Global Policy Forum

America in Baghdad


By David Phinney*

May 15, 2006

Secret contract deals, fraud, ineptitude and shoddy work costing billions of dollars have been a centerpiece of our troubles in Iraq since the eve of the 2003 invasion. Suspicions of favoritism began with Halliburton and its small $2 million task order to extinguish possible oil well fires that Saddam Hussein might ignite to dispirit coalition forces. The contract quickly steamrolled into a no-bid multi-billion deal to repair Iraq's oil infrastructure once the March 2003 invasion was complete.

As the war dragged on, we found that Halliburton was not alone. Dozens of politically-connected U.S. corporations soon received what appeared to be sweetheart deals resulting in poor performance, little oversight and inflated salaries. The Coalition Provisional Authority and Washington officials created a "free-fraud zone," according to Frank Willis, a former CPA advisor.

More than three years later, it's clear that contracts large and small were regularly agreed to with little written record, proper competition or follow-through to ensure that work was performed. This is not news. The contracting process, paid for with billions of dollars in U.S. taxpayer money and seized Iraqi assets controlled by the CPA, has been repeatedly found to be so lacking in accountability that it's difficult to determine how the money was spent. Transparency International predicts the Iraq debacle may be found as "the biggest corruption scandal in history."

What is news is that the Bush administration continues to follow the same dysfunctional contracting methods and lack of transparency with one of its most recent and visible projects in Baghdad—the building of the new U.S. embassy. When the U.S. State Department awarded the $592-million embassy deal last summer, officials reasoned they needed to keep the contract secret because of their concerns for the safety of work crews. Others believe it has more to do with keeping the lid on an overpriced, behind-the-scenes political deal with a building contractor that has been accused repeatedly of coercing low-paid laborers from poor Asian countries to work in Iraq against their better judgment.

Keep the contract secret? It's a joke. After all, the project is rising up like an 800-pound gorilla in Baghdad's Green Zone. The Green Zone is the safe zone—relatively speaking—and anything that takes place there is for all to see. Construction cranes tower over the 104-acre construction site as 700 non-Iraqi laborers toil below to build a fortress-like structure with all the makings of a high-tech Fort Apache on steroids. How could anyone miss it?

Located along the Tigris River, the sprawling embassy site is the size of Rome's Vatican City and two-thirds of Washington's national mall. When completed in June 2007, the facility will boast of its own Marine base, a helicopter pad, 15-foot thick walls, six apartment buildings and 1,000 residents. The price tag may well reach $1 billion. When all is said and done, it will be the largest embassy ever built to wave the U.S. flag.

But the company now building what may be the most lasting monument to the U.S. occupation isn't American. It isn't even Iraqi. It is a well-connected Kuwaiti firm partially owned by Muhammad I. H. Marafie, a member of one of Kuwait's most powerful mercantile families. The war in Iraq has been very, very good to Marafie's company. On the eve of the 2003 invasion, the fledgling firm was valued at somewhere around $35 million. Now, thanks to war contracting, First Kuwaiti General Trading and Contracting appears to be nudging the $2 billion mark. Along the way, First Kuwaiti whipped up a bit of controversy as a leading supplier of low-paid laborers recruited from poor Asian countries to build and operate U.S. military camps in Iraq—frequently as a subcontractor to Halliburton's multibillion support services agreement.

First Kuwaiti, as well as other Middle Eastern companies under U.S. contracts in Iraq, has been accused repeatedly of pressuring its workers to take jobs in war-torn Iraq against their wishes . Once there, those workers are said to have often endured pay of just dollars a day, lousy food, bad medical care, crammed housing and 12-hour work days, seven days a week. Some who have witnessed such brutal conditions liken it to modern-day slavery.

First Kuwaiti's general manager, Wadih al-Absi, calls such accusations lies. But the accusations come from workers in Nepal, the Philippines, former Halliburton supervisors and even those well acquainted with the company's upper management. None of these people know each other, but they have the same complaints of poor treatment and labor trafficking.

The list of companies that competed for the embassy contract includes the most accomplished engineering companies in the United States and boast of established track records for building secure embassies and large-scale construction projects. Some are skeptical about the State Department's hard work to keep the project a secret for the better part of a year. The hardest thing for them to swallow about the contract is that one award-winning American company, Framaco, offered to do the job for as much as $70 million less than First Kuwaiti.

The contract for the U.S. embassy "was political," said one competitor. Why political? Because Kuwait was the only country bordering Iraq that was willing to allow the staging of land troops for the 2003 invasion, whisper other disgruntled contractors. The State Department intervened before on behalf of other Kuwaiti firms. After the invasion, the U.S. ambassador to Kuwait, Richard Jones, pressured Halliburton to buy overpriced fuel from the unknown Kuwaiti firm Altanmia Commercial Marketing Company, according to official documents. That fuel, intended for domestic use in Iraq, resulted in ongoing disputes about overcharges of possibly several hundred million dollars. Jones then returned to Washington to serve as the senior adviser and coordinator for Iraq at the State Department. He was in that position when First Kuwaiti was awarded the embassy contract.

As for the allegations against First Kuwaiti of labor trafficking and harsh treatment of its laborers, the State Department prefers to not offer any definitive statements on the question: Is this the kind of company American taxpayers want to pay to build their embassy in Iraq, the country where the U.S. has already spent $250 billion and counting to show the Iraqi people how to run a country right? "Our people are investigating the issues," said State Department spokesman Justin Higgins after U.S. Ambassador John Miller, head of the Office to Monitor and Combat Trafficking of Persons, left for the Middle East in late January to investigate allegations of labor trafficking by unnamed companies.

The U.S. Army did begin investigating the allegations last summer following similar inquires and in April, the Pentagon issued a new order to crack down on labor trafficking by contractors working in Iraq and Afghanistan. The directive also notes that inspections of military contractors and subcontractors in Iraq has revealed deceptive hiring practices, excessive recruiting fees that indebt workers for months if not years, substandard living conditions that include crammed sleeping quarters and poor food and the circumventing of Iraqi immigration procedures. No companies were named for wrongdoing or exonerated. So, in the end, it appears that the State Department secrets are perhaps more for the security of those who inked the contract.

About the Author: David Phinney is a Washington, D.C.-based journalist and broadcaster whose work has appeared in the Los Angeles Times, The New York Times and on ABC and PBS.

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