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) 28,000 have been wounded. And we have already spent over $450 billion on the war. For most of this year, Congress has focused its attention on as- sessing the military surge. Much less attention has been devoted to evaluating the political progress in Iraq. But almost every expert agrees that political reconciliation is the key to achieving lasting peace in Iraq. As General Petraeus has observed, “There is no mili- tary solution to a problem like that in Iraq." I think that is exactly right, and that is why it is so important to assess what the State Department is doing in Iraq and to understand the impacts that corruption, mismanagement and lax oversight are having on our mission. Beginning in July, our committee has held a series of hearings to examine these issues. We have held hearings on the Iraq Em- bassy, Blackwater and corruption in the Iraqi ministries. These hearings and our investigation have raised important questions: Is the Maliki government too corrupt to succeed? Have the reckless actions of private contractors like Blackwater turned Iraqis against us? Why did the State Department sele company under investigation for kickbacks and bribery to build the largest Embassy in the world? And can the State Department ac- count for over $1 billion spent on a contract to train the Iraqi po- lice? The executive office with direct responsibility over these issues is the State Department, and the official most responsible for them is Secretary Rice. The quality and effectiveness of her actions in Iraq and the State Department's management are a matter of ur- gent national concern, and that is the focus of today's hearing. This week, President Bush asked the American people to spend another $46 billion in Iraq. The President also is continuing to ask our bravest Americans to risk their lives there. As Congress evalu- ates these requests, we need to know what the State Department is doing to combat corruption in Iraq. We need to know whether the State Department is capable of real oversight over Blackwater and other Government contractors. And most of all, we need to know whether the mistakes of the State Department have jeopard- ized any chance for political success in Iraq. Mr. Davis, I recognize you. [The prepared statement of Chairman Henry A. Waxman fol- lows:] pair Mr. DAVIS OF VIRGINIA. Thank you, Mr. Chairman. Secretary Rice, welcome. Your testimony today will give much- needed perspective and context to the complex oversight issues being pursued by this committee. We appreciate your being here. The high-level, results-oriented outlook you bring to our discus- sions has been missed by those of us who want to fix problems, not just fix blame. So far, our hearings on Iraq have thoroughly and loudly described alleged mismanagement failures and well-known challenges that have led to no serious discussion about how to re- faulty programs or disjoined processes. Pursuing only half of our mandate under House rules, it has been all oversight, no re- form. I hope our dialog today will begin to right that imbalance. Effective State Department operations in Iraq and throughout ast are critical to our national security and our global strategic objectives. Military skill and valor open the door, but the path to victory in Iraq, however you define that term, can only be secured through diplomatic and political dexterity in a dangerous and volatile environment. So it is essential that legitimate ques- tions about State's operational strength and agility receive sus- tained attention at the highest levels of the Department. With the Secretary's presence here today, there should be no question that is the case. Regarding the specific issues before us— the use of private security contractors, the coordination of anticorruption assistance, construction of the Embassy compound in Baghdad, and barter efforts to foster reconstruction and political compromise in Iraq-Secretary Rice and the Department have been proactive in identifying issues, addressing problems, improving per- formance and increasing accountability. Today we need to hear more about those initiatives, and we need to learn what the Department needs from this committee and from this Congress to protect and empower America's diplomatic forces in Iraq. Yesterday, the Department released a report by a special panel Secretary Rice appointed to review policies and practices governing personal protective services. The steps recommended should im- prove coordination and management of essential security functions in connection with critical diplomatic activities. But more will be needed and more must be done, as we look forward to hearing from the Secretary how the Department plans to keep that role of secu- rity contractors more closely in line with our larger goals in Iraq. Reports of construction problems and delays at the new Embassy compound in Baghdad have to cause concerns, but worries about cost overruns should not be among them. The initial $592-million project was constructed under a fixed-price contract, and any work required to fix deficiencies or meet specifications will be completed at the contractor's expense. The decision to expand what was al- ready the largest U.S. Embassy in the world raises separate fiscal and policy questions that I am sure the Secretary is prepared to address. Regarding corruption, it has to be conceded that no amount of hand-wringing or feigned indignation here can obscure the hard truth: The United States did not bring corruption to Iraq, and it won't stop when we leave. Focusing on the extent of corruption, rather than the effect of anticorruption efforts, betrays a desire to 14 ones that we have found. We have many, many hundreds of docu- ments, hundreds of reports of corruption. We investigate them all. But nothing is going to be gained by speaking prematurely about allegations without fully investigating them. Chairman WAXMAN. Well, this is a big deal. This is the Prime Minister of the country. Secretary RICE. I agree with you, it's a big deal. Chairman WAXMAN. His government that we are propping up with the lives of our soldiers and the billions of dollars of our tax- payers money—and this is not a minor accusation. Now, let me ask you about something else. Secretary RICE. Well, Mr. Chairman, precisely because it's not a minor allegation, I think it is worth giving the time to it to fully investigate it before discussing it. Chairman WAXMAN. Judge Radhi gave the committee copies of secret orders from Prime Minister Maliki's deputy. And I had the secret orders, and we extended a copy to you. These orders say that the Iraqi Commission on Public Integrity cannot refer for criminal prosecution the Iraqi President, the Council of Ministers or any current or former ministers, without the Prime Minister's permis- sion. In effect, this order immunizes all the most senior officials in the Maliki government from any corruption investigation. Is this true? Is this what this order does provide? And did Prime Minister Maliki's office issue orders protecting current or past min- isters from corruption investigations? Secretary RICE. Mr. Chairman, no one in Iraq is going to escape corruption probes. I don't care what kind of order is- Chairman WAXMAN. No, no. Are you aware of that order? Secretary RICE. I believe that you are referring to something that is—because there's an executive branch and a legislative branch that are treated differently. Is that the point? Chairman WAXMAN. No. The point of the order is that Prime Minister Maliki has issued an order saying that he may not be in- vestigated, nor may his minister be investigated, of full corruption, which means they are immunized from anything — Secretary RICE. Well, I can tell you Chairman WAXMAN. Excuse me, Secretary. Excuse me. Which means they are immunized from the investigation by the Iraqis, themselves, of corruption. Are you aware of that order? And does it trouble you that such an order has been issued? Secretary RICE. Well, Mr. Chairman, I will have to get back to you. I don't know precisely what you are referring to. It is our un- derstanding that the Iraqi leadership is not, indeed, immune from investigation. Chairman WAXMAN. Well, we held this hearing on October 4th. The State Department sent Ambassador Butler to testify. We went through all of this with him. We even gave him copies of this order. And I don't know if you are telling us you haven't seen them or, now that you've seen them, you don't believe them. Secretary RICE. No. I'm telling you, Mr. Chairman, that I will get back to you on this question. If, in fact, there is such an order, and if this order is meant to immunize rather than to make certain that the investigation is by appropriate bodies in Iraq, that would certainly be concerning. 18 the newspapers, tensions are already high with Turkey, concerning Iraq. So it would be deeply damaging. And I appreciate those who, de- spite the difficulty of the vote, decided not to vote for the resolu- tion. Mr. SHAYS. Thank you. Thank you, Mr. Chairman. Thank you, Mr. Davis. Chairman WAXMAN. Thank you for your questioning. Secretary Rice, before we continue, would you just pull the mic up a little closer? The Members are saying they are having a dif- ficult time hearing you. Mr. Welch, for 5 minutes. Mr. WELCH. Thank you, Mr. Chairman. Secretary Rice, if, in fact, the evidence that suggests Prime Min- ister Maliki is in fact protecting corrupt officials exists, do you be- lieve that the American taxpayers have a right to know? Yes or no on that? Secretary RICE. I believe very strongly that, first of all, the U.S. Government has a right to know, and certainly the American tax- payers will have a right to know. But, Congressman, I think we owe it to everyone to do thorough investigations, not to respond to allegations, not to respond to uncorroborated evidence or uncorroborated statements. And I'm going to hold to that, because, not only is it potentially damaging to relationships that we are very dependent on, in terms of the al- legations that are uncorroborated, but it's wrong. It's simply not right to sit in an open session and do that. Mr. WELCH. If the American people have a right to know, and w what they have a right to know, when will you tell us what they want to know? Secretary RICE. What the American people need to be assured of is that, if there is corruption, the United States is, in fact, dedi- cated to routing it out. I want to just emphasize that-let's not take Iraq in isolation. Corruption is not just a pervasive Mr. WELCH. I do want to interrupt. Secretary RICE. Let me just finish my point. Mr. WELCH. No. The reason I want to- Chairman WAXMAN. Secretary Rice, please. We only have limited time. Secretary RICE. All right. Mr. Chairman, may I have an oppor- tunity, though, to finish my answers? Mr. WELCH. My question is only about Iraq. We have very lim- ited time, Madam Secretary, and that is the reason for my inter- ruption. Let me ask you this. On your point that you followup and that you want to do thorough investigations, we have received informa- tion about this order Chairman Waxman asked about, that the Commission on Public Integrity, which is a credible group, can't refer for criminal prosecution the Iraqi Council ministers or any current or former ministers without the Prime Minister's permis- sion. My question to you is this: That obviously interferes with Iraq moving forward, with us moving forward. Will you ask the Presi- 32 the ground now. They are on the ground now in that country fight- ing and dying, and we cannot wait a moment longer before we talk about this. That is what we want to do. We want to talk openly, publicly about the corruption in Iraq; and we want to know, as appropri- ators, whether it is a good idea to send $196 billion to a country where the government has severe corruption. And we have to do our responsibility here, our constitutional duty. And there is one point I would like to make on this before I ask my question. It has been said by the State Department that if we talked about corruption in Iraq, it would hurt our relationship with the Iraq Government. The fact of the matter is, it would be good. It would be good for our relationship with the Iraqi people if we talked about the corruption in their own government. I think that democracy is aspirational. We are certainly not perfect, and we have had a lot of people talk about that today. But I think this sig- nals our high expectations of democracy in that country and in our own that we put it all out there. Sunlight is the best disinfectant, and I think that closing off that evidence is complicit with—is covering up some of the corruption that is going on there, some that we know about. So I want to ask you this. Knowing that more transparency will be helpful in this country and in Iraq on this subject, will you re- scind the directive that prevents the State Department employ- ees-high-ranking State Department employees coming here and discussing in great detail the levels and degree of corruption in Iraq? Will you do that? Hin Secretary RICE. Congressman, first, I have to correct the record on a few things that you have said, if you don't mind. irst is I did not say that to talk about corruption would hurt our relationship with the Iraqi Government. I said that I was not prepared to engage in discussions of premature allegations-pre- maturely of allegations or things that may be uncorroborated or unsubstantiated until in fact they had. And I saw no good purpose in doing so. I am here talking right now about corruption in Iraq, about con- cerns of corruption in the ministries, concern in corruption in par- ticularly the- Mr. LYNCH. In very vague terms, though, Madam Secretary, with all due respect. Secretary RICE. I am here talking about specifically about our concerns about corruption. Now, if you would like us to be able to actually do anything about corruption, Congressman, we have to be able to investigate it. We have to be able to get the testimony of people who are bring- ing the stories and the facts to us. We have to be able to protect them from what is obviously a very hostile environment. We have to be able to preserve that access. That is why we have offered to have you have any document that you would like and any official who would be able to address those documents to come and spend as much time as you would like in ession so that we can protect the underlying sourcing and the underlying people who bring those allegations to us. Mr. LYNCH. Let me say one thing. 41 a contradiction to me that at a time when this Congress, the Demo- cratic majority in Congress wants to cut the level of troops, they want to nationalize contractors, thereby increasing the number of troops required for protective service of State Department officials, Embassy officials as well, as well as provincial reconstruct teams. It seems to me a contradiction when you espouse a smaller footprint in Iraq that you want to eliminate contracting. There have been a number of questions about this. But I want to ask, in regard to the State Department's use of contractors versus full-time government employees, what is the better use of taxpayer money? Have you analyzed this as an ongo- ing process in Iraq? And if you could just comment on that. Secretary RICE. Yes. Well, we believe that we get—in that sense it is a reasonable way to handle the significant problem that we have of providing protection for the diplomats. I would repeat that when the team went out and they asked di- rectly General Petraeus and Ambassador Crocker, should this be done instead by Diplomatic Security—which, by the way, we have increased the numbers, the allocation to Diplomatic Security over time. But they were asked, should Diplomatic Security try to do this, which means you would have to bring it in house, should the military do this? And they were told, no, that would not be appro- priate. So we are left with the need for private contractors. Now, there can be certainly better oversight of the private con- tractors, which is why we are taking the steps that we are t But this is the best way that we can find to make sure that our people can get out of the Green Zone and go to do all of the pro- grams that are being questioned here, whether they are on anti- corruption or budget execution or training personnel. Mr. McHENRY. So there are really three choices. The military can guard the State Department- Secretary RICE. Right. Mr. McHENRY [continuing). You could have in-house security, which would have to be a massive expansion of what is currently available, or you could use contractors. And the first two were re- jected, is that correct? Secretary RICE. That is correct. Mr. McHENRY. Has there been a cost-benefit analysis as a part of this in terms of the cost to taxpayers? Secretary RICE. Well, I think that, first of all, if you just imagine bringing on enough Diplomatic Security agents to do this full-time, and we will have to as a result of a report bring more people on, I think they said 100 people, but if you tried to have 1,100 or 1,200 Diplomatic Security agents, you are creating a career path, people who would, of course, be there for throughout a career. This allows us to be flexible in terms of how temporary an assignment might be. So it is the cost benefit is very good, and I think you wouldn't want American soldiers to have do this task. Mr. CUMMINGS. Mr. Chairman. Mr. McHENRY. And if I may continue, because, as a part of this, the idea is that we are in Iraq not on a permanent basis, therefore, you do not hire career government workers to be there on a 30-year basis, for instance, with retirement benefits and things of that sort. Secretary RICE. Exactly. d. and I think you certainly 51 and defects at all, we weren't going to open it under those cir- cumstances. The problems that you're referring to, Congresswoman McCol- lum, are indeed problems that the State Department found itself. These were problems found by the Office of Overseas Buildings own overseas fire inspectors. So, of course, when those were found, the remediation had to be done at the expense of the contractor, and so it delayed bringing the building on line. So, yes, these are—these are problems in construction. They were found by the—our own inspectors. They're being remediated by the- Ms. McCOLLUM. Madam Secretary, the State Department was aware of the problems that I just cited, aware of the problems be- fore the July meeting. General Williams came to this committee and told us that the construction was of extremely high quality, and he told us that this Embassy would open in September. Now, given the magnitude of the problems and many that the State De- partment was aware of well before this hearing, it would be not good if your staff did not know in July when coming before this committee that this building had such serious problems. That's a huge communication problem in the State Department or a delib- erate communication problem in the State Department before those who came to testify to this committee. Now, Mr. Chair, I also have a question for you. We had asked for documents. This committee had asked for documents. We have received some of them, but my understanding is 3 months later we have still not received the bulk of documents we requested at that hearing. Is that correct, Mr. Chair? Chairman WAXMAN. Yes, it is. Ms. McCOLLUM. Mr. Chair, I would—I know that you're asking for them. We were told in other cases the documents will be made available. Obviously building inspection reports are not classified at this level for repairing construction, and I would hope the com- mittee could receive everything. Chairman WAXMAN. Thank you. The Secretary- Secretary RICE. Well, I would like to respond, Congressman. Chairman WAXMAN. Sure. Secretary RICE. First of all, again, in construction, complex con- struction in a complex environment, there were problems with the fire suppression system in the guard house. Those problems are being remediated at no cost to the United States or to the tax- payers by the company on the basis of inspections that we our- selves did.. I think anybody is familiar that when you take ownership of a construction project, you go and you find out what is wrong, and then the company remediates. That's what is going on here. It's a completely normal practice. The circumstances of Iraq are anything but normal, but we are not going to accept a building that these problems have not been dealt with. Chairman WAXMAN. Thank you. Secretary RICE. On the documents. · Chairman WAXMAN. Yes. Secretary RICE. As I understand it, we have 18 separate sub- stantive requests. We have exerted 10,000 manhours in tying to