Panel I of a Hearing of the Senate Appropriations Committee
Interview
SEN. LEAHY: Good morning. First off, I apologize to all our witnesses and those in the audience for being late. It was an unavoidable thing. As it is, Chairman Byrd is not here today. But without objection, I will include his full statement for the record. As you know, the chairman's been a strong voice for accountability of our assistance programs in Iraq. I talked with Senator Byrd at length yesterday. I know he still has that concern. We look forward to him being back here very soon.
This committee's heard testimony of the president's budget request for billions of dollars for Iraq reconstruction. We've heard these over several years. The Appropriations Committee is actually the only regulator on the spigot this administration opened in 2003 to flood Iraq with billions of dollars of U.S. taxpayer's money. I think it is time, after all these years, for the Congress to have a strong hand on this spigot, especially as we are considering another $108 billion in supplemental emergency funds, money which the United States has to actually borrow, the $108 billion, and then pay interest on it.
Investigations of the special inspector general for Iraq, the Government Accountability Office, media and others have revealed waste and fraud on a scale unprecedented in our foreign assistance program. The administration's attitude toward budgeting, spending and accounting for U.S. tax dollars in Iraq can actually be summed up in two words -- anything goes. Just put it on the American taxpayer's credit card.
Meanwhile, the American people's priorities here at home have been relegated further and further back of the line. We've heard this year that there are even more needs in the United States are going to have to be put on the back burner as we send more money to Iraq. Incidentally, we've been there longer than the United States was in World War II.
Beginning last year, the new Congress has begun oversight to try to correct these mistakes and learned lessons so we can avoid them in the future. And today's hearing will continue that process.
For the administration that came into office insisting they could be trusted to spend taxpayer dollars wisely and then ignored any advice they disagreed with, including from people with decades of experience, both Republicans and Democrats, the record is shameful. Even today, the administration continues to oppose remedies like the War Profiteering Prevention Act.
It's not that nothing good has been accomplished. None of us is suggesting that. There had been some very successful projects in Iraq. But if one compares the results of the exorbitant amount spent, it's an embarrassment. As we struggle here in the United States to find the money to repair our decaying bridges or our roads or our schools, the administration has wasted hundreds of millions of dollars, some would say billions, in Iraq.
First, of course, we were told by the administration, and the American people were told, that Iraqi oil would pay to rebuild the country. That assertion by the chief architects of the war turned out to be either naïve or intentionally dishonest. I tend to think the latter. Instead, since 2003, they have spent $45 billion for Iraqi relief and reconstruction which, of course, does not include the half- trillion dollars spent on the military operations. In fact, the long- term costs of this war is already expected to exceed $3 trillion if you count the costs of rebuilding our military and caring for the wounded.
The administration has spent huge amounts on no-bid contracts to companies like Halliburton and their subsidiaries, companies that have close connection to the White House. They charge exorbitant fees. They often did shoddy work or never even completed the work they were paid to do.
I and others have urged the administration to focus on smaller projects, get more responsibility and involvement of the Iraqi people themselves, those who know the area the best. But stubbornness, arrogance, incompetence won out. And only recently has the approach begun to change.
Now, I want to commend Ambassador Ryan Crocker, Ambassador Charles Ries and their staffs for the long, overdue changes they are making. And as chairman of the State and Foreign Operations Subcommittee, I've seen how foreign aid can be effective. It can help transform people's lives for the better. It can help transform whole countries. And it serves our national interests in many, many ways. But in Iraq, the experts were ignored by political ideologues who wanted a quick fix.
So at a time when the hardworking Americans are losing their homes and losing their jobs and spending their savings on the soaring costs of health care, trying to make ends meet, these same taxpayers have a right to know how the administration has squandered so much of their hard-earned money in Iraq. And they have a right to ask today, with the price of oil at $108 a barrel and the administration asking for billions of dollars more for Iraq reconstruction, why the American people should continue to foot the bill for what many say the Iraqis could afford themselves.
I've been joined by one of the most distinguished and senior members of the United States Senate Senator Thad Cochran who has also chaired this committee in the past. And I yield to Senator Cochran.
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SEN. LEAHY: Thank you, Senator Cochran.
And our witnesses will include, first, David Walker who is the comptroller general, the Government Accountability Office. He became the seventh comptroller general of the United States, began his 15- year term November 9th, 1998, if I'm correct. As comptroller general, he is the nation's chief accountability officer, and he's the head of the U.S. Government Accountability Office, GAO, the legislative branch which was founded back in 1921 to improve the performance and ensure the accountability of the federal government for the benefit of the American people.
He'll be followed by Claude Kicklighter who is the inspector general of the Department of Defense. He is the sixth Senate- confirmed DOD inspector general, but he's served his country not only to become inspector general on April 30th of last year, he served his country for over 50 years, first as an Army officer for 35 years retiring as a lieutenant general, followed by over 15 years as a distinguished public servant. He was selected by the secretary of State and Defense to establish and direct the Iraq/Afghanistan Joint Transition Planning Group. And a man of great knowledge and competence.
And he'll be followed by Stuart Bowen who is the special inspector general for Iraq reconstruction, the SIGIR. I think that's how you pronounce it. He's served as special inspector general since October 2004. He was previously the inspector general for the Coalition Provisional Authority, a position to which he was appointed in January 2004. And he has been asked to ensure effective oversight of $47 billion appropriated for the reconstruction of Iraq.
We'll begin with the inspector general. Mr. Walker, please go ahead.
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SEN. LEAHY: (Tom ?), thank you very much.
I have one question for all of you. But before I start, just to go back, General Kicklighter, to our testimony: You mentioned the diversion of U.S. weapons to Iraqi insurgents and your efforts to stop it. Are you confident today that U.S. weapons are not being diverted and thus used to kill and wound Americans?
MR. KICKLIGHTER: Senator, I am confident that both the U.S. or the coalition forces and the Iraqi security forces have put in place procedures to prevent that -- accounting for weapons down to the company level by serial number. And we went and looked at a lot of the nodes and down at police stations and companies and here's what the estimate is: That all the weapons coming through the system today, there is a major attempt to capture those weapons and control them by serial number and by weapons guard down in the police station and into the units.
SEN. LEAHY: I'm thinking of the very large number of handguns that went unaccounted for -- some even showed up in Turkey.
MR. KICKLIGHTER: Yes, sir.
SEN. LEAHY: Are you confident that none of the American weapons today are being diverted, and thus used against us?
MR. KICKLIGHTER: Yes, sir. I can't say 100 percent, you know, that any system is 100 percent. But I believe there is a good system in place that is getting better day by day and there is not a major leakage of weapons going into the hands of the insurgents or to the black market.
SEN. LEAHY: Not a major leakage.
MR. KICKLIGHTER: No, sir.
But there is --
SEN. LEAHY: That's not awfully comforting. I mean, I'm not trying to quibble words here, but obviously the first sets of weapons came out with really no adequate way of checking them. We had the problem after the invasion that large ammunition dumps weren't even secured. If you're the family member of one of our brave men and women who are over there fighting, you've got to be kind of concerned if among the weapons they're facing are weapons that came from the United States.
I think you'd agree, as a -- from your own military background that's something we should all be concerned about.
SEN. LEAHY: We should be extremely concerned about tight controls of weapons and ammunition to make sure they don't fall in the wrong hands.
Let me ask this question, I'll begin with Mr. Walker: Five years after we invaded Iraq, after spending $44 billion to rebuild the country, do you believe that there are effective controls in place today to prevent the theft and loss of U.S. taxpayer funds and Iraqi government funds?
MR. WALKER: Senator Leahy, I think things are much better today than they were, but they're clearly not good enough. And I think there is a bigger picture question: The Iraqis have a budget surplus. We have a huge budget deficit.
SEN. LEAHY: I'm going to be going into that, but go ahead.
MR. WALKER: All right.
One of the questions is, who should be paying?
SEN. LEAHY: Well, they have $4 billion a month in oil revenues. That's about $50 billion a year. The president's asking more -- for billions more in the emergency supplemental for the Iraqi reconstruction funds. Any reason why we can't use some of that $50 billion a year they're making from their oil revenues?
MR. WALKER: Part of the problem, Senator Leahy, is that -- information I have from my very capable staff -- is that for the calendar year that ended on 2007, that through November they'd spent less than 10 percent of their budget for some of their major ministries. At the same point in time, we're all painfully aware of what is happening with crude oil prices.
So irrespective of what they budget, it's not being spent for various reasons. And needless to say, revenues are going up.
SEN. LEAHY: Which bothers me because we're told in this country we can't have money to fix our infrastructure, badly as it's needed; we can't have money to make our airports run well; we can't have money to research in cancer and Alzheimer's and diabetes and everything else, because of the war in Iraq. And it seems like we asked for billions of dollars more for it -- at some point, they ought to be able to do some of this themselves.
General Kicklighter, could they be doing more -- covering more of their own reconstruction costs than they do?
MR. KICKLIGHTER: Sir, I think they are beginning to do more and I know that they're doing more in the area of paying for their own military equipment. They are investing in foreign military sales now and bringing weapons systems into the country that they are paying for. And I think that's certainly the trend that we should be following. As time goes on, they should pick up more and more of the expenses of their --
SEN. LEAHY: Including reconstruction?
MR. KICKLIGHTER: Yes, sir.
SEN. LEAHY: Thank you.
Mr. Bowen.
SEN. LEAHY: First, do you believe that there are effective controls to prevent the theft and loss U.S. taxpayer funds and Iraqi government funds? And secondly, should the Iraqi government be paying more of these reconstruction costs?
MR. BOWEN: As to the first question, I think, as General Walker said, the controls have gotten better. It's something that we focused on, you know, since the 2004 reporting on the challenges during CPA of the lack of controls, and the need to improve thereafter.
My biggest concern on the control front is the issues related to direct contracting with Iraqi firms. It's an emphasis that the United States' Joint Contracting Command Iraq has pushed, I think, properly forward in order to employ more Iraqis and build capacity, and promote capital growth.
However, those are Iraqi firms executing projects involving U.S. funds, and so I continue to raise questions about that --
SEN. LEAHY: During these past five years, has there been anyone from the Iraqi government held accountable for the theft or loss of U.S. taxpayer funds?
MR. BOWEN: That issue has not come to the fore. My concern on prosecution of Iraqis who -- who've committed corruption is that there haven't been any to speak of. The largest one --
SEN. LEAHY: There hasn't been any corruption, or there hasn't been any prosecution?
MR. BOWEN: Prosecution.
SEN. LEAHY: I want to make sure we got that right.
MR. BOWEN: Prosecution.
SEN. LEAHY: As a former prosecutor, I know the difference -- (laughs).
MR. BOWEN: Yes. And the issue -- the most case came to the, came to court a week ago in Baghdad, involving the deputy minister of Health. And there was significant evidence related to the black market in prescription drugs that had been on-going within that ministry, and the case was dismissed because witnesses had been intimidated and did not show.
That's a sign of a rule of law system that is not strong. And, frankly, the corruption issue is a symptom of that weak rule of law system.
SEN. LEAHY: Well, and it's also costing American taxpayers a great deal of money, because they won't -- they won't police their own corruption. It creates a real problem up here on the Hill.
MR. BOWEN: Well, that's right.
And with respect to the oil revenue, that was the leading issue pointed out in our latest quarterly, that this windfall, as a result of this past quarter's maximum production level since the invasion -- maximum export level since the invasion, and the highest oil prices in history, coalesce into an enormous revenue windfall for the Iraqi government.
They estimated $35 billion last November, and, frankly, it's going to be closer to $60 (billion). And that certainly gives them resources to carry forward with an extensive reconstruction plan. Also, it makes it all the more important that Prime Minister Maliki carry forward in what he's declared 2008 to be "the year of reconstruction and anticorruption" on both those fronts.
SEN. LEAHY: I want more than a declaration. I'd like to see him actually do it, because we have to spend more for our aid because the oil prices -- they ought to be able to use some of their oil to pay for their own costs and not keep sending the bill to the United States.
Senator Cochran.
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SEN. LEAHY: I would tell the senator from North Dakota that the reports he's brought up in this have been invaluable to this senator in my work. I should also note for those who think there may be any question of partisanship, the Truman Committee which you talked about was done by then-Senator Truman of Missouri, Democratic-controlled Congress, a Democratic president and a war that was -- had far more support in the United States than the current war does. And they still raised the questions because one thing -- whether you support the war or oppose the war, Americans would like to think their money is spent wisely and spent well. And for those who have had family members serving there or served there themselves, they want to make sure that that's done well. I felt that way when my son was in the Marine Corps and got called up for Desert Storm. I feel that same way today even though I have no family member there.
Senator Craig, you're next.
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SEN. LEAHY: And you've opened hundreds of investigations into cases of fraud, waste and abuse. There is currently more than 55 open, active investigations, many of which have been referred to the Department of Justice.
According to your records, the Justice Department has only brought charges against about 14 individuals and recovered only $17 million in fraud. Do you believe the Justice Department has moved aggressively enough? Should we turn this over to some good local sheriffs departments who might be more aggressive?
MR. BOWEN: We're working --
SEN. LEAHY: That last may have been uncalled for. But my other hat is chairman of the Judiciary Committee. I'm just wondering. It doesn't seem like we're getting an awful lot out of them.
MR. BOWEN: Well, we have some significant cases that are pending that I can't address, of course. I would say that the effort by the Justice Department has improved over time, which is a continuing theme in the course of this hearing. I think that we'll see the fruit of those prosecutions this summer.
SEN. LEAHY: Do DOD and Department of State still enter into cost-plus contracts in Iraq?
MR. BOWEN: Yes, they do. And I think Senate Bill 680 is a good reform measure to help circumscribe the overuse of cost-plus contracts. It's clear that, as our audits documented, that, for example, overhead was an extraordinarily high percentage of these cost-plus contracts. We have a report coming out this quarter that will show overhead on one cost-plus contract was about 50 percent of the total costs of the contract. That's unacceptable.
SEN. LEAHY: You've testified before in the Judiciary Committee in favor of the War Profiteering Prevention Act. Do you still support that?
MR. BOWEN: Yes, sir, I do. I think strengthening oversight and prosecutions of contractors and government officials who engage in corrupt practices is a good thing.
SEN. LEAHY: Sometimes the idea that you might go to jail and not just get a fine might focus one's mind?
MR. BOWEN: It focuses the mind, yes, sir.
SEN. LEAHY: I found that when I was in law enforcement.
Senator Cochran, do you have anything further?
SEN. COCHRAN: Mr. Chairman, I think your convening this hearing has been very important and also ensures everyone will know that we are anxious to see that the funds that are appropriated by this Congress are spent for the purposes that we approved them and without any culpability for fraud, abuse or waste. And I think the gentlemen who've appeared before our committee today have convinced me that the best efforts in their offices are being made to achieve that goal, to ferret out waste, fraud and abuse where it exists and see that those who are guilty of it are brought to justice.
And we appreciate your service in those ways. Thank you.
SEN. LEAHY: I noted in my introduction of the comptroller general, Mr. Walker, that he has a 15-year term. He's now two-thirds of the way through that at almost 10 years, but he's going to be leaving tomorrow, if I'm correct, after 10 years of service, service that I've been privileged to see. I've seen his candor, his commitment to the Congress and the American people and the ability of both Republicans and Democrats alike to rely on what he's said.
And I wish you well in your career. But I might say, Mr. Walker, your service has been in the best of what one would expect of somebody serving our great country, and I commend you for that. And I suspect you'd find that virtually everybody else would agree.
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