein. Now it is laudable that you worked for the children that were damaged during the Iran Iraq War, but you were in fact an official of Sad- dam Hussein, were you not? Mr. AL-RADHI. [Translated by Ms. Behrens.] What was your last question, Mr. Burton? Mr. BURTON. You were an official in the Saddam Hussein regime and how did you get those jobs? Mr. AL-RADHI. [Translated by Ms. Behrens.] I obtained those jobs with my hard work, my studying and my work at the Judicial In- stitute. Mr. BURTON. Well, let me just finish, Mr. Chairman. I know you have given others just a little bit of extra time. n Hussein was a brutal dictator who even cut people up and put them in chippers. They did everything, buried hundreds of thousands of people in mass graves. If you had been an opponent of Saddam Hussein, I cannot figure out how you got those jobs. Mr. AL-RADHI. [Translated by Ms. Behrens.] Of course, under Saddam Hussein, I refused to do what he was asking, and there- fore they put me in prison and they broke the bones of my head. Mr. BURTON. Thank you, Mr. Chairman. Chairman WAXMAN. Thank you, Mr. Burton. 76 I trust all the witnesses are familiar with this report because it says, “Sectarianism and corruption are pervasive in the Ministry of Interior and cripple the ministry's ability to accomplish its mission to provide internal security of Iraqi citizens." Things are apparently so bad at the Interior Ministry that this report by General Jones, the Marine Corps General, recommends that the entire national police be disbanded. Here is exactly what the report concluded: “Conclusion: The na- tional police have proven operationally ineffective. Sectarianism in its units undermine its ability to provide security. The force is not viable in its current form. The national police should be dist and reorganized.” That is a pretty damning conclusion. Mr. Bowen, as the Inspector General, what is your opinion? Have corruption and sectarianism really gotten to this point that the Jones' recommendation is appropriate, to scrap the national police and start all over? Mr. BOWEN. I am very familiar with that issue and that report, and indeed I met with members of the Multinational Security Transition Command-Iraq that is in charge of training the national police, and they independently confirmed to me the problem of in- filtration in the national police, as well as other problems in the IPS and other Iraqi security forces and the facility protection serv- ices as well. But the national police is a very serious issue. It is managed quite directly from the MOI. The corruption that grew within it, which is really a sectarian infiltration that was condoned over sev- eral years, has produced the situation that General Jones quite ac- curately addressed, and his solution, I think, is on point. Mr. COOPER. Judge Radhi knows the situation better than any of us do. One of the most disturbing elements of this conclusion of the report was that the previous Minister of the Interior was a man named-forgive me if I mispronounce it-Bayan Jabr. Mr. AL-RADHI. [Translated by Ms. Behrens.] Bayan Jabr. Mr. COOPER. Bayan Jabr, it was under his leadership that the ministry became so heavily politicized. The report, for example, says that Mr. Jabr gave key ministry posts to members of the Badr Brigade, and the Badr Brigade Mili- tia infiltrated Iraqi police units throughout Iraq. Judge Radhi, to your knowledge, was Mr. Jabr, a member of the Badr Organization? Mr. AL-RADHI. [Translated by Ms. Behrens.] This issue, of course, I know about it from the media because I do not have a political relationship with them. However, I can say that these security ministries are now di- vided among the sectarianism and the sectarianism influence, and therefore you see that their performance is not a good performance. Mr. COOPER. The amazing thing to me is it is my understanding, even though Mr. Jabr, was the previous Minister of Interior, in- stead of being punished or reformed or in any way changed, now it is my understanding he has been promoted to be Minister of Fi- nance, which is truly astonishing. 78 Mr. WALKER. Actually not. What we did was we were involved in expenditure of U.S. funds, and we facilitated the release of records from the U.S. Government to the Board of Supreme Audit of Iraq so that they could hopefully do the audit work with regard to Iraqi funds. So we have not audited Iraqi funds, but we facili- tated the Board of Supreme Audit hopefully being able to do the same. Mr. ISSA. So that the record be complete on one thing, I know you are not going to find one person on the dais, under any cir- cumstances, that is satisfied with the level of integrity, trans- parency or lack of corruption in Iraq. That is something that, from the chairman going both directions on the dias, it is very clear that this is not a government that works to the best interest of their people, particularly if they are Sunnis in Anbar or Kurds in the north. Mr. Bowen, your written testimony states the number of corrup- tion cases under investigation by the Iraq Commission on Public Integrity was 1,861 in 2006 and 3,158 in 2007. Can you describe essentially how we got to this increase? It looks good on paper. Tell me about it. Mr. BOWEN. One is an increased effort under Judge Radhi's lead- ership to push forward, try to push back the tide of corruption that has been rising, as he testified today. It is also indicative of that rising tide itself, that the corruption efforts have increased because the work is to be done. Mr. ISSA. I appreciate that. To your knowledge, how many convictions have there been in Iraq? Mr. BOWEN. I don't know what the total number is. There have been hundreds of convictions. Mr. Issa. So they do get convictions. Mr. BOWEN. Yes. Mr. ISSA. What is the typical penalty when convicted? Are they the equivalent of a U.S. felony conviction? Mr. BOWEN. It depends on the nature of the crime, of course. The challenge in Iraq, especially with the ministries, is that there is se- lective prosecution because there is by fiat, the authority with every minister to protect any ministry employee from any corrup- tion investigation. And so, I am aware of some cases wherein most of the defend- ants were protected under Article 136(b), but one of the lower level ones was permitted to be prosecuted and imprisoned because of their sectarian identity. Mr. ISSA. Always please your boss, I guess, is the rule in Iraq. Judge, one question I have for you is when did you decide that you needed to leave Iraq and get your family out of Iraq to a per- manent place such as the United States for safety? Mr. AL-RADHI. [Translated by Ms. Behrens.] For 2 years, there were continuous threats, and I did send letters and petitions to the Parliament about this issue of threats, and then they started hit- ting my residence with missiles. Then it has become very difficult for me. Mr. ISSA. I only wanted a date if that could be provided, just a calendar date, if possible, for the decision. 79 Chairman WAXMAN. You can submit it for the record if you don't recall a date at the moment. Mr. AL-RADHI. [Translated by Ms. Behrens.] I decided only when the Prime Minister warned me through an interview on [phrase in foreign language). Mr. ISSA. And the date? Mr. AL-RADHI. [Translated by Ms. Behrens.] The beginning of September this year. Mr. ISSA. Thank you. Chairman WAXMAN. Thank you, Mr. Issa. Mr. Tierney. Mr. TIERNEY. Thank you, Mr. Chairman. I want to thank all of our witnesses here this morning for their testimony, for their consistent help with the committee, and Judge Radhi, particularly, I want to thank you for the courage that you have shown and integrity of coming forward. Mr. Chairman, just for the record, I don't know as I had to go in and out of other meetings, but if nobody has brought it up yet, I think that we ought to make a statement that the State Depart- ment's attempt to indicate that even broad statements and assess- ments that anyone might make characterizing the quality of Iraqi governance or corruption and saying that shouldn't be discussed, I think is a little bit bizarre, if nothing else, given the fact that there is $600 billion of the United States invested in that country and the importance of the Iraqi people of having those investments come out to reconstruction and safety and security and other things. So this is a very germane issue that we are investigating and ta Iking about here this morning and important to delve into. Judge Radhi, we have talked about your statement that some $18 billion has been lost as a result of corruption, but if we can take just a minute to talk about corruption at the Ministry of Oil, an area where I understand that you have not yet been able to even have an audit on that basis. You made a statement: “It has been impossible for the Commis- sion on Public Integrity to safely and adequately investigate oil cor- ruption where Sunni and Shia militias have control of the meter- ing, transport and distribution of oil.” So we are talking about billions and billions of dollars worth of Iraqi oil revenues, basically the lifeblood of the country, and a cen- tral obstacle to obtaining any political reconciliation. Are you say. ing, sir, that given that importance you have not been able to have audits or investigations into that ministry? Mr. AL-RADHI. [Translated by Ms. Behrens.] Out of this $18 bil- lion total amount, only half a billion is related to issues pertaining to the Ministry of Oil. With respect to the Ministry of Oil, the Inspector General of that ministry had issued a report that contains three sections. The In- spector General of that ministry spoke about trafficking in oil, about the amount of funds of these revenues and about the amount of oil that was involved in this in addition to the reports by U.S. and British authorities. There were two cases about a current and former minister, and these cases were closed. 81 relevant to your line of inquiry. First, I think we have to keep in mind that corruption, as has been mentioned, involves the abuse of public office for private gain. Corruption happens all over the world in differing degrees. It has happened in Iraq for a long time. There is, however, a difference. The United States is dedicating a lot of lives and a lot of money in Iraq and, in general terms, I don't think it is any of our business to investigate corruption of other sovereign nation's money. However, when the United States has 160,000 troops on the ground and billions of dollars invested, I think we need to be concerned with it, not to investigate it, to be concerned with it because I think it can have a direct impact on the ability of the Iraqi government to achieve the 18 bench- marks that have been laid out for political, security and economic progress in Iraq. So that is why I think it is important, but I think there is a line that ought to be drawn as to how far we should go. Mr. SARBANES. You cited four elements that are impacting progress. One was employee shortage. The other was sectarian in- fluence. The third was the corruption within the various ministries, and the other was security. Let's take employee shortage. Any prospects any time soon that the employee shortage aspect of this will be fixed or remedied or progress much in a positive direction from what you have seen? Mr. WALKER. Well, there are several angles there, one of which there has been a brain flight outside of the country because the se- curity situation. The question is whether and to what extent that might be able to be reversed. I think it is going to take a more sta- ble security question for that to be reversed in any significant num- bers. Second, you have the de-Baathification policy and if political progress can be made on that such that there might be a possibility to be able to tap some expertise from the former regime that may have been Baathist but not hard line Saddamist, if you will, you might be able to achieve some progress there. But then I would ask Mr. Bowen whether he has any perspective because he is on the ground. Mr. BOWEN. First of all, it is an employment issue. The real problem in Iraq is unemployment which ranges up to 40 percent by some estimates, and that provides a breeding ground for insur- gent recruitment. With respect to the corruption effort or the attempt to stem the tide, we have issued two audits in the last 13 months that have found that the U.S. effort has not been well planned, well coordi- nated or well funded. Notwithstanding that, we created two thirds of the anti-corruption bulwark, the IGs and the CPI. I spent a good portion of the first third of my time in this job taking on the support of the IGs because of a vacuum of support and pushing their growth, pushing their interest, trying to. I pushed for an anti-corruption summit which Ambassador Khalilzad held in November 2005. But, notwithstanding those efforts, the plan, the coordination, the funding never came about, unfortunately. It is disappointing as our audits point out. 82 Mr. SARBANES. My time is up. I want to thank the witnesses, and I just want to highlight a comment that the Judge made which was to suggest that the infrastructure in Iraq is almost equal to zero and that the key services being provided by ministries in Iraq are almost equal to zero, which I think is a very damning assessment of where things stand. Thank you, Mr. Chairman. Chairman WAXMAN. Thank you, Mr. Sarbanes. Mr. SHAYS. Let me just ask you, how many Members do you have, because I came here a little later and I would be happy to wait a few more. How many more do you have? Chairman WAXMAN. There are two more. Mr. SHAYS. I would be happy to wait for one more and then I will go. Chairman WAXMAN. There are two more. Mr. SHAYS. Then I will go. First, Judge Radhi, I want to say to you that you honor us by your presence. You are a very brave and distinguished man. I have known about you for a number of years, and I try to get to Iraq every 3 to 4 months. So to have you here is a real honor. I would like to say your decision to leave Iraq is understandable, but it is a huge defeat for good government and my hope of success in Iraq, and I am very sorry that it has come to a point where you feel you need to leave. I first want to say to you, Mr. Walker, I get concerned when we—and to you, Mr. Bowen—from the outside looking in are pass- ing judgment on circumstances that I think are known and yet there is recognizably very little solution. I mean one solution is to give up on Iraq because it is corrupt. That is one solution, and I don't think you are suggesting that. No one can blame the U.S. Government for the fact that the Iraq government is corrupt, no one. You could blame us for going in. Let me just ask you, Judge al-Radhi, are you regretful that Saddam's regime was overthrown by the U.S. Government? Mr. AL-RADHI. [Translated by Ms. Behrens.) As I said in my opening statements, I thanked the United States because it re- moved a dictatorship that oppressed the Iraqi people. Mr. SHAYS. Judge Radhi, I know you said it, but it can never be said too much in an environment where most of Congress is critic that we did, in fact, do that, and so it is important for people to know as I see all the time when I go into Iraq, thank you for com- ing and getting rid of Saddam. But I do believe that the people of Iraq could be very critical for what we did once we were there. What do you think the biggest mistake was that the American Government made? Mr. AL-RADHI. [Translated by Ms. Behrens.] I am not a politician. That is one. The second thing is that the Americans helped the Iraqi people by removing the dictatorship. What is happening now in Iraq is really the work of the neighboring countries. Mr. SHAYS. The Iraqi what? I am sorry. Mr. AL-RADHI. [Translated by Ms. Behrens.] The aspirations of neighboring countries, of regional aspirations. Mr. SHAYS. Should we give up on Iraq and leave? Mr. AL-RADHI. [Translated by Ms. Behrens.] Regional aspirations. ess is critical 83 Mr. SHAYS. Thank you. I want to ask the Judge, should we give up on Iraq and leave? Mr. AL-RADHI. [Translated by Ms. Behrens.] In reality, the Iraqi people would hope that you continue your support to them. Other- wise, they will be suppressed by the neighboring countries. Mr. SHAYS. You appreciate that the United States came in and removed Saddam, and you do not want us to leave. So tell me the bottom line issue of what we can learn by your testimony that will help make Iraq a better place and not have your testimony be used by some as an argument that we should leave? Mr. AL-RADHI. [Translated by Ms. Behrens.] In reality, it is a great endeavor that you came to Iraq and to liberation. Liberation was a great endeavor. I believe if you help the Iraqi people to be managed and governed by an honest government, I believe that the problem will be over. Mr. SHAYS. Thank you very much. Thank you, Mr. Chairman. Chairman WAXMAN. Thank you, Mr. Shays. Mr. Yarmuth. Mr. YARMUTH. Thank you, Mr. Chairman. I would also like to thank all the witnesses. I would like to pursue for a minute the issue that Congressman Tierney mentioned regarding the efforts of the administration to muzzle any discussion about corruption in Iraq, and I would like to address Mr. Walker and Mr. Bowen. As I know Mr. Walker knows, I was a journalist in my former so I have a professional as well as personal interest in ef- forts to conceal information, a natural resistance to that. Last week, the State Department informed this committee that their officials would not be allowed to provide information about corruption in Iraq unless the committee agreed to treat it as classi- fied and withhold it from the public. The State Department sent an e-mail to committee staff, confirming that virtually any discussion of Iraqi corruption was now classified. Let me show you what the State Department said was classified. The e-mail said: “Broad statements or assessments which judge or characterize the quality of Iraqi governance or the ability or deter- mination of the Iraqi government to deal with corruption including allegations that investigations were thwarted or stifled for political reasons and statements or allegations concerning actions by spe- cific individuals such as the Prime Minister or other GOI officials or regarding investigations of such officials.” Mr. Bowen, let me ask you first. Is there anything that you said today that would have passed muster according to this directive other than good morning? Mr. BOWEN. It is a pretty broad directive, and it was not and does not apply to me or my testimony today. Mr. YARMUTH. I understand, but if such a policy did apply to you or your testimony, what effect would that have on what you could do? Mr. BOWEN. A significant effect. Mr. YARMUTH. Would you be able to do your work if this policy were applied to you? 84 Mr. BOWEN. As testifying before this committee, I would have to be more circumspect about what I said, but everything I have said today, virtually everything I have said today, we have reported on in the past, and so this is not new news. We first called the prob- lem of corruption in Iraq a second insurgency over a year ago. Mr. YARMUTH. Mr. Walker, did you know that the State Depart- ment would consider the broad statement in your report that char- acterized the ability of the Iraqi government to deal with corrup- tion to be classified information? Mr. WALKER. No. Several comments on that, first, my testimony is based on this report which the State Department had an oppor- tunity to review and comment on, and they did not classify any of the information in this report which is the basis of my testimony. Second, I can understand why the State Department might have a concern if you were talking about specific individuals because, frankly, in our own country, we would probably have concerns about testifying with regard to ongoing investigations dealing with specific parties. But with regard to the broader challenge, itself, I think it would be over-reaching to try to classify discussions about the broader overall challenge. Mr. YARMUTH. I was going to ask you, the report that you sub- mitted, if the State Department were to issue it, this entire report would have been classified, wouldn't it, under those guidelines? Mr. WALKER. Well, we did submit it to them both for comment, which we do under generally accepted government auditing stand- ards, and second also for sensitive review and classification review, and what you have before you is unclassified Mr. YARMUTH. As part of this new classification policy, the State Department also went back and retroactively classified the reports issued by the Office of Accountability and Transparency. I under- stand that both GAO and the Special Inspector General received copies of these reports when they were unclassified. Either of you, did anyone ever tell you that these reports were classified before you received them? Mr. WALKER. No, and quite frankly I have seen at least two cir- cumstances within the last 2 months where both the State Depart- ment, this being one, and the Defense Department attempted to retroactively classify something that had been made available pub- licly and in some cases were on the worldwide Web which is obvi- ously, I think, highly questionable. Mr. YARMUTH. Thank you very much. It is pretty obvious, Mr. Chairman, that we all know what is going on here. There is no real danger to national security from these reports. The State Department was fine with circulating them on an unclassified basis throughout the government, and it wasn't until this committee asked to see the documents that they took this action. So it is pretty clear that the administration just wants to muzzle any comments that reflect negatively on the Maliki government. Chairman WAXMAN. Will the gentleman yield to me on that Mr. YARMUTH. Yes, Mr. Chairman. Chairman WAXMAN. We even asked one of the people at the State Department whether he agreed with a statement by Sec- point? 85 retary Rice when she praised Prime Minister Maliki for his efforts to stop corruption. She even praised him. We asked this fellow from the State Department, do you agree with that, and he said, I am not allowed to discuss that in an open forum. I can't believe the attitude that the State Department has taken in this regard. It is just incomprehensible to me. We are going to insist on our rights for the Congress of the United States to be able to get information about corruption in the Iraqi government. Their only excuse is that it might embarrass the Maliki government. Well, I think that the information that is already on the record, that is public knowledge should be a source of embarrassment to the Maliki government and a source of concern to the U.S. Govern- t. The levels of corruption according to General Walker and Special Inspector General Bowen and Judge Radhi is that corrup- tion is increasing in Iraq, and the State Department can't keep us from knowing that and can't censor that just because they think it might embarrass or hurt our relationship with the Maliki govern- ment. Too many Americans are over there fighting and dying and too many American are paying taxes to support the efforts in Iraq for her to pretend something is not happening when we all know it is happening. I thank the gentleman for yielding to me. Mr. YARMUTH. Thank you, Mr. Chairman. I yield back. Mr. WALKER. Mr. Chairman, could I real quickly? I testified that corruption is a serious problem in Iraq, and it is, but I can't attest as to whether or not it is increasing or decreasing based upon our work. Chairman WAXMAN. Well, I am not citing you, but both Mr. Bowen and Judge Radhi. Mr. WALKER. You are correct. The others did. I just wanted to be clear for the record. Thank you, Mr. Chairman. I appreciate that. Chairman WAXMAN. You covered yourself. Mr. Braley. Mr. BRALEY. Thank you, Mr. Chairman. Mr. Walker, it is good to see you again. Do you have any ulterior motive for being here today? Mr. WALKER. I work for the Congress of the United States. This is our authorization, authorizing committee. I have no ulterior mo- tive other than to serve my client. Mr. BRALEY. Mr. Bowen, likewise, good to see you again. Do you have any ulterior motive for being here today? Mr. Bowen. No. I am responding to your invitation and thankful for the opportunity to testify. Mr. BRALEY. I raise that interesting question because one of the witnesses on the panel with you has had questions raised by other members of the committee about his ulterior motives for being here today. Judge Radhi, you were the top Iraq anti-corruption official for several years. You investigated thousands of cases involving Shi- ites, Sunnis and Kurds. By being so persistent and evenhanded, you made both friends and enemies 86 We have talked with many people in the U.S. Government who are very proud to be associated with you. For example, Christopher Griffith is a Senior Advisor to the U.Š. Office of Accountability and Transparency at the U.S. Embassy in Iraq, and he said this about you, “I think he is the most honest government of Iraq official that I have met in my 21 months in the country. He has never lied to me. He has tried to be studiously non-sectarian in his efforts, and I have worked closely with them. To the extent that I would trust a government of Iraq official, I would trust him.” Judge Arthur Brennan who is the Director of the Office of Ac- countability and Transparency in the Embassy said this about you, “Among the people that I have worked with in the U.S. Embassy, Judge Radhi had the reputation as a courageous, honest and effec- tive and at least as effective as you could be under the cir- cumstances as effective Director of CPI.” Of course, you know Mr. Bowen who is sitting next to you today. When you resigned your position last month because of escalating death threats against you and your family, Mr. Bowen stated, “It is a real blow to anti-corruption efforts in Iraq. He was the most prominent anti-corruption enforcer.” Mr. Bowen, do you stand by that statement today? Mr. BOWEN. Yes, I do. Mr. BRALEY. Last month, you were attacked by the Maliki gov- ernment. Mr. Bowen, from what you know about Judge Radhi and his work in Iraq on these very important anti-corruption issues, do you believe there was any merit to those accusations? Mr. BOWEN. I found Judge Radhi to be my most reliable partner in carrying out my mission in Iraq. Accusations are commonplace within the Iraqi government, and I don't have any information about the merits of them. Mr. BRALEY. Well, Judge Radhi, I just want to join the rest of the committee in thanking you for making the difficult journey here to share your important testimony with us. No one here un- derstands what you have been through as a true and courageous person standing up for truth, standing up for justice, and we appre- ciate your efforts and thank you for joining us. _ Mr. AL-RADHI. [Translated by Ms. Behrens.] Thank you. Chairman WAXMAN. Thank you very much, Mr. Braley. First, I want to ask unanimous consent that the documents that were referred to in questioning which the majority and minority have looked at be admitted to the record. Mr. ISSA. It has been mutually agreed to. Chairman WAXMAN. Without objection, that will be the order. Mr. Issa, you wanted to ask a few more questions. Mr. Issa. Yes. I am going to be very brief. Believe or not, this is my first round, but if enough people yield to you, it seems like you have been here forever. I just want to followup on a question that I asked earlier, and I asked the question for a reason. We are putting in $6 billion a month into Iraq by anyone's rounding error. It is great or it is less. It is huge. That huge amount of money, approaching a trillion dolla has been spent in this theater so far, why wouldn't we treat, and 87 this is for General Walker first and then for Mr. Bowen. Why wouldn't we treat Iraq oversight of their corruption and of their use of their funds as we treated the Marcos government, as we dealt with the post-Soviet Russian period, as we have dealt with Colom- bia and other countries in which drug money has had an adverse influence? Why wouldn't this committee look at it in terms of the leverage of U.Š. money? I ask that because, although I don't believe we have yet made the case, I hope by the time we adjourn in a few minutes, we will have made the case that, in fact, this committee in both an unclassified the chairman's indulgence, hopefully, in a classified set- ting, should be learning much more than any one individual can tell us. I would go to General Walker first. In your opinion, your experi- ence, is it appropriate for us to have oversight over the billions of dollars being spent of U.S. dollars and not see the effects of the other dollars? Because I would presume that for every dollar that we don't spend, the Iraqis would have to find a way to come in many cases with those dollars, and for every dollar we contribute, we relieve their obligation to use their oil money wisely. General Walker. Mr. WALKER. Well, first, I think this committee has a respon- sibility to aggressively oversee expenditure of U.S. funds, especially when it deals with contracting and other related activities in Iraq. Second, I believe that in general terms it is not the U.S. Govern- ment's responsibility nor is it appropriate for us to investigate Iraqi sovereign money. However, I do believe it is in the interest of this committee, the Congress and our country to understand the nature and extent of corruption overall and to what extent does that undermine the abil- ity of the Iraqi government to deliver on its promises with regard to funding and the ability of the Iraqi government to meet the 18 benchmarks that are necessary in order to achieve “success.” Mr. ISSA. Right. The second part of the question, in your opinion, would that require a followup in a classified setting for this com- mittee to fully understand some of what you and the State Depart- ment and other sources could give us? Mr. WALKER. I clearly think it is in the committee's interest to obtain access to as much information as possible and to the extent that there is information available that is classified, then I would encourage you to avail yourself of that classified information as I did in connection with the Iraqi 18 benchmark report that we issued. Mr. ISSA. Mr. Bowen. Mr. BOWEN. Yes, Mr. Issa, the classified hearing makes sense since those reports are now classified, and I have read them, and they are full of details about corruption within the Iraqi Ministries, specifically cases, case details. So I think that would be useful for the committee. As to the first part of your question, the United States has enor- mous interest in the success of democracy in Iraq, clearly. Iraqi cor- ruption, by the Iraqi government's own admission, threatens that state today. 88 The Coalition Provisional Authority, essentially a U.S. entity, created two thirds of the anti-corruption effort, the CPI, which Judge Radhi headed for the last 3 years, and the Iraqi Inspectors General, and by creating them took on the burden to build their capacity. They were new entities. They did not sustain that burden as our audits have shown either through effective strategic plan- ning or appropriate funding. The way ahead, implicit in your question on that front, I think is engaging those with expertise in the issues you alluded to, inter- national corruption and the fight against it. That is the World Bank. They have two people in Iraq right now. I met with them in August. They have good ideas. They have no capacity themselves to address the issue. They need to lean for- ward and deploy and, more broadly, other United Nations efforts. UNAMI needs to engage, needs to be a presence, ultimately. As with everything in Iraq, multi-lateralizing the solution will improve the likelihood of success of this fledgling democracy. Mr. ISSA. Thank you. Judge, just in closing, I want to thank you for your courageous e last several years. Hopefully, you understand that even though tough questions are always asked by this Congress, it is with great appreciation for the work that you have done in Iraq on behalf of your country. I yield back, Mr. Chairman. Mr. AL-RADHI. [Translated by Ms. Behrens.] Thank you. Chairman WAXMAN. Thank you very much. Thank you, all of you in this panel, for your participation. We have votes on the House floor. We will respond to those votes and be back here in 10 minutes because we still have Ambassador Larry Butler from the State Department and Ms. Claudia Rosett from the Foundation requested by the Republicans. So we stand in recess to respond to the votes, which I think we should be back here in 10 minutes. [Recess.] Chairman WAXMAN. The meeting of the committee will please come back to order. For our next witness, we are pleased to welcome Ambassador Larry Butler. He is a Deputy Assistant Secretary for Near East Af- fairs at the U.S. Department of State. Mr. Butler, it is the practice of this committee that all witnesses that testify take an oath. [Witness sworn.] Chairman WAXMAN. Your prepared statement will be in the record in full, and I would like to ask you to proceed in around 5 minutes. STATEMENT OF AMBASSADOR LARRY BUTLER, DEPUTY AS- SISTANT SECRETARY FOR NEAR EAST AFFAIRS, U.S. DE- PARTMENT OF STATE Mr. BUTLER. Mr. Chairman, Ranking Member Davis, members of the committee, thank you very much for the opportunity to appear before you today. Just to digress a little bit, in the course of my 31 years with the State Department, I have served in countries like Finland and 91 Testimony of Ambassador Lawrence E. Butler Deputy Assistant Secretary of State for Near Eastern Affairs U.S. Department of State Before the Committee on Oversight and Government Reform United States House of Representatives October 4, 2007 Chairman Waxman, Ranking Member Davis, members of the Committee, thank you for providing me the opportunity to testify today. During the course of my career with the Department of State, I have served in countries like Finland and Denmark where corruption is virtually unheard of. This year they rank first and second in Transparency International's list of least corrupt societies. I have also served in countries that emerged from the break up of the former Yugoslavia where corruption had long been a way of life, and thanks to sanctions, conflict and transition from totalitarian communist regimes, corruption and law breaking was essential for survival at every level of society. Politicians sought elected and appointed office precisely to access public resources for personal and partisan benefit. The shift from socialist to private ownership was frequently characterized as brazen daylight robbery by insiders, organized crime and regime cronies. I may have contributed to coining the term, “crony capitalism" to describe Milosevic's kleptocracy during my service in Belgrade. We can therefore, by extension and without knowing any facts, presume that corruption should also be a serious problem in Iraq, as it is in practically every other country in the throes of emerging from dictatorship and conflict situations. None of us should underestimate the challenges of establishing strong and transparent government institutions in the wake of a dictatorship where corruption was woven into the fabric of government. And none of us should underestimate the challenge of rooting out 93 Agency for International Development – have also made combating corruption an important part of their missions, and programs, in Iraq. We pursue these efforts across the country, and not just in Baghdad. At the grass-roots level, for example, the Department of State funds a number of non-governmental organizations that target corruption and are seeking to create a civil society where government transactions are transparent and subject to the rule of law. I would be happy to answer your questions. I know you appreciate that some details, if discussed outside of a classified setting, can endanger the lives of those involved as well as our ability to work with the Government of Iraq. 95 Does that make it classified? Mr. BUTLER. That very much falls under one of the provisions in the Executive order that provides the basis for classification which is where revelation of information would damage bilateral relation- ships. It is intended to be kept confidential, Mr. Chairman. Chairman WAXMAN. Well, let me ask you some of these ques- tions, and you tell me if this is something that you think has to be kept confidential. Has Prime Minister Maliki or his associates obstructed any anti- corruption investigations in Iraq to protect his political allies? Mr. BUTLER. I would be unable to answer that question in an un- classified setting, Mr. Chairman. Chairman WAXMAN. Why is that? Mr. BUTLER. This goes to the nature of our relationship with the government of Prime Minister Maliki, and we have repeatedly on many occasions offered to the committee and to staff to provide an- swers to questions like this in a classified setting. Chairman WAXMAN. The American people want to know whether the government of Iraq currently has the political will or the capa- bility to root out corruption within its government. Do you believe that the government of Iraq has that will? Mr. BUTLER. I am in a position to detail many of the anti-corrup- ts undertaken by the government of Prime Minister Maliki. Chairman WAXMAN. No, no, that is not the question I asked you. Do you believe that the government of Iraq currently has the po- litical will or the capability to root out corruption within its govern- ment? Mr. BUTLER. Mr. Chairman, questions which go to the broad na- ture of our bilateral relationship with Iraq are best answered in a classified setting, and we are very prepared to do that. We are pre- pared to respond. Chairman WAXMAN. That information would be classified? I mean all the people we have in Iraq getting killed, all the bil- lions of dollars we are spending in Iraq. The American people are asking, what are we doing and what are the chances for success? How are we going to have any chance of success if there is cor- ruption going on in the Maliki government? If I, as a representative of over 600,000 people and chairman of this committee, ask you from the State Department whether he has a chance to succeed, you can't answer that? Mr. BUTLER. Mr. Chairman, we have repeatedly made clear our willingness to meet with you and your committee members in a closed session. Chairman WAXMAN. Well, Mr. Ambassador, I think that Sec- retary Rice is going to have a confrontation with this committee be- cause we are not going to accept the idea that if you say something that could be negative about the Maliki government, it is classified; if you say something about them positive, it is OK. That seems to be what we have been told by the State Department. I consider that completely unacceptable, and we are going to have a confrontation on this because the executive branch must an- swer the questions of the legislative branch if we are to do our job. 97 and other countries, an annual report on Iraq including its trans- parency and corruption? Mr. BUTLER. We publish quarterly reports that we submit to the Congress on 2207, I think. Mr. ISSA. Have those been provided to the committee? Mr. BUTLER. Those have been provided to the committee. Mr. ISSA. Fully vetted, do those or do those not say, about many countries, and I have worked the Egyptian desk, so to speak. So I have read those every year along with all the other areas, the Lavant. Iraq, in that report, looks better or worse than Egypt or other countries in the Lavant, other Arab countries? Mr. BUTLER. The 2207 report is very specific to Iraq, and I would not be able to draw comparisons to other countries. Mr. Issa. Does it look pretty bad? Does it look like, in fact, that you have a corrupt government in that report? Mr. BUTLER. I cannot recall. In the 2207 report, I don't think we get very much into the specifics of corruption. Mr. ISSA. OK. So do you think there should be a report that talks about a direction improvement or dropping off in the level of trans- parency and/or corruption in Iraq? Mr. BUTLER. The Embassy, under the direction of Ambassador Crock is focused and will continue to be focused on dealing with the issues involving corruption in Iraq. We have stipulated; there is corruption in Iraq. How to measure it, I don't know. This is a country that is undergoing violence. It is difficult to figure out what are your definitions. Mr. ISSA. Well, you mentioned the post-Soviet period. Does it look a lot like Russia did? Mr. BUTLER. It looks very similar. Many aspects of that do look similar. Mr. ISSA. So in a post-dictatorship period, a post-organization pe- riod, an emerging democracy with privatization, with systems that were previously subsidized in one way that are not being sub- sidized the same way now, it, to you—only wanting your opinion- is it not surprising, even if we didn't have the violence, even if we didn't have the insurgency, that this is, in fact, pretty close to a basket case as far as legitimacy of the institutions of government and delivering services? Mr. BUTLER. I don't, would not. I would not associate myself with an assessment close to a basket case. The government of Iraq is in an ongoing process of a revolution of creating a government in a democracy where one did not exist before. Mr. ISSA. Is it better than the mid-1990's in Russia? Mr. BUTLER. Hard to make comparisons. Mr. ISSA. Does it look reminiscent of the mid-1990's in Russia? Mr. BUTLER. In some areas, there are many similarities. Mr. ISSA. What is Maliki doing as far as you know or key min- isters of his to fight corruption that you can say is being effective? Mr. BUTLER. During the 18 months that Prime Minister Maliki and his government have been in power, and that is, I think, a key number to focus on. It has only been 18 months. 98 He inherited the Commission on Public Integrity as well as the Board of Supreme Audit that were established prior to him assum- ing power, becoming the first democratically elected Prime Minister of Iraq subsequent to 2003. He created the Joint Anti-Corruption Council in May 2007. The Prime Minister has provided crucial support to the JACC's creation which is an Iraqi solution to an Iraqi problem. Part of the Joint Anti-Corruption Council's agenda is to formu- late recommendations, and this is one of the areas that I know came up earlier in the day, and this has to do with Paragraph 136(b) of the Iraqi Criminal Procedures Code. That is on their agenda to deal with. They are also working with the Inspector Generals to create an association to coordinate strategic goals. Mr. ISSA. OK. My time is going to run out, and I appreciate the long list, but let me just ask one question. The President has openly said that he is—I will characterize- disappointed in this government's movement toward passing cer- tain almost universally agreed on need for reforms, such as carbon sharing, such as these corruption laws. To the extent that they on the agenda, you get no points. Do you see the likelihood that in a timely fashion they are going to be passed and enforced? I want your opinion, your assessment on that. Mr. BUTLER. I would need to take the so-called benchmark legis- lation which doesn't include anti-corruption measures specifically, but they are all built in there. Ambassador Crocker, working with Prime Minister Maliki, continues to work toward achieving the leg- islative goals. In the meantime, two things I would like to throw out there is that Prime Minister Maliki did something back in March which dramatically improved one aspect where there had been corruption, and he put the Iraqi Army around the Bayji refinery. Mr. ISSA. He started watching the oil. Mr. BUTLER. He started watching the refined oil, specifically, which was literally going out the front and back gate and was end- ing up on the black market. The second thing the Prime Minister did, and I think this is an important point, was followed an IMF recommendation to, on two occasions, increase the price of fuel in Iraq which reduced the dis- parity between the black market price and the street price, which has taken a huge bite out of the black market. Some of that money was going into criminal networks, some of it was going to feed the insurgency. These are very important steps to drain the swamp that insurgents and organized crime are operating Chairman WAXMAN. The gentleman's time has expired, but how can you say all those positive things about Iraq but you can't admit to any of the negative things? Ambassador BUTLER. Mr. Chairman, we acknowledge there is corruption in Iraq, and corruption, by necessity, is defined as when government officials at every level are not discharging their jobs. We recognize that this is a rapidly changing environment and we have an Embassy which is rapidly changing and evolving to meet and respond to the threat, if you would- 99 UIS Chairman WAXMAN. I am talking about what you are able to say in this meeting. You are able to say all the things that you think are positive that he is doing, but you are not able to talk about the failures of the Iraqi government, even though we had a panel that has given us very clear indication that this government is riddled with corruption. Why can you talk about the positive things and not the negative things? Shouldn't we have the whole picture? Ambassador BUTLER. Mr. Chairman, I would be ve would be very pleased to answer those questions in an appropriate setting. Chairman WAXMAN. An appropriate setting for positive things is a congressional hearing, but to say anything negative has to be be- hind closed doors? Ambassador BUTLER. This goes, as you know, to the very heart of diplomatic relations and national security. This is our ability to Chairman WAXMAN. No, it goes to the heart of propaganda. Ms. Watson. Ms. WATSON. Thank you, Mr. Chairman. Stuart Bowen and David Walker testified earlier today about the lack of leadership undermining the anti-corruption 2 efforts at the U.S. Embassy in Iraq. Mr. Bowen and Mr. Walker are certainly not alone in that sentiment, and as I sit here—and you know I have been there out in the field, at a post, and any area of corruption I reported to the Secretary of State immediately. So on my watch I would not allow it to go on without at least making a statement about it, and I would go any place at any time to say that Amer- ican taxpayers' money was being abused and misused. So over the past few weeks committee staff have interviewed several Embassy officials involved with U.S. Embassy anti-corruption efforts and they uniformly told us that no single official has been put in charge of U.S. efforts to combat Iraqi corruption and that there is no co- ordinated strategy for fighting corruption in Iraq. Judge Arthur Brennan, who served as the Director of the Office of Accountability and Transparency for part of 2007 was asked whether there was an overall U.S. strategy for combating Iraqi cor- ruption, and let me read an excerpt from his transcript: “During the time you were there, were you aware of any coordinated U.S. strategy to fight corruption in Iraq?” The answer was “No.” James Santelle, Rule of Law Coordinator at the U.S. Embassy, told committee staff the following: “The Embassy, over time, devel- oped what are called stovepipe institutions. There is not coordina- tion, as I have said before. You have a system where the coordina- tion is lacking.” Anti-corruption efforts are supposed to be a cornerstone of the U.S. effort to bring political reconciliation in Iraq. How is it pos- sible that these efforts can be in such disarray? Ambassador BUTLER. Ambassador, to take a moment and de- scribe Embassy Baghdad and the environment it is in, and to pay tribute to the men and women of the United States, as well as their counterparts in the Iraqi government who have stood up to tackle the very real challenges presented to the development of a market-based economy and a real democracy, Embassy Baghdad is an Embassy where it endures nearly 100 percent turnover every year and in a rapidly changing external environment- 101 Chairman WAXMAN. Time has expired. Ms. WATSON. Excuse me. I know my time is up. Chairman WAXMAN. Unless you want to say something, we are going to move to Mr. Davis. Mr. Davis. Thank you. Yes, I heard something different in the testimony. I remember Ambassador Bremer saying that we gave it to people who gave it out. There weren't accounting systems fur- ther on down the line, but we gave it to the appropriate authori- ties. As you know, it was an emergency situation at the time; you had to start paying people and the like. I gather that is your testimony. Ambassador BUTLER. These were CPA days, yes? Mr. Davis. Yes. Ambassador BUTLER. With accountable taxpayer money—and if I am wrong on that one, sir, I do apologize—IIRF money and others- Mr. Davis. This was Iraqi money, I think is what she is talking about. Ambassador BUTLER. I believe that is correct. And it was CPA time, as opposed to U.S. taxpayer money. We take our responsibil- ity to look after taxpayers' money very carefully, very seriously. I just wanted to take a moment- Mr. DAVIS. Well, let me do this, because I have 5 minutes, and I don't want you answering her questions in my 5 minutes, I am sorry. Ambassador BUTLER. Yes, sir. Mr. Davis. Page 1 of the strategy says that the basis of the prob- tion in Iraq is market distortions, cultural tolerance, intimidation militias, undeveloped civic culture, lack of government capacity. What market distortions enable or foster corruption? Ambassador BUTLER. First and foremost, when you are selling subsidized or under-market priced fuel. We saw gasoline and diesel fuel being diverted all over the place into the hands of militias and organized crime networks who were selling it on the black market and pocketing the difference. And that has been taken care of. Mr. DAVIS. OK, so we have fixed that problem? Ambassador BUTLER. It is being fixed. Mr. DAVIS. Describe an example of cultural tolerance of corrup- tion. Ambassador BUTLER. For 35 years, the people in Iraq lived under a system where you had to play by the rules of the Bathist party and Saddam Hussein. That would be the cultural. If you wanted to survive, you paid whatever you had to to the boss on top of you and do things that were for the regime and not for the benefit of the broad public. Mr. DAVIS. So it was like a little tip to get things. Ambassador BUTLER. And something we see in the former Soviet Union and in the former Yugoslavia. Mr. Davis. Well, it is not uncommon, in fact, around the world, is it? Ambassador BUTLER. No. Mr. DAVIS. What are some elements of civic culture that would reduce corruption? 102 Ambassador BUTLER. The lack of NGO's, civic associations, soci- eties that serve as public watchdogs who are able to come in and say money has been wasted on this particular project and effec- tively become whistleblowers and can lobby in Baghdad or in the provincial governments. Mr. DAVIS. What would you say is the key government capacity that is most important in establishing fighting corruption, would it be the IGs, the CPI, the BSA? And how do we prioritize? Ambassador BUTLER. I wish I could point to one thing that fights corruption. Corruption is a lot like a football game, you have to play defense with the IGs and the other investigative bodies, but you also have to play offense, and that means you put in place the mechanisms, the technical capacity to reduce the ability of people to put money in their pockets or steer contracts to cronies or fam- ily. Mr. DAVIS. We have heard a lot of questions about the classifica- tion of documents. I guess really what I want to know is allow you to say what steps the U.S. Embassy is taking to assist the Iraqi government's counter-corruption. How are the anti-corruption of- fices organized? What is the strategic plan to assist in countering corruption? How many people do we have involved with that and how much funding are we allocating? Ambassador BUTLER. Over the last 4 years we have dedicated significant Iraq reconstruction rehabilitation funds to support Iraq anti-corruption Mr. DAVIS. What is significant? Can you give me an idea, what is significant? Ambassador BUTLER. I don't think I have a number for you. Mr. DAVIS. To me, $1,000 is significant, but in a case like this, what is—for some in government salary. What is a significant amount, ball park, is it tens of millions? Ambassador BUTLER. I would have to come back to you on that one in writing, sir. Mr. DAVIS. OK, I think we need to know that. OK. Ambassador BUTLER. I will come back for the record, please. Mr. DAVIS. OK. Keep going. Ambassador BUTLER. That was to support both the CPI and the board of the supreme auditors. As a result of the USG assistance to the Commission on Public Integrity, the CPIs conducted over 4,000 investigations and made several high profile arrests, includ- ing the former minister of electricity and minister of labor and a number of officials of the ministry of oil, and referred more than 2,000 cases for prosecution to the Central Criminal Court. INL also funds Department of Justice resident legal advisors. These are U.S. prosecutors who advise and mentor criminal court justices in all manners of serious cases. We have also funded Department of Jus- tice ISITAP advisors and specialists to train and mentor the inves- tigators from the Commission on Public Integrity. There were 11 of these investigators who came back with Judge Radhi to learn how to do polygraphs. Every one of those investigators went back to Iraq to get back to work with their new skills. IRF also works to enhance investigative capacity of the CPI, as well as provide equipment for their investigators. 107 Thank you, Mr. Ambassador. During this hearing today, we have seen a pretty stark contrast. We saw, on the first panel, Judge Radhi, who is risking his life to tell us the truth, and here you are in the position of not being willing to risk your career truth. Now, I am not faulting you, most people wouldn't want to risk their career, but we have the responsibility of raising money from the American people to pay for this war, and Judge Radhi told us, in his testimony that, “The cost of corruption that my com- mission has uncovered so far across all the ministries in Iraq has been estimated to be as high as $18 billion.” Now, maybe that is Iraqi money. My friend, Mr. Shays, tried to e that point, but money is fungible. I think total U.S. appro- priations for reconstruction in Iraq has been about $20 billion. And if money is fungible and they can swap Iraqi money for dollars, we may have been party to taxing American citizens to pay for mas- sive new levels of corruption heretofore unseen in Iraq. We have been in the country for 4 or 5 years now; they haven't exactly pulled out of the bottom of the ratings on the corruption index. The dispute we have had over what is an open testimony and what is classified, the viewers should understand that it is not what we hear in a classified session—we would like to learn as much as we possibly can—but by hearing it in that session, then we are unable to talk about it, so the taxpayers don't get any new information. If you can't tell us here, they will not learn a thing, and here, sir, the people rule. And after 4 or 5 years than this, a longer engagement than World War II, they are kind of wondering what we should do, and we need to supply them with answers, and it shouldn't be an ideological dispute. Let me ask you. I talked about the Jones Commission before, an excellent independent, bipartisan commission that reported last month, led by Marine Corps General James Jones, and he said sec- tarianism and corruption are pervasive in the Ministry of Interior and cripple the Ministry's ability to accomplish its mission to pro- vide internal security to Iraqi citizens. He said basically it is so bad we have to disband the whole thing. What is your opinion of General Jones' view of the Ministry of Interior's behavior? Is he right or wrong? Ambassador BUTLER. Mr. Congressman, in 2004, the U.N. re- stored sovereignty to the Iraqi government. The recommendation as to what happens with the Ministry of Interior and the police forces would be a decision for the Iraqi people, the Iraqi Council of Representatives, and the Iraqi government. Your first comment, my job here is to protect the lives and the interests of the people that are in Baghdad and throughout the country, from Irbil down to Basra. Some of the details that have been alluded to would have the potential of compromising their re- lationships and operations. I am sure you will appreciate that. The military calls it operational security, OPSEC. And the second part is our ability to have influence and be able to maintain trust with our interlocutors in Iraq is something which is very much covered itional security information. It is a judgment call and I have an obligation to them; not to my career, but to the people who can't be here to answer your questions, but have a very hard job to do. Judge Radhi and his colleagues risked their lives, some lost their 108 lives. He has left his country and his homeland and done a coura- geous thing by coming before the committee. There are folks still there who have to finish the job, and the job will take as long as the job takes. I can't predict when it will end. I have never seen corruption entirely routed out or defeated any- where, but the Iraqis, because it is their country, have to develop the capacities, and your oversight is more than appropriate, it is very welcome to make sure that we in the executive branch are doing what we are supposed to do, what we can do to support Iraq develop the institutions and the capability to reduce corruption to the point where it doesn't affect economic development, where it doesn't fuel sectarian tensions, and helps this country become a strong and vibrant democracy. Mr. COOPER. Marine Corps General Jones is as patriotic as you are. Mr. Bowen, the SIGIR Inspector General of Iraq, is as patriotic as you are. They are telling us what sounds more like the truth than what you are, at least in an open setting. A final point. I see my time is running out. Secretary Rice said, in October 2006, “They, the Iraqis, need to do more of the kind of that apparently the interior ministry is trying to do.” So here she is in a public forum complimenting the same ministry that General Jones tells us is so sectarian, so corrupt, basically, the Iraqi police need to be disbanded. Why is our Secretary of State saying things that are so directly at odds with the Jones Commis- sion? Ambassador BUTLER. General Jones and his very distinguished panel, who spent considerable time in Iraq in August and Septem- ber, did so as private citizens with considerable extraordinary serv- ice in uniform to the country and the police service as well. Chief Ramsey was a member of that Commission. Certainly respected professional judgments based on what they saw and heard out There, and we are looking very hard at it. The Department of De- fense, as you know, has primary responsibility for the Ministry of Interior and the Ministry of Defense. Mr. COOPER. I see that my time has expired, Mr. Chairman. Chairman WAXMAN. Mr. Tierney. Mr. TIERNEY. Thank you, Mr. Chairman. I don't think the Amer- ican people would sit by idly and quietly if we were having secret discussions about $18 billion worth of taxpayer money going out the door through corruption, and I don't know of any situation where corruption has ever been defeated or diminished with secret meetings, as opposed to shining light on it and bringing it out into the public light and the public coming forward, whether Iraqi citi- zens or American citizens, demanding something be done. I mean, these hearings are about finding out who is corrupt, how that cor- ruption is playing out, what should be done to stop the corruption, and to the extent our government is, what are we doing about it and how is it going. We are not doing very much, when Judge Brennan, the former Director of the Office of Accountability over there aware of any coordinated U.S. strategy to fight corruption in Iraq; when James Santelle, who supervises the activities of that OAT or- ganization and is the Rule of law coordinator for the Embassy, told us you have a system where the coordination is lacking; and Mi- 111 start doing something about it, and we will find out who is involved with it and get it done so that our people aren't being shot with weapons bought from money as a result of corruption. Chairman WAXMAN. Thank you, Mr. Tierney. Ambassador Butler, Stuart Bowen and David Walker testified earlier today that there is a lack of leadership undermining the anti-corruption efforts at the U.S. Embassy in Iraq. Mr. Bowen and Mr. Walker are certainly not alone in that sentiment. We have also heard in other interviews from several Embassy officials that there is no coordinated strategy for fighting corruption in Iraq. Now, maybe you don't want to talk about this issue because the U.S. Embassy is not doing its job. How do you respond to that? Ambassador BUTLER. The SIGIR report of July did a couple of things, and the previous year. One, that there should be a consoli- dated anti-corruption strategy, which was prepared in 2006; and then, subsequent to this year's SIGIR report, Ambassador Crocker has convened and designated a person to conduct a full anti-corrup- tion internal organization review. Chairman WAXMAN. So you are doing better. Ambassador BUTLER. We are attacking the problem when we find the problem, sir. Chairman WAXMAN. Well, we learned, a couple days ago, when we looked at Blackwater, which works for the State Department, that there was no real oversight that the State Department was providing with regard to Blackwater troops, and they are a private military. Now I am wondering what kind of job the State Depart- ment is really doing, with this conflicting testimony, in oversight in terms of anti-corruption efforts, and I think this is going to be a serious matter that we are going to have to review. I also want to just end by saying that I think your position is absolutely absurd that you cannot answer questions in an open forum that the American people are entitled to have answered be- fore we appropriate more money to put into this war effort in Iraq. I just cannot understand it. So when I say we are going to have a confrontation with the Secretary, we want to know whether the State Department is doing its job of oversight with the private mili- tary that they have employed; whether they are doing their job of oversight with regard to anti-corruption efforts, which our Embassy should be supporting more strenuously; and we want to know why the State Department is refusing to talk to Congress and give us answers to questions that ought to be given in a public forum. So I put that out there not to have you address it, but I just want to put you on notice and the State Department on notice that we are going to have to resolve these matters. Mr. Davis, anything further before we move on? Mr. DAVIS. Well, let me just ask what is the long-term hope over there? We are spending over half a trillion dollars to try to bring democracy and the rule of law to this country, and the question I think a lot of us face is are we giving birth to a democracy or are we babysitting a civil war. Ambassador BUTLER. Mr. Davis, that really is the fundamental question, and my faith is in the people that are working on this, both in the men and women in uniform under General Patraeus’ command and the men and women who work for Ambassador 112 Crocker. Democracy is not easy; it is hard. It takes time, it takes imagination. We have a phenomenal team out there. And I very much, Mr. Chairman, value your candor and appre- ciate the committee's attention to these issues because corruption is something that I have had to deal with in just about every as- signment I have had in the last decade. This is hard. I have never seen anything as complicated as presents itself in Iraq, with a com- bat zone going on, the influence of the neighbors, and add to it the oil resources. I am confident that Ambassador Crocker is the right leader. He will, together with Jim Santelle, the head of the Rule of Law Department, get that part of it organized. At the same time, what we haven't really emphasized this very much, Mr. Davis, but the efforts to develop the capacity of the Iraqis themselves, invest in people, invest in sort of help us, bu- reaucracies. They are able to deliver services and support the democratic institutions that are accountable to the people and that the Iraqis themselves can be proud of and not afraid of. I think we share that goal. Mr. DAVIS. Thank you. Chairman WAXMAN. Thank you for your testimony. Just for the record, total funding for ongoing and planned anti-corruption ac- tivities through June 15, 2006 was approximately $65 million, or less than .003 percent of the total Iraqi IIRF funding to date. That is just so we have a perspective of how much we are doing finan- cially in that area. We are now being called for a vote. We will respond to the vote and then come back and here the last witness. [Recess.] hairman WAXMAN. For our last witness, we are pleased to wel- come Claudia Rosett, a journalist in residence at the Foundation for the Defense of Democracies. We are pleased to have you with us today. It is the custom of this committee to ask all witnesses to answer questions under oath, so if you would please stand. [Witness sworn.] Chairman WAXMAN. Thanks. Your prepared statement will be made part of the record in full. We would like to ask, if you would, to present your oral statement in around 5 minutes. The button on the base of the mic you need to push. STATEMENT OF CLAUDIA ROSETT, JOURNALIST IN RESI- DENCE, FOUNDATION FOR THE DEFENSE OF DEMOCRACIES Ms. ROSETT. Good afternoon, Chairman Waxman, Ranking Mem- ber Davis, and members of the committee, wherever you are. Thank you very much for the chance to te here today. I hope I can be of some help in providing some background and context for what you have been discussing. These are extremely important matters. Is the mic at a good distance here? OK. In listening to it, there are a few things I want to mention be- cause I think they may be important, and I could not agree more with you that corruption is a huge problem, and it is one that should concern people, whatever side of the aisle, whatever. A brief story I want to tell you. 118 degree that transformed virtually the entire economy of Iraq into a network of patronage, plunder and graft. In other countries that have emerged from tyranny bereft of any normal, functional system of law and versed in criminal rackets - for instance, most of the nations spun out of the former Soviet Union -- we have witnessed the enormous difficulty of establishing institutions that police corruption and protect and reward integrity. In Iraq, this has been made all the more difficult not only by the violence, but by the legacy of the sanctions era and relief program that marked Saddam's final stretch in power. Sanctions, combined with Oil-for-Food, was a mix meant to contain and control Saddam's government while delivering help to the population. The irony is that the UN arrangements served, if anything, to hones the skills, compound the complexities and extend the depth of corruption both inside and emanating from Iraq. In the various investigations into Oil-for-Food that followed the overthrow of Saddam, much has come to light about the devices and dodges by which the Iraqi regime translated erstwhile relief funds into palaces, arms and patronage, rather than baby milk, medicine and soap. Having entered into an agreement with the UN in 1995 that despite the sanctions imposed in 1990 following the invasion of Kuwait, Iraq's government would be allowed to sell oil solely in order to buy humanitarian relief, Saddam and his sons, cronies and functionaries then enlisted every subterfuge, scam and corrupt practice in the book to cream money out of the funds theoretically earmarked for the public good. Meanwhile, the majority of the population came to depend on the patronage and rations doled out by this same corrupt government. Corruption was the norm; the only issue was who came out on top in the competition to run the rackets. This provides at least a crude guide to the habits and tacit understandings – not to mention the unfortunate set of skills - which any attempt to address corruption in Iraq must now overcome. An excellent report on this era, released in September, 2002 by the Coalition for International Justice, is a 70-page study entitled "Sources of Revenue for Saddam & Sons: A Primer on the Financial Underpinnings of the Regime in Baghdad.” It includes a discussion of the competing crony networks of that time, the shifting balance between Saddam's sons, and an overview of sanctions-busting techniques -- illicit, immoral and ever more refined - including not only such well-known practices as smuggling oil (and the jockeying for the franchises to do so) and over-invoicing to scam money out of payments for food, but practices such as “Fleecing Pilgrims.' One of the authors of that study, John Fawcett, testified two years ago before the House Committee on Energy and Commerce. In that instance he was speaking mainly abo effects of Oil-for-Food corruption on the international system. But what he said applies even more thoroughly to Iraq itself: “The oil for food program gave a tremendous boost towards the institutionalization of corruption within the global economy, the repercussions of which have barely begun to emerge." 119 One after another, subsequent studies have weighed in with similar findings about the corruption that grew inside Iraq (and radiated from it). When CIA chief weapons inspector Charles Duelfer produced his September, 2004 report, what grabbed headlines was that he had found no weapons of mass destruction. Less noticed was that he had devoted hundreds of pages of his massive report to chronicling the vast landscape of corruption he encountered via interviews with former Iraqi officials, and documents from the secret files of the regime. In his introduction to what is now known as the Duelfer report, he wrote: “In many ways, the arms inspectors have merely been leading the way.. in exploring the decay that Iraq became, and, indeed, the corrupt systems that grew parasitically on Iraq as it decayed.” Mr. Duelfer included detailed descriptions of many of the front companies, rackets, and the institutionalized corruption, such as that of the Ministry of Foreign Affairs, which “facilitated, established, and maintained foreign government and business contacts and, provided Iraqi officials involved in illegal international trade with financial and political sanctuaries.” Similarly, when Paul Volcker's U.N.-authorized probe looked into Oil-for-Food activities on the ground in Iraq, he found - as he noted in his Sept. 7, 2005 report – that “It is clear that the environment in Iraq during the Programme enabled (and possibly even fostered) corruption." Among the examples he cited, “in which poor controls enabled fraud and corruption" was the need, in absence of a reliable banking system, to transport and keep on hand large amounts of cash. In a U.S. federal trial which ended just this week in Manhattan with the guilty plea (of conspiracy to defraud the Oil-for-Food program) of an American former Oil-for-Food contractor, Oscar Wyatt, prosecutors introduced into evidence a once-secret database kept by the marketing arm of the Iraqi Oil Ministry. It was devoted entirely to keeping track of hundreds of millions of dollars worth of illicit kickbacks on oil sales – including not only the names of the clients paying these fees, but the relevant front companies from which the money came, and the illicit Iraqi-controlled accounts into which it flowed. This was corruption exalted to the level of state policy - not for the good of the Iraqi people, who were in fact the chief victims of these schemes. This translated into a culture of graft so brazen as to produce the example in 2002 of a Russian businessman with a Swiss front company, Lakia S.A.R.L., who paid a $60,000 "deposit" upfront - in other words, a kickback -- into a secret Iraqi-controlled account in Jordan, in order to obtain a lucrative Oil-for-Food oil contract. The Iraqis on the receiving end took the money, but did not deliver the contract. Outraged, this businessman sent faxes to both the UN and the Iraqi government in Baghdad, demanding a refund of his kickback. Multiply this sort of scene across thousands of companies contracting with Saddam's government under the official Oil-for-Food program, compounded by many more doing 122 to earn a living, where there wasn't somebody doling it out or peo- ple fighting for this immense source of wealth. However, I under- stand the State Department probably isn't going to go bomb the oil wells of Iraq. Mr. DAVIS. No, but that is a good observation. You know, the fastest growing Arab economy in the Middle East is Jordan, and they have no oil. Ms. ROSETT. Exactly. And that is no accident. Mr. DAVIS. Correct. Ms. ROSETT. It is the great curse. In fact, it is the same thing- some of the most perceptive Russians said to me when I was work- ing there, and that is one of the problems here. In other words, it is so tempting to talk about fighting corruption in terms of set up an agency, do a study. There are things that, if we had privatized that oil when we first went in there and you could see the com- plications. There would be an outcry: oh my God, is that trying to steal it? It would have been terribly important. If there is ever any political way to do it—I don't see really how you would, but you are the politicians, I am not. What I can see is if there were any way to do it, the money should go to the people of Iraq. That is the patrimony that right now, in theory, they own, but in practice what they get for it is wars. And it is looking for some way to deal with things like that can actually help. As I mentioned, I am not familiar enough, right now, with what are the nest of rules of claims of things that Iraqis have to bribe for. I am much more familiar with what it was when Saddam Hussein was doing business. That was quite obvious. Mr. DAVIS. Do you know how this operated under the British mandate? I mean, you know the level of corruption? The British usually ran a pretty clean area. Ms. ROSETT. Yes. Well, one of the things that was much harder to buy under the British was any semblance of law. I mean, any system will have some corruption, but part of—I saw it at work in Russia. It is frustrating, it is heartbreaking. You can see what is needed and it is extremely hard to bring into being. Thus, that an- swer of 50 years, when Douglass North—he wasn't kidding. But back up for a minute. Look at what was going on in Europe just after World War II. Germany was a disaster. I mean, Graham Greene wrote wonderful novels about how corrupt things were in those times. That was the third man, Orson Wells selling tainted penicillin, you know, laming children so he could live well, the sort of symbol at the time. You know, it takes a long time. And I realize the question you have been asking at the hearing today is, is there a sign of hope. I would suggest there is in the following sense. Under Saddam Hussein there was no hope; it was built into the system in ways where, as long as he and his circle were there, nothing could change. Now there is some hope and there are some signs that I think matter. That Al Mada list I men- tioned earlier, a Baghdad newspaper at least could print a list of the corrupt people; they can discuss it to a degree they could not. Chairman WAXMAN. I am going to ask you to hold that and rec- ognize Mr. Van Hollen. He may be pursuing the same lines of ques- tions. 123 Mr. Davis. Mr. Chairman, let me just thank our witness. I am going to leave, but thank you for being patient and thank you for adding your observations. Ms. ROSETT. Oh, thank you Chairman WAXMAN. Mr. Van Hollen, do you have questions of the witness? Mr. VAN HOLLEN. I just want to thank the witness. I caught some of your testimony actually on the internal monitors, as you started off your testimony. I think we can all agree this is not a partisan issue in terms of the desire to fight corruption, that Re- publicans and Democrats alike would like to join in that effort. And having been a journalist, I would assume that you think that pub- licizing or exposing corruption is one way to fight it. Wouldn't you agree? Ms. ROSETT. It is a pretty good way, yes. Mr. VAN HOLLEN. I mean, we have a saying around that sunlight is often the best disinfectant, meaning if you allow the public to watch what is going on— . Ms. ROSETT. I usually call it daylight, but I like that, yes. Mr. VAN HOLLEN. Daylight, OK. But, I mean, you would agree with that general proposition, would you not? Ms. ROSETT. Yes, I would Mr. VAN HOLLEN. So I find it very curious that the State Depart- ment has taken the position that even talking about corruption in Iraq in open is somehow a bad thing, because you would think one of the best tools we could use to try and clean it up and make sure that funds were better used would be to expose the problem in pub- lic. Wouldn't you agree? Ms. ROSETT. I would. I think they are making a mistake. Could I back up, though, and just say one thing I think is terribly impor- tant to put in context, and it is that they should have been doing it for years. Again, it is what I was saying before. This thing has deep roots, long legs, and has morphed as it has gone along. I am not convinced, from the tangible signs one can see, that there is more corruption in Iraq than there was, say, during the final years under Saddam, because I think you need to ask the further ques- tion corruption of what kind. What is it buying, what is it doing? Mr. VAN HOLLEN. If I could just- Ms. ROSETT. But basically what I am saying is, oh, yes, I think they should have exposed the documentation they had on corrup- tion under the U.N. Oil for Food Program. I think they should have spilled out documents as soon as they went into Baghdad and began finding them. And, yes, I do think they should be producing more today. Mr. VAŇ HOLLEN. Right. I mean, obviously, the regime of Sad- dam Hussein was a terrible regime. It was a regime we did criticize openly in many, many different ways, for lots of their actions, but- Ms. ROSETT. No, no, you have no idea. The frustrations that you have been experiencing I found in trying to get documentation. Mr. VAN HOLLEN. I understand. But we did invade Iraq with the government of Saddam Hussein and now, of course, we are there. We had the interim government and we had the coalition author- ity, and the fact of the matter is we are now, wouldn't you agree, JUDU 125 ly, is an attempt to hide a very real problem going on in Iraq from the American people. Thank you very much, Mr. Chairman. Chairman WAXMAN. From the American people, not the Iraqi people. Mr. Shays. Mr. SHAYS. Thank you, Mr. Chairman. Thank you for having this hearing and thank you for the witnesses that you have asked to step forward. One of the advantages of missing your testimony, which you summarized, is I actually read your whole testimony, and it is pret- ty stunning, because what you basically say is that Iraq has been a corrupt country for any number of years, but it had a unique rruption because it was using the apparatus of govern- ment under Saddam to become even more corrupt- Ms. ROSETT. That is right. Mr. SHAYS [continuing]. And that the Oil for Food Program, which, by the way, our committee exposed, we led the charge on and you were a witness, and a wonderful witness, the Oil for Food Program institutionalized the corruption in a very public way with- in Iraq. Where I might disagree with Mr. Van Hollen and my very distin- guished and sincere chairman is that I believe that the Iraq gov- ernment is thoroughly corrupt based on what it has been, and I be- lieve in part it is corrupt because there are some in the government who, if they thought it would be a government that would last and so on, that they would be more willing to invest and say, OK, I will make money in the long run through a less corrupt way, but if they think that we are going to pull the rug out from under them, some are just going to cash in on a government they think is going to fall. And I will say parenthetically one of the reasons why I think we need a time line to tell those who think we are going to pull the rug out from under them we are not, and to tell those who think we are going to stay forever that we are not going to stay forever in the way that we are now. That is an editorial comment. What I would like you to comment on is just explain in your words how the Oil for Food Program has created almost a unique form of corruptness within a government. . Ms. ROSETT. Sure. What it did was where, as you heard the Judge say, Saddam had sort of taken all oil for himself and his sons and his immediate cronies, this made it an internationally ap- proved system in which basically he was handed all rights to dis- pose of all the oil, to conclude all deals, and this was under U.N. sanctions. It was a truly poisonous mix, in other words. Iraq was enormously corrupt, from what one can read, before sanctions were imposed Mr. SHAYS. So what he did is he undersold his oil and got kickbacks Ms. ROSETT. Yes. Mr. SHAYS (continuing]. And he overpaid for commodities and got kickbacks- Ms. ROSETT. Yes. 127 go to see who performed the act. And it would seem to me that should be our emphasis, where do we identify a specific action of corruption. And I do agree, Mr. Chairman, with this point. I totally agree with it. If we have a witness that says Mr. Maliki or someone else and he was under oath, I believe? Chairman WAXMAN. Yes, all witnesses before the committee are. Mr. SHAYS. Is under oath, is saying to us that a specific person basically told me if I did this my life would be in danger. Now, if he is saying that someone else is going to make your life in danger, that is one thing, but if he is saying I am going to make sure your life is in danger, I think that needs to be exposed. I do totally agree with that. Chairman WAXMAN. Would the gentleman yield to me? Mr. SHAYS. Absolutely. Chairman WAXMAN. I asked Judge Radhi do you think that Prime Minister Maliki is corrupt, and he said to me I am a judge, I can't make a decision on a point like that; I can't say that. But he said what I do know is that he stopped investigations of corrup- tion of some of his relatives. Mr. SHAYS. And if I could, and that, I think, is the key point. It is kind of what I am learning from this. The way he said it is the way I think we ultimately get at it, because he is basically stating fact and action, to which we t Ms. ROSETT. Which is the basis of law, actually, which I think ultimately is what is needed here, is what Iraq is desperately miss- ing. Chairman WAXMAN. I think you both made very good points. Do you want to summarize, Mr. Shays? Mr. SHAYS. Well, just to thank you, Mr. Chairman, for having this hearing. I thought your statement was excellent because the one thing it has done for me is it has made me realize that there have been cor- ruptions in lots of governments, but what is unique about this is, under Saddam, he was actually teaching his citizens to be corrupt so that he could have the power he needed, and that was quite en- lightening. Ms. ROSETT. May I just share with you for a second a vision- Chairman WAXMAN. Well, we have been here all day and we have a short business meeting we have to attend to. Ms. ROSETT. Sure. Chairman WAXMAN. So maybe you can get together with Mr. Shays after the official meeting. Mr. SHAYS. But anything you want to put on the record in writ- ing we could submit. Chairman WAXMAN. Yes, we would certainly receive it. Ms. ROSETT. This is one scene from a New York courtroom. It was simply the silver laptop. I wrote an article about it in the Wall Street Journal yesterday; you can read it. But the silver laptop on which the entire kickback data base for the Iraqi oil ministry under Oil for Food had been downloaded, this data base, and this Iraqi on the witness stand, brought in by Federal prosecutors to show the jury how it worked, typing in a name and up would come the whole list of itemized kickbacks and connected front companies. 128 And I have followed these documents for years at this point. I have never understood quite that viscerally until I saw this, how thor- oughly institutionalized it was. It was the way— Chairman WAXMAN. You are talking about in the Oil for Food Program Ms. ROSETT. Yes. Chairman WAXMAN (continuing]. Or today? Ms. ROSETT. No. This was the Oil for Food Program. But this was- Chairman WAXMAN. OK, well, I think people learned some les- sons from that. Thank you very much. Ms. ROSETT. Thank you. Chairman WAXMAN. I appreciate that story. That concludes our hearing for today, so we stand adjourned. [Whereupon, at 3:55 p.m., the committee was adjourned.] [The prepared statements of Hon. Patrick McHenry, Hon. Diane E. Watson, and Hon. Bill Sali follow:] 130 From: [mailto: Ostate.gov] Sent: Monday, September 24, 2007 6:55 PM Subject: redlines Doar Here are the redlines from State: -Broad statements/assessments which judge or characterize the quality of Iraqi governance or the ability determination of the Iraqil govemment to deal with corruption, including allegations that investigations were thwarted/stitled for political reasons; -Stat ments/allegations concerning actions by specific individuals, such as the Prime Minister or other GOI officials, or regarding Investigations of such officials. Apologies for the delay. 131 Full Committee: Oversight & Government Reform Page 1 of 4 Opening Statement Congresswoman Diane E. Watson Oversight & Government Reform Hearing: "Assessing the State of Iraqi Corruption" Thursday, October 4, 2007 Thank you Mr. Chairman for holding today's very important hearing that will focus on the state of corruption in the Iraqi government. Since the fall of Saddam Hussein's regime and the transfer of power from the Coalition Provisional Authority (CPA) to the Iraqi Government, corruption has run rampant in the new democratic state. Currently, Iraq ranks third on the list of the world's most corrupt countries. A New York Times article on May 12, 2007 titled, “Billions in Oil Missing in Iraq” reported that between 100,000 and 300,000 barrels a day of Iraq's declared oil production over the 133 Page 3 of 4 C.P.A. delivered $8.8 billion to Iraqi ministries with no accountability. This action was in violation of C.P.A. Regulation Number 2, which required transparency in the spending of funds. If we want the Iraqi government to maintain a high level of responsibility and take the necessary steps to alleviate corruption, I think it is crucial that the United States lead by example and show them a better way to conduct business in a transparent democratic system by simply following rules and regulations set forth by the law. Mr. Chairman, I hope this committee can find the root of the problem and pull it out before more weeds 135 REPUBLIC OF IRAQ . .بس .ني »/ ۰۷ . ل .(سري في وعاجل جدا / بی / هيئة النزاهة العلامة ه ۸ م/ نعمة - دائرة التحقيقات السلام عليك م الله و كان المواره ۱ كتابكم المرقم م/۷۸ في ۲۰۰۷ / ۳ / ۱ . وجه دولة رئيس الوزراء بالتأكيد على كتابنا المرقم مرنم/۹۱۹۴ في ۲۰۰۷ / 4 / 1 المرفق طية والقاضي بإيقاف تعقيبات الوزراء السابقين والحاليين إلا عبر رئاسة الوزراء ، وكتابنا المرقم مرن //۲۸۲ في ۲۰۰۷ / ۲ / 4 المرفق طيا والذي يشير إلى تخويل من رئاسة الوزراء بالتمليك . مع التقدير مرمت : - تمام رئيس الوزراء اعلاه. وجه د. طار نجم . . ما " منز لغة او : 3 بو ۱۱ * به * * * * * ** * ** ** ** . اوه - " " " " . 137 REPUBLIC OF IRAQ PRIME MINISTER'S OFFICE Ref.: m.r.n/s/7/914 Date: 04/01/2007 (Personal, Confidential and very Urgent) To/The General Commission of Integrity 8569 743 Subject/Referral Peace, mercy and blessings of Allah be upon you! It has been decided not to refer any of the following parties to the court until approval of His Excellency, the Prime Minister, is obtained: 1. Presidential office 2. Council of Ministers 3. Current and previous ministers With appreciation Signed by Dr. Tariq Najim Abdullah Prime Minister's Office Manager 04/01/2007 A copy to/ - Presidential office-Diwan Please be informed ... With appreciation - Both Prime Minister Deputies/Please be informed ... With appreciation - Ministers' Cabinet Secretary General's Office/Please be informed... With appreciation - Organizing unit - Follow up - Issued correspondence file 139 REPUBLIC OF IRAQ Prime Minister Omge (77 No.: سده : م، ناسا ۷/ ۷۸ تاریخ : ۲۰۰۷ / ۷ / ۶ ا : Date دين : اتمی ۶۲۶ دينة ! ميزانية العامة 120 سری شخصیام .. هيئة النزاهة العامة مكتب نائب رئيس الهيئة إلى ألم ۹۸ : تاریخ ۲۰۰۷ / ۷ / ۷ ما تمليك .. السلام عليكم ورحمة الله وبركاته وجه دولة رئيس الوزراء بأنه لا اعتراض دی رئاسة الوزراء على اجراءات تمليك الدور السكنية العائدة لشركة الموانيء العراقية و بضمنها الدار المسجلة بأسم السيد سلام عودة فالح | وزير النقل السابق واستنادا إلى موافقة الإمائية العامة لمجان الوزراء بكتابها المرقم ق/ ۱۳۷۹۹ / ۲۰ / ۱۲ في ۲۰۰ / ۹ / ۲۰ و الذي بموجبه جرئ ---- سسسسسس عمليات التمليك اصوليا. مع التقدير الرفيت 1 - قلب الامة العامة لمجلس الوزراء اعلاه. - محضر بیع اتلیه) هدار البرلمة ۱۱۰ شارع الحنان. بن سب نداری البقرة ( مرمي د. طارق کجمدالله مدير مكتب رئيس الوزراء ۲۰۰۷/۲/ - بارا عند مدخل بلعم .. مع الشعر. ای استیل من 140 Republic of Iraq Office of the Prime Minister (Official Emblem) 360 Number: M. R. NI SIT1 282 Date: 4/2/2007 [Stamp: Office of the Deputy Chairman of the Commission; Incoming; Number 686; Date 7/2/2007) (Stamp: Commission of Public integrity; (illegible) Iraq; (illegible) 226; (illegible) 7 2 7) (Private and Confidential) To: Commission of Public Integrity Re: Transter of Ownership May the Peace, Mercy and Blessings of God be upon you. His Excellency, the Prime Minister, has given the order that the Office of the Prime Minister has no objection to the procedures in place for the transfer of ownership of the residential housing owned by the Iraqi Ports Company, among which is the house registered in the name of Mr. Salam Audah Faleh, the former Minister of Transportation, on the basis of the acceptance of the General Secretariat of the Council of Ministers, as stated in its letter numbered Qaf/2/1/25/13796 of 20/9/2005 and pursuant to which transfer of ownership operations were properly conducted. Regards. Enclosures: Aforementioned Letter of General Secretariat of the Council of Ministers - Record of Sale (Transfer of Ownership) of house number 190 Ajnadin Street Office of Nouri Kamel Al-Maliki Prime Minister Dr. Tarek Nijm Abdallah Director of the Office of the Prime Minister 4/2/2007 Our Office / Urgent To be referred to the Basra Branch (private and confidential). A copy thereof is to be kept with us along with the enclosures.. (signature) CC to: Ministry of Transportation - Office of the Minister For your information. Regards. - General Secretariat of the Council of Ministers - Office of the Secretary / Your above letter. Regards. Honorable Mr. Salam Audah Faleh/Former Minister of Transportation / For your information. Regards. - Outgoing letters file. To: Office of the Judge 141 Statement of U.S. Rep. Bill Sali (R-ID) Hearing on Assessing Corruption In Iraq House Committee on Oversight and Government Reform Over the past several ycars, our nation has devoted billions of dollars to our military efforts in Iraq, in terms of the expenses of the war itself, in peacekeeping and security efforts, and also in the reconstruction of the Iraqi government Although critics of our efforts in Iraq like to downplay what we, in tandem with our Iraqi and Coalition partners, have achieved, much progress has been made. As our collcague Brian Baird of Washington State wrote in late August, and I quote: “The situation has at long last begun to change substantially for the better. I believe Iray could have a positive future. Our diplomatic and military leaders in Iraq, their current strategy, and most importantly, our troops and the Iraqi people themselves, deserve our continued support and more time to succeed.” I agrce. This Committee hearing, however, is focused on corruption within the Iraqi government itself. Every new government will face scrious roadblocks as it establishes itself, secks to represent pcople from diverse backgrounds and antagonistic sects, and works for political compromisc. The new government in Iraq is no exception. It has been said that “to oppose corruption in government is the highest obligation of patriotism." It is troubling to all of us who value such patriotisin that there is corruption in the new Iraqi government. Such corruption, however, is not something new in Iraq. Certainly corruption has been endemic in previous Iraqi governments, and is made more difficult to combat as military conflict continues and the nation's infrastructure is rebuilt and improved. 142 We cannot compel the excision of corruption. We can, however, encourage the Iraqi people to take more complete ownership and responsibility for their government to fight corruprion and to govern, through their elected representatives, with integrity. Our country's involvement in Iraq puts more than American dollars at stake. American lives are in daily jcopardy. It is nothing less than our solemn duty to conduct honest oversight on the spending of taxpayer money. As we address these issues, it is imperative that we not undercut the very basis of our mission in Iraq. We cannot allow this discussion to devolve into partisan finger-pointing. We can not let this report blind us to greater progress being made in Iraq. In this forum, we must not make the mistake of discussing or advocating a precipitous withdrawal of our troops that would inevitably create greater chaos-a veritable vacuum for the corruption we are concerned about. So, let us proceed, not with a partisan agenda of criticism but rather with a commitment to public integrity, honest inquiry and genuine patriotism. In the words of Senator Joe Lieberman, who was the majorily's noininee for Vice President in 2000, and I close with this quote: "l'here is no better strategic and moral altcmativc for America than standing with the moderate Iraqis until the country is stable and they can take over their sccurity. Rather than engaging in hand-wringing, carping or calls for withdrawal, we must summon the vision, will and courage to take the difficult and decisive steps needed for success and, yes, victory in Iraq. That will grcatly advance the causc of modcration and freedom throughout the Middle llast and protect our security at home.” Thank you, Mr. Chairman. no